SMALL BUSINESS COMMISSIONER BILL

Second Reading

Adjourned debate on second reading.

(Continued from 14 September 2011.)

The Hon. T.J. STEPHENS (17:28): I rise to speak on the Small Business Commissioner Bill. As lead speaker for the Liberal Party, I will outline the opposition's concerns with regards to this bill. As honourable members are aware, the Liberal Party opposed this bill in the other place.

The Small Business Commissioner Bill establishes an agency of the Crown to regulate franchising arrangements as well as other aspects of small business. The first problem with this bill is that it does not define what a small business is. Where is the line drawn? Where would the commissioner's powers end?

It strikes me as bizarre—and it is typical of this government—that it thinks that in order to better facilitate business more regulation needs to be introduced. It is hard to fathom. I fail to see how the creation of a new bureaucracy with more regulation is going to better serve anyone in the business community. The powers and scope that this bill gives to the commissioner are already in place and are invested in other agencies. We do not believe there is any need to double up. We have seen this all too often with Labor governments over the years.

Another aspect I have concerns with is state regulation of franchising agreements. While this has always been true, it is more relevant today than it has ever been. Many franchises and buying groups are nationally, if not internationally, trading companies, with franchises all over the country and the world. Why then would we have a different regulatory framework and umpire than anywhere else in Australia? Franchising regulations should occur at the commonwealth level in order to avoid inconsistency between jurisdictions. While this would make it easier for franchisors to run their companies, it would also make it easier for franchisees, who would be on a level playing field in terms of the law and have certainty and peace of mind about the framework they are working in, regardless of what state or territory they conduct their businesses in.

It is my understanding that this bill dilutes the franchise code of conduct already in place and allows the commissioner to add to the code, which is commonwealth law, to create a unique code in South Australia. This will inevitably lead to inconsistencies of the nature I have just referred to. Opposition to this bill boils down to this: making it harder for small business people to run their businesses in South Australia. By over-regulating the government will isolate South Australia from the rest of the country, which will affect competitiveness in the franchising industry in this state.

The member for Mawson in another place likened the Franchise Council of Australia, the industry body for all involved in franchising—both franchisors and franchisees—to big tobacco, which I think summarises Labor's approach to the business community in general. Labor has never been a friend of business: despite all its masquerading people are seeing through it. The reality is that this bill will not help franchisees at all, and everyone in that industry will be worse off. Coming from a small business background myself, I can assure this place, the minister and the countless small business people in this state that the last thing they need is more regulation and bureaucracy paid for by higher taxes on just about every aspect of their business. The Liberal Party understands this.

From my own personal perspective, can I say that I used to lay awake at night worrying about the size of my overdraft, the purchases I had made, my staffing contingents, rent deals, advertising deals—all the things that make a business operate. I can say that not once did I ever lose a moment's sleep about whether a small business commissioner would be appointed. Who has time for such things? It is about getting on and running your own business.

The member for Norwood in another place referred to the gutting of funding to business enterprise centres of $1.35 million and to Regional Development Australia boards of $4.083 million, which were a key part of the government's small business platform leading up to last year's election. If this government cares as much as it says it does about small businesses, why is it cutting funding to the key businesses that support bodies in this state, which are crucial in advising businesses on their legal options, avenues to resolving disputes, as well as liaising with government? It is obvious from this move that the government has lost touch with the business community and is no longer interested in listening and is intent on satisfying only its own interests and not those of hardworking South Australians.

I certainly acknowledge the fact that there are rogue franchisors (if I can use that term), who act in a disingenuous manner to their franchisees for their own interest. In fact, I have spoken to franchisees who have been personally affected. Those franchisees should have the opportunity to seek reparation. However, this is the wrong way to help those people. This will not help and, while I welcome assistance and protection for franchisees from poor franchisors, we should not punish the majority who work well within industry.

I have had a very commendable letter that I would like to read into Hansard from a lawyer who has practised for many years and operated for both franchisors and franchisees. It starts:

Dear Honourable Member

Re: Small Business Commissioner Bill 2011.

I am a concerned lawyer who has represented small to medium businesses (including franchised businesses) in South Australia for over 30 years.

I am writing in relation to the Small Business Commissioner Bill 2011 which has recently passed through the lower house and is to be considered by the Legislative Council in the next week or so.

The stated objective of the government is that the bill will result in legislation similar to the Victorian Small Business Commissioner Act 2003.

I support that objective, but unfortunately the Bill goes considerably further than the Victorian act in that it:

1. enables the relevant minister to bring within the ambit of the legislation any industry by prescribing an 'industry code' in respect of that industry, and he can do that simply by regulation;

2. grants extensive rights to investigate and prosecute; and.

3. imposes a new and extreme penalty regime that is far more extensive than those contained in the federal Competition and Consumer Act and the South Australia Fair Trading Act.

I am particularly concerned about the ability of the minister to prescribe a code in respect of an industry without reference to Parliament. Added to this, and to complicate matters further, there is nothing prohibiting the Minister prescribing a code in relation to industries which are already the subject of a code eg. the oil and franchising industries. Should that occur, it will only result in further bureaucracy in relation to the same industry, added cost and, undoubtedly, confusion.

Mr Piccolo MP proudly states that the bill will make 'South Australia the safest place in Australia for small business to set up shop'. My concern is that it is likely to make South Australia the last place in Australia that franchisors and other generators of employment and opportunity will want to set up shop.

As you would be aware, Mr Piccolo introduced a private member's bill for the establishment of State based franchising legislation, because he was unable to persuade the Federal Government to make the amendments he was seeking to the Commonwealth Franchising Code of Conduct. His bill lapsed.

At around the time that Mr Piccolo was introducing his private member's bill, Peter Abetz was attempting to do the same thing in Western Australia. The Parliamentary Committee established to examine the WA bill recommended against its introduction. Tellingly, the WA Committee Chairman, Dr Mike Nahan, commented that 'the Committee felt that the Bill was not an appropriate measure at this time given the significance of the amendments, and the importance of uniform legislation to easing the cost and compliance burden for small businesses. The Committee's view was also influenced by what it saw as the potentially adverse legal implications and cost impact to Western Australia and franchising participants from the Bill.'

Interestingly, the South Australian Small Business Commissioner Bill will set up a framework that will enable the South Australian Government to introduce State-based franchising legislation which will impose a different regime and penalties to those which currently apply in respect of the Commonwealth Franchising Code of Conduct.

Mr Piccolo's private member's bill was not acceptable, and therefore what he sought to achieve should not be permitted to slip through the net as part of the Bill.

I am of the view that an industry code should not be able to be prescribed under the Bill by regulation. Such prescription should only occur with the approval of Parliament. At the very least, the Bill should be limited to ensure that the Minister cannot prescribe an industry code where there is already a Commonwealth code dealing with the same industry.

To allow a State-based industry code to co-exist with a pre-existing Commonwealth code for the same industry will only result in small businesses having to deal with the two regimes. This, at a time when governments throughout Australia are committed to creating more efficient regulatory frameworks for business. I have no doubt that if the Bill is passed, then soon thereafter there will be a code prescribed in relation to the franchise industry.

In support of my concerns, I refer you to the comments below that were made by Messrs Piccolo and Koutsantonis in relation to the Bill.

In a News Release dated 28 July 2011, Mr Koutsantonis stated 'We understand that for too long small businesses, franchisees and tenants have felt powerless when dealing with unfair practices of franchisors, larger businesses or large scale landlords.' In a News Release dated 14 September 2011 he said 'This is about giving franchisees some rights; a voice to help them stand up to the big corporations, why the Liberal Party has taken [the] side of big business and opposed these measures is a mystery.'

Mr Piccolo in a News Release dated 3 August 2011 stated that his lapsed private member's bill 'would have complemented the existing Federal Code but would have gone further in protecting franchisees from rogue and unscrupulous franchisors.' He went on to say that 'while the Bill is structured differently to his own, it will ultimately achieve the same objectives.'

There are other significant criticisms of the Bill that have been brought to the attention of Mr Koutsantonis, but based simply on the above I request that you:

4. vote to reject the Bill; or

5. move to have the Bill referred to a Parliamentary Committee for proper consideration.

Proper consideration will enable fuller consultation (rather than the limited and selective consultation that has occurred) and the consideration of amendments such as removing the right to prescribe industry codes; providing a definition of 'industry code'; and/or removing the right of the Minister to prescribe an industry code where there is already a Commonwealth code in relation to that industry eg. Oil Code or Franchising Code of Conduct.

Thank you for taking the time to read this letter. If there is anything which you wish me to elaborate on or provide to you in support of what I have written, please do not hesitate to contact me.

Yours sincerely,

Ramsay Andary.

I did check with Mr Andary to see whether he was prepared for me to use his name and read his letter into the Hansard.

I can say at the outset that we prefer option 4: vote to reject the bill. It is not my intention to move to have a parliamentary committee look at it because I believe that it has already been investigated on a previous occasion.

The real issues here for small business are: this government has withdrawn $200,000 from CITCSA, we are paying record land tax, unsustainable payroll tax, and we have a WorkCover scheme that has been an embarrassment to this government, failing both workers and business. This bill should be treated with the contempt that it deserves and voted down.

Debate adjourned on motion of Hon. J.M. Gazzola.