Retail and Commercial Leases (Miscellaneous) Amendment Bill

Second Reading

Adjourned debate on second reading.

(Continued from 15 October 2019.)

The Hon. D.G.E. HOOD (12:34): I rise to indicate my support for this bill, which makes some important legislative changes pertaining to the retail and commercial leasing sector, which aligns with the Marshall Liberal government’s agenda of ensuring South Australia is an attractive place to invest and conduct business. The proposed amendments will primarily support the smaller enterprises throughout our state, which is imperative, given there are well over 140,000 small businesses in South Australia, comprising no less than 98 per cent of all businesses, which provide employment to over a third of our workforce and contribute $35 billion to our economy.

The government’s bill implements the recommendations arising from the formal review of the Retail and Commercial Leases Act 1995, conducted by former District Court Judge Mr Alan Moss, that were handed down in 2016 in addition to amendments resulting from the Marshall government’s own consultation process following its election to office.

The primary purpose of this act and the regulations is to, of course, protect the lessees of retail shop premises who pay rents that fall under a specified threshold. Naturally, landlords and tenants will often have differing interests, and there is a notable inherent imbalance of power in some cases in favour of the lessors. As rent will usually be the largest continual financial outgoing for small businesses, the fair operation of leases is critical to their viability and longevity.

Some members present may recall that the former Labor government and the then Liberal opposition committed to undertake a review of the act in 2014 to assess the effectiveness of its provisions, as it had not been reviewed in some 20 years of operation, despite the fact that it had been extensively amended during that 20-year period. A bill was subsequently developed that was informed by Mr Moss’s 20 recommendations and the submission of interested parties, including organisations, industry bodies and individuals, following their release.

Although the bill received passage in the other place, it lapsed just prior to the last election due to the prorogation of parliament before it could progress any further. The current Liberal government has incorporated the amendments of that bill along with five new amendments into its revised iteration in an attempt to address ambiguities concerning how existing provisions of the act are to be applied, to clarify key aspects of the legislation and to enhance existing protections. Specifically, it:

makes it explicit that retail shop leases can move into and out of the jurisdiction of the act either as a result of an adjustment in the rent threshold that triggers its operation or an alteration in the amount of rent payable;

dictates that certain sums, such as the rent threshold and security bonds, are to be exclusive of GST;

establishes a formal process by which the Valuer-General is to review the rent threshold periodically;

stipulates requirements for the disclosure of information by landlords to tenants;

increases penalties for breaches of the act with a shift that is broadly in line with CPI, accompanied by two new penalties;

increases the value of a bond from four weeks’ rent to three months’ rent;

extends the application of the act to ensure public companies limited by guarantee and registered with the Australian Charities and Not-for-profits Commission are captured; and

excludes overseas companies from coverage of the act if they are registered on an international stock exchange.

A number of technical amendments are also included in the bill in addition to those I have just outlined.

Another amendment not previously considered by our parliament when Labor’s bill was debated also makes it express within the act that a registered lease that at the time of registration falls outside the rental threshold shall remain outside its scope, despite any future increases to the threshold. This provision seeks to remedy issues that arose when the former Labor government increased the rent threshold by regulation from $250,000 to $400,000 GST exclusive in 2010.

Although it was an arguably necessary move to account for the consumer price index and other economic factors, the manner in which the adjustment was executed caused considerable difficulties for lessors and lessees with long-term leases in particular, due to uncertainties as to how existing agreements at the time would be affected. I am sure I am not the only member in this place who has been personally contacted by South Australians who were significantly impacted by this abrupt change. I do note that in the other place, the need to enforce transparency where there is an intent to register a lease was raised by both the opposition and crossbench and the Attorney-General was swift to respond by introducing further amendments to provide for these provisions.

It is no surprise that under the leadership of the Marshall Liberal government South Australia has defied the national trend in relation to small and medium business confidence, with recent survey results revealing owners and operators of these enterprises are now the most positive in their business prospects in the nation, with a significant lift within regional South Australia and Adelaide outperforming all other capital cities. It also found that this government continues to lead the way in supporting small and medium businesses, with approval of state government policies at a six-year high.

The proposed amendments in this bill will certainly complement the delivery of an array of innovative reforms and initiatives as part of our determined effort to support this vital sector of our economy. I support the bill.

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

Sitting suspended from 12:40 to 14:15.