SMALL BUSINESS COMMISSIONER BILL

Second Reading

Adjourned debate on second reading.

(Continued from 27 September 2011.)

The Hon. M. PARNELL (15:30): The Greens will be supporting the second reading of the Small Business Commissioner Bill. The bill establishes a small business commissioner along the lines of the Victorian model, but not identical to that model. The key role of the small business commissioner will be to facilitate commercial dispute resolution as an alternative to the courts.

The emphasis of the small business commissioner's work is expected to be on disputes arising from landlord/tenant relationships and perhaps franchisee/franchisor disputes as well. It is important to note that the small business commissioner will not resolve disputes herself, or himself, but will try to facilitate a resolution using other services.

I understand, from the briefing I obtained from the government, that it is likely to cost in the vicinity of $1 million each year. One of the questions that we should ask ourselves is whether we will get good value from that investment.

When this bill first arrived my initial reaction was that it was one of those common sense measures, a measure that was known to work interstate, was unlikely to attract much controversy, was not that expensive and I did not expect to receive very much correspondence on it. What I have found since is that they were very much in the category of famous last words, because we have had a great deal of correspondence on this bill.

What I will say is that I still have not heard any credible argument as to why helping facilitate dispute resolution between businesses, especially when one of the parties is a small business, is a bad idea. I cannot see that it is a bad idea, but a number of people have written with concerns and I will go through some of those in a second.

I thought I would start with reading an extract from one email that I received, and I understand that all members would have received these emails. This is not a person who I have contacted personally and asked to use their name, so I will not use their name. This person describes a dispute that they had as a franchisee with their franchisor, a dispute that went over many years and involved a considerable sum of money. What my correspondent writes is:

During this difficult time we had no Government body or person to turn to. We were left to spend many tens of thousands of dollars on lawyers and mediation with no result. I and my Family are personally devastated by this experience, and we would have valued an opportunity to have approached [a] Small Business Commissioner.

They go on to say:

We need laws to ensure that all Franchisors fully comply with Franchising Code. We need a body like a Small Business Commissioner to be there for Franchisees.

It is important to note that the bill before us does not specifically refer to the relationship between franchisee and franchisor. However, it is expected that it is likely to be a key area of work, if for no other reason than that is an area where disputes arise.

The other thing I will say at the outset is that some of the submissions that I received and have not given a great deal of credence to are ones that fall into the category of what I refer to as turf protection. There are a small number of lawyers who have written saying that they do not believe that any regime for dispute resolution other than the current one, presumably one that is lucrative to them, is needed in this state.

I requested a briefing of the government and I was pleased to meet with Associate Professor Frank Zumbo and Mike Sinkunas, Director of Small Business Commissioner Project. I will say that at the very first meeting I had I did not envisage that this bill would be at all contentious. However, as with other members, I have received a deal of correspondence against the bill in the last couple of weeks, and it appears that most of this correspondence has been driven by the Franchise Council of Australia and some of its member bodies. The Franchise Council of Australia Limited is described on its website as 'the peak body for the $128 billion franchise sector in Australia, representing franchisees, franchisors and service providers to the sector'.

To verify that claim, I went to the section of its website which lists its members and, at my first visit, that page was down, which always fills me with some dread as to whether it is accidentally down or been removed; but it is back up again today and I had a quick look this morning before parliament started. It is clear from that list that it is overwhelmingly an organisation comprised of franchisors. On the list of members, and there are very many of them, I could not see the mums and dads, the individual names, of people who are working as franchisees. They were overwhelmingly the big end of town. I think that does help inform the range of submissions we have had from the Franchise Council and its member groups.

In fact, a quick Google search of some of the people and organisations involved in the Franchise Council shows a very long history of dispute over many years at both the federal and state level, especially around the appropriate degree of regulation that it believed was necessary, or not, in the franchise industry. Not surprisingly, in those debates over many years, at federal and state level, the franchisors wanted less regulation and the franchisees wanted more.

As a result of debate nationally and legislation federally, we now have the Franchising Code of Conduct, which is a mandatory industry code of conduct that has the force of law under the commonwealth Competition and Consumer Act 2010. Interestingly, when you do a Google search you find all manner of information, including what appeared to be some fairly unsavoury behaviour, with allegations of contempt of parliament. They were certainly fiery debates: that is what I will probably best leave it at at this stage. But, certainly, this is a dispute that is now boiling over into state parliament and, no doubt, when we get into committee we will hear more about it.

All the bodies that wrote to me urging me to oppose this bill focused on the same fairly small set of concerns around what they saw as being too much regulation, unnecessary duplication of regulation and the potential for unreasonable mandatory standards to be imposed on them that would impact negatively on their businesses, and, in the case of some of the more extreme submissions, that level of regulation would, in fact, drive business away from South Australia.

In fact, I did find some of the concerns in this correspondence to be quite alarmist, given that the bill before us does not actually create any codes of conduct, whether binding or otherwise, and there is nothing in the bill to suggest which codes of conduct might be prepared and what aspects of those codes might be mandatory or simply advisory.

I will just refer briefly to one of the submissions that I received, which was urging the Greens to oppose this legislation, and it included the following:

At the end of the day, if the proposed SA bill acts as a deterrent to the business world, including franchisors and franchisees, then it will have a very negative and unproductive effect. Governments, whether state or federal, should be seen to be promoting best business practice with ongoing education, such as that now promoted by the ACCC, and not discouraging well educated participants.

There is a range of similar comments. My response to that is to suggest that I cannot envisage that we would discourage anything other than charlatans if we were to have on our statute book or on our books of delegated legislation fair standards of conduct that operated between businesses.

If our laws are driving people away, they are probably driving the right people away. But I do not even accept that basic premise. I do not see that laws and codes of conduct that create for fair relations between business entities is a disincentive to business. In fact, the opposite could equally be argued: that it provides a level of certainty and security that would make South Australia a good place to do business.

What is important, especially in relation to proposed codes of conduct, is that they will be subject to disallowance as delegated legislation so that, if the government does overstep the mark and tries to impose unreasonable requirements on business, the parliament can step in and can disallow those codes.

Another criticism of the bill is that the version that has been presented to us is not identical to the one that was put out for public consultation. I note that the changes are relatively minor, and I include in that category of minor the creation of the head of power that would allow for regulated mandatory codes of conduct. I point out that it is not unusual for that type of regulatory approach. You need only look at the bulk of our pollution laws, which are enshrined in environment protection policies, rather than in the legislation itself.

The obvious thing to say is that, if the bill which was presented to parliament was identical to the bill which was presented for public consultation, the criticism would have been levelled at government, 'You didn't listen to anything that anyone said and you've kept it exactly the same. Why did we bother making submissions?' The government has made a small number of changes, and I think those changes are improvements.

The final criticism in the correspondence that has come to me, which can be best described as self-interest, comes from some of the lawyers, who suggested that the entire role of small business commissioner was unnecessary. The assumption behind that claim is that the existing legal system works well enough for the small number of disputes that occur each year, particularly in the franchise sector. My response to that is to say that there are hundreds of small businesses out there that would beg to differ.

Having received a large number of submissions against the bill last week and continuing, I have now started to receive an equal number of submissions from people urging me to support the bill. The big difference between the two lots of submissions is that the ones I have been getting in the last few days are basically from mums and dads—they are from the individual proprietors of small businesses, with the newsagents clearly well represented because that has been a source of conflict, in particular, in relation to their dealings with News Limited in the past.

It would be wrong to suggest that the demarcation is simply between big business and individuals. There are also a large number of business groups that are supporting this bill. I will not name them all, but I will mention, for example, the South Australian Farmers Federation, the Motor Trade Association—and I did take the opportunity to have a brief chat with the Executive Director, John Chapman. The Council of Small Business Organisations of Australia, the national peak body, is supportive of the bill, and I did take the opportunity to meet with the organisation's Executive Director, Peter Strong.

There is clearly a campaign afoot, both for and against. So, our job here, I think, is to go back to first principles and to look at what the bill seeks to achieve, what it actually does state on its face. It seems to me that we come back to the fact that a low-cost, relatively small agency designed to help resolve disputes between business partners of unequal strength is, in fact, a good thing to do.

I will finish with one final submission, one I received, in fact, just yesterday. I did ring the person to check that they were happy for me to use their name in parliament. I offer members the following from Paul Smith of the Millicent Newsagency. He says:

As one of hundreds of small business owners in South Australia, I write to you to ask that you support the appointment of the small business commissioner. It is vital that we have someone to call upon as an adjudicator/mediator/umpire when we feel unfairly treated either in contract negotiations or day to day business dealings with big business.

We have seen time & time again small companies, family owned & run businesses wiped off the map because of the ruthless actions used by bigger organisations. There needs to be a level playing field. There is room for all, but the pressures applied can become too much, and the small business owner is pushed out of the market.

The economic impact reaches much further than that one business when they close. They employ local people. They are affected, their families are affected, the shops that they frequent are affected. It becomes epidemic and spreads like a plague throughout the community.

If too many small businesses are bullied, harassed and forced out, imagine the economic effect that would have.

Please support this vital appointment for South Australia's economic engine: small business.

I just remind members that, when we talk about small business, we are talking about 136,000 small businesses in South Australia, but behind each of those trading names, or each of those shopfronts are real people—real South Australians—who are trying to make a living out of business. I think that if we can help level the playing field in their disputes with big business then we have done a good job, so the Greens will be supporting the bill.

Debate adjourned on motion of Hon. I.K. Hunter.