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SMALL BUSINESS COMMISSIONER BILL

Second Reading

Adjourned debate on second reading.

(Continued from 13 September 2011.)

Mr GRIFFITHS (Goyder) (12:06): I indicate that I am in the final stages of my comments on the Small Business Commissioner Bill, having to my surprise discovered that I had been on my feet for some 38 minutes yesterday evening talking about this. At the time of the adjournment yesterday I was in the process of putting before the house a copy of the words from an email received by me, and indeed all the members of this chamber and of the Legislative Council, from Mr Stephen Giles, who is the chairman of the Franchise Council of Australia. I was part way through that, so I—

The Hon. A. Koutsantonis interjecting:

Mr GRIFFITHS: The minister's presence is noted all the time. I was part way through that, so I will continue that before making some closing remarks. Mr Giles says:

In addition to the FCA and the SSCA, the Law Council of Australia has expressed concerns when alerted to the differences between the initial version of the Bill and the Bill currently before Parliament.

Specifically the Bill currently being debated contains the following additional sections, neither of which was contained in the version of the Bill circulated for public comment—

earlier this year—

a completely new section enabling the enactment by regulation of an 'industry code' and the declaration that contravention of an industry code is to be subject to a civil penalty; and

a new and draconian penalty regime that goes well beyond current powers in the SA Fair Trading Act or the Federal Competition and Consumer Act.

The Hon. A. Koutsantonis interjecting:

Mr GRIFFITHS: I am only repeating someone else's words, minister. He continues:

It is not appropriate that these provisions should be enacted. It is even less appropriate that these provisions should be introduced without the opportunity for proper industry consultation and extensive debate. The FCA is gravely concerned that Parliament may be misled as to the current level of support for the Bill.

The Hon. A. Koutsantonis interjecting:

Mr GRIFFITHS: Minister, I would be surprised if you have not actually also received this email. Mr Giles' email continues:

There are other concerns that have been raised when similar legislation was proposed in Western Australia, and which led to the WA Government to decide not to proceed. Not least was the estimated cost of not less than $4m over 4 years. The FCA's concerns have been raised in detailed submissions to the SA inquiry into franchising—

I point out that there has been an extension to the initial inquiry that the minister was chairing, and the Economics and Finance Committee is about to submit to this chamber a report detailing the results of that supplementary inquiry into franchising and the impact of the code changes that occurred in July of last year, which were sought by the member for Light and myself when we were still both members of that committee. The Franchise Council of Australia's concerns have been raised in detailed submissions to the SA inquiry into franchising, and they remain current and valid. Continuing on from Mr Giles:

The FCA is concerned to see the small business sector in South Australia prosper. This bill, if enacted, will have exactly the opposite effect, and will see South Australia isolated from the rest of the country. The enactment of a bill based on the Victorian model could be supported under the COAG harmonisation process, but this bill goes far beyond that model and directly overlaps with the existing comprehensive federal regulatory regime. The substantial amendments from the initial draft noted above are clearly intended to introduce state-based franchising legislation via the back door, in a non-transparent and totally inappropriate way. Substantive law should be introduced transparently, with due consultation and in legislation that is subject to appropriate parliamentary debate. This bill, assuming it is constitutionally sound, will enable the introduction of substantive legislation by regulation. That is contrary to proper parliamentary process.

The [Franchise Council of Australia] calls upon the parliament of South Australia to oppose the bill. At the very least it should be withdrawn for proper consultation with the small business sector. In an amended form it would be likely to gain significant support.

Interesting words.

The Hon. A. Koutsantonis: Are you going to read out the Farmers Federation submission as well?

Mr GRIFFITHS: No; I am just updating the house. You got the opportunity to talk about the 57 submissions. I want to finalise this with a few words, and reinforce the fact—as I expressed last night—that franchising changes should occur by way of changes to the national code, not on state-by-state-based opportunities. I have a great fear that that would create a situation in which South Australia would be seen as not being a place to invest. I certainly do not want that to occur, and the opposition does not want that to occur.

It is important to highlight a few things. The Liberal Party, by virtue of many of its members, and not just parliamentary members but lay members, has a significant small-business background. Many members in this chamber operated small businesses or have family associations with small businesses, going back several generations in some cases. They are committed to the success of small business and would never propose or support legislation that would in any way have a negative impact on small business. We see ourselves very clearly as a party that will do all in its power to support small business opportunities in South Australia and ensure its greatest possible level of success.

The minister quoted himself in estimates earlier this year. I believe the words were, 'It is not the government's job to make business succeed.' I respect that business has the sole responsibility to work as hard as it can in the best possible way to provide quality service and product, but there is a role for government to support success. The minister nods his head in acknowledgement. There is obviously a role for the government to support success.

Supporting success comes in many different ways, though. It can be focused—as you have done—on assisting with a mediation service or middle person (which, as I see it, is what the commissioner will be) to help in resolving issues. It can be at the front end of small business, with small-business initiatives—start-up businesses, generational transfer, economic challenges that are occurring around the world—where that level of support is needed. It is in a that area that I am quite fearful that the support that does not exist is what small-business truly needs. It is for that reason that the Liberal Party has chosen not to support this piece of legislation.

There will be a lot of debate about individual clauses of the bill, and I again reinforce the fact that I understand how the numbers work in this chamber. It is my role to ensure that I seek clarification on quite a significant number of points. I do admit that some of those were provided at the briefings, but I want to make sure that the minister puts the issues on the record as well, because it is important that there is scrutiny of any piece of legislation.

We have not taken the decision on this bill lightly, and I do respect that a level of criticism may come from people who are uninformed on the reasons behind the position we have taken. However, we have taken the decision not to support this bill because of two things. First, we are very concerned about the franchising aspects and how that will impact upon how South Australia is viewed and investment opportunities that will come down; and, secondly, that small business needs support in a different field to what the minister has proposed.

I am grateful, in fact, that there is $1.5 million in support being put towards small business, which is on top of a very small level that is in direct programs from within the budget. But, again, I enforce on behalf of the Liberal Party—and no doubt other members will take up similar issues—that it is the wrong end of the spectrum. There are opportunities for small business to grow. It needs government support, it needs government mentoring, it needs programs in place, it needs people available to assist them to grow, to help with a vision, and to help make that vision a reality.

There are services already available from associations in a commercial sense that can help with mediation for issues and resolve disputes, and that, sadly, seems to be the total focus of the role. For those many reasons that we have espoused over the last 45 minutes or so, I confirm on behalf of the Liberal Party that we cannot support the bill in its current form.

Mr PENGILLY (Finniss) (12:15): I support the member for Goyder's remarks. I read with interest the debate in yesterday's Hansard and the interjections that were thrown his way; however, that is part of the cut and thrust of the chamber. I can only think that this has been drafted by the new Chairman Mao from the STA, Peter Malinauskas. This is where this is coming from. Anytime I hear that the Labor Party is wanting to try and help small business, I shudder, because I can tell you I have more questions and comments and criticisms come to me about the government's performance in the way of small business from my electorate than almost anything else, with the exception of Housing SA customers.

So, it was with a great deal of interest that I read the media release from the Franchise Council of Australia, and I think it is worth reading that into the record today:

Koutsantonis continues to ignore objections to de-facto franchising bill

13 September 2011

The Franchise Council of Australia (FCA) is disappointed the South Australian Government appears intent on introducing back-door franchising legislation through its Small Business Commissioner Bill 2011, especially as the 57 public submissions to the Bill have never been made publicly available.

The FCA has made clear its objection to the undeclared franchising-related elements of the Bill, being pushed by Small Business Minister, Tom Koutsantonis.

'Yet Mr Koutsantonis says today that the sector wants this legislation,' says FCA Executive Director Steve Wright.

The Commonwealth and other States have considered and rejected the franchising-related moves Mr Koutsantonis intends to implement. The Bill in its current form is disconcerting news for the $9 billion South Australian franchise sector and the thousands of franchisees and employees who work in it.

Mr Koutsantonis says the Bill mirrors the Victorian Small Business Commissioner model. But the truth is it goes much further—to the point it is actually a de-facto franchising bill, with heavy new penalties and the potential for different rules to those which exist in the rest of the nation.

If Mr Koutsantonis thinks this will inspire franchising small business growth in SA, he is mistaken. He needs to pull back from this anti-franchising approach and return to what the Victorian, NSW and WA Governments have recognised is the sensible approach—a Small Business Commissioner Office which focuses on quick, affordable dispute resolution, not one which sets up an expensive quasi-tribunal.

Small business needs reduced red tape, not a new big-stick bureaucracy which the WA Government estimates would cost taxpayers millions of dollars a year to run. SA already trails the rest of the nation in terms of business confidence. Mr Koutsantonis' Bill will make the situation worse, not better.

It worries me that this government seems to meddle in what it is incapable of having a lot of knowledge about. If this was being handled by the minister for primary industries, Mr O'Brien, who at least has some understanding of small business, I would possibly be a little more comfortable. However, the Liberal Party is going to reject this bill. It will be interesting to see what happens in the upper house. I read the comments in The Advertiser this morning attributed to minor parties. They may seek to get further advice before they deal with this, once it ultimately goes through this house. I think they may need to reconsider their position.

All this will do is make it more cumbersome and clumsy for small business in South Australia. It will not help in any way, shape or form. It is a fool of a bill put up by a fool of a government being run by the SDA. I urge the house to reject this bill.

Mr BIGNELL (Mawson) (12:20): I rise to support this bill. I have a copy of the Franchise Council of Australia's media release, sent out yesterday, in which they obviously do not want this bill to proceed, and the Liberal Party has been keen to jump on board and declare its opposition to the bill, as well. It is a little bit like the tobacco industry coming out and asking that health warnings not be put on tobacco products. The Franchise Council of Australia and the big franchise owners in this country, and in other places in the world, are big business. The small businesspeople—the people we want to protect through this bill—are the franchisees.

I want to go through an example of one case from my electorate. This constituent, who is a franchisee of a well-known company with franchises throughout Australia and in three other countries, sought my assistance regarding his concerns about alleged breaches of a franchise agreement by the company. The gentleman has been a franchisee with this company for 18 years. He was held out as a model franchisee by the company and has won awards in various categories in recognition of his achievements over the years.

Some five years ago, the franchisor encouraged groups of franchisees to invest their own money to set up a central production facility in each state to service the needs of the franchisees in each state. The constituent saw trouble looming with the South Australian facility and asked the franchisor for assistance along the lines of what was being provided in other states. This request was denied.

A different franchisee negotiated with the franchisor to purchase the South Australian central production facility and operate in my constituent's territory without any reference to him and, in fact, to operate in competition with him. Although the constituent reluctantly consented to the sale, he did so on the grounds that conditions were to be put in place which would protect his business.

A sale was agreed to without any reference to the constituent. The constituent's signature appeared as a witness on the new agreement. He claims that the back sheet of the sale contract he had signed was instead placed onto the back of the variation to the franchise agreement instructed between the purchaser and the franchisor. This and other methods used by the company are, if true, illegal and unethical, and the franchisor did nothing to protect the integrity of my constituent's pre-existing franchise agreement.

Following this sale, almost overnight sales in my constituent's franchise hit an 11-year low. The constituent took legal action to recover money from other directors of the facility; a settlement was reached between the constituent and the other directors. However, although the franchisor was not party to this action, the CEO offered all parties an amount of money to settle but told the opposition lawyers not to settle until he had extracted immunity from my constituent that he would not take legal action against the company in relation to the breach of the franchise agreement. This was not given.

The company denied and continued to deny that it had breached the constituent's franchise agreement, although during this long and complicated process no fewer than seven lawyers have looked at the case and said there was a clear breach of the agreement. The constituent tried to make contact with the board but was thwarted by the CEO and told that nothing goes to the board without him first scrutinising it.

Finally, the constituent laid his complaints about both the legal aspects of the case and the conduct of the CEO direct to the chairman. He received a short reply saying that the company does everything to protect the integrity of their franchise agreements, and the allocated territories, and that they have great faith in the CEO and any further communications are to go through the CEO. In essence, they appointed the CEO to investigate complaints against himself.

I then wrote to the chairman complaining about how the case had been handled and the bullying tactics of the CEO. He stated the company had carried out two investigations into the allegations and found no wrongdoing; however, they never spoke to their franchisee. My concerns about bullying were not addressed by speaking to the complainant but by writing to me in defence of the CEO and the company. I addressed the matter of their responsibility towards the production facility; this was dismissed by saying it was a matter between the individual franchisees and not the franchisor.

On the matter of the contract between them and the purchaser of the production facility in which the constituent's signature appeared as a witness and is claimed to be fraudulent, the chairman suggested that my constituent should take it up with the other party.

This stonewalling has been going on for a number of years and it is my opinion that the company is continuing to bully the constituent into submission. This has had a huge impact on the constituent who has done no wrong whatsoever and has followed the franchise agreement to the letter. The constituent is keen to be able to commence meaningful negotiations in good faith with the company regarding these issues. In the current regulatory environment there is the opportunity for mediation but this is costly and leads to unethical franchisors bleeding franchisees financially dry and then choosing to ignore the recommendations of the mediation process. In fact, the franchisor in this case has told the constituent that it will not give an undertaking that it would accept a mediator's recommendation—but my constituent would be more than happy to do so.

The Small Business Commissioner Bill, in particular section 5(1)(d), gives the commissioner, through the minister, the capacity to prescribe a mandatory industry-specific code and enforce civil penalties for breaches of such a code. I have not named the franchisor at this stage because of the wish of the franchisee who is hopeful that, one day, this will be resolved.

When you buy a franchise, what you are buying is guidance and assistance. The constituent has been paying thousands of dollars each month and has been on the receiving end of actions from the franchise company and its CEO, which, if proven to be true, are unfair and illegal and put his business at risk. The passage of this bill will go a long way towards bringing to account unscrupulous operators whose unfair, unethical and sometimes illegal practices are harming small businesses in our state.

That is just one example of one person in the electorate of Mawson. I was fortunate enough, in the previous parliament, to be on the Economic and Finance Committee where the member for Light persuaded us to have an inquiry into franchise agreements throughout the state. That sort of spread and we heard evidence from people throughout the country—experts. We heard time and time again about franchisees who had been done over by the franchisor. We know that does not happen all the time and there are a lot of people doing very well with great relationships between the franchisor and the franchisee, but as legislators we need to bring in protection for the people who are most at risk.

I am not surprised to read the Franchise Council of Australia's media release which it put out yesterday. As I said at the start of the speech, it is a little bit like the tobacco companies reaching out and saying, 'Please don't put those health warnings on the sides of cigarette packets; cigarettes are healthy and they will do you no harm and so we should not have those health warnings.'

I will always do the very best I can to stick up for the little person in my electorate and that is what I am doing in this case. This fight with the particular franchisee I mention today has been going on for more than a year now and I hope that, through the successful passage of this bill, people like him will have somewhere to turn in their time of need, when they are being bled dry and seeing not only their years and years of work going down the tube but their future in terms of superannuation and the life they have set up for themselves also going down the tube. I am always going to stick up for the little guy and it is for that reason that I commend the Small Business Commissioner Bill to the house.

Mr MARSHALL (Norwood) (12:28): I rise to speak to the Small Business Commissioner Bill 2011. Portfolios are often evaluated on the size of their budget and when we look at the Office of Small Business it only has an annual budget of $1.9 million and just a handful of people, and so some might think that this is not a particularly important portfolio for the minister. However, this is completely and utterly wrong. The simple fact is that, despite the small budget allocated to this sector, it is one of the most important portfolios for this state government.

In fact, the minister has spoken at length (as have many of his colleagues on the government side) in recent days about the importance of this sector. We see numbers like 138,000 small businesses in South Australia; we hear statistics that this represents 96 per cent of all private sector establishments in this state—and these statistics are all true. However, more than that, the simple fact is that the small business sector and the family business sector is the engine room of the South Australian economy.

We have a Premier who is always batting on about the importance of the mining sector and always talking about the importance of the defence sector, and these are two vitally important sectors of our economy. But make no mistake: the small business sector and the family business sector are the real engine room that drives our economy forward.

We do not have the big corporate offices that exist interstate in Sydney and Melbourne; we do not have the big resource sector like they have in Queensland and Western Australia. What we have is the dedicated and committed family business and small business sector here in South Australia. If the Premier is going to have any chance of reaching his audacious goal of creating 100,000 jobs in this term of the government, then he had better recognise the importance of this sector.

This is in fact the first piece of legislation that this minister has brought to the parliament relating to small business since he was elevated to this role and so, of course, it is with much anticipation that we have received this piece of legislation. He has been planning it for 18 months, so of course we expected a grand reform. We expected a great commitment by this government to this important sector. What a huge disappointment this minister has been. What a huge disappointment this piece of legislation is to the people of this important sector. I refer specifically to the bill which says that it is a bill for:

An act to establish the office of the Small Business Commissioner; to provide for the powers and functions of the Commissioner; to make associated amendments to the Fair Trading Act 1987 and Retail Commercial Leases Act 1995; and for other purposes.

Make no mistake: this is just another state bureaucrat and another layer of state government bureaucracy. I ask you and I ask the minister: what has informed this new piece of legislation that he has introduced? I could not find any evidence of information that was provided to him that would actually inform him that this was the number one issue that needed to be addressed by the small business and family business sectors in South Australia.

I did a bit of digging, though, and I thought it was actually good to have a look at what other pieces of information this government had brought into the realm over recent years and I stumbled across this fantastic document: the South Australian Small Business Statement. This was released in the lead-up to the 2010 election. It was done by the previous minister, the Hon. Paul Holloway, who was the minister for small business at the time and, by and large, this is actually a good document.

Of course, it starts off with the obligatory sort of motherhood statements, the first one from the Premier, of course: 'Our government is committed to ensuring South Australia is the most forward-looking, resilient, dynamic and sustainable "small business" state in Australia.' Who could fault the Premier for that statement? Of course then we have messages from the minister; we have messages from the Chairman of the Business Development Council.

The first chapter is completely and utterly dedicated to the size and importance of the sector and I will not labour any of those points, but I refer to the very next sector in this impressive statement, and this is not some dusty tome that was delivered to the government 28 years ago. This is the most recent and only commitment this government has actually made to the small business sector that I am going to be referring to.

The first chapter is entitled 'Communicating with small business', and what is the very first heading? Any guesses? The BECs. The business enterprise centres. So, how has the government responded to this important item that the government themselves released? Of course, it has all already been announced that they have cut all funding to the nine business enterprise centres in metropolitan and suburban areas. That funding of $1.35 million finished on 1 July 2011.

So, let's go to the second item in this impressive document. The second item is Regional Development Australia. I had to check with my colleague: how is the government going in terms of its commitment to this very important area? Guess what? They have flagged that they are cutting the funding to this important area, in fact, with the removal of $4.083 million in funding support for the eight Regional Development Australia boards operating in regional areas. Oh, dear, that is a bit of a blow, isn't it?

Basically, we can look at the document which has informed the previous minister when he went out to extensive consultation to develop a small business commitment and strategy for the state, he talks about the BECs and the importance of the RDAs but what does the new minister do as soon as he gets himself into the seat? He cuts the funding. It is great that the government wants to stand and make all these outrageous platitudes to the sector—it is so important. The member for Mawson a little bit earlier today said, 'Guess what, I'm going to be standing up for small business.' Well, let me ask the member for Mawson: did he go to the minister and say, 'Reinstate the funding for the BECs'? Did he go to the minister and say, 'Reinstate the funding for the RDA's? No, he did not.

Let us go to the very next sector of this report. The very next sector relates to the importance of the family business sector to South Australia. This is something I do know a little bit about because I was formerly chairman of the South Australian branch of Family Business Australia. This is a sector that I come from and I know it well. I was intimately involved with the application to the government for the thinker in residence, Dr Dennis Jaffe, to come out to address this important issue.

One of the two key elements of this thinker in residence report was 'a dedicated family business development manager within the Department of Trade and Economic Development responsible for developing and coordinating support for family businesses across this state'. So, again, I thought, 'This document is gold. I love this document. Let's have a look at where that person sits at the moment.' So I made some inquiries, and you will never guess what. This person has gone as well! Apparently, there was a bit of a vacancy. So I wrote to the new head of the Department of Trade and Economic Development, one of Rann's mates, Lance Worrall, and I asked him about the business development manager—

The DEPUTY SPEAKER: Order! Member for Norwood, you will address people by their proper titles.

Mr MARSHALL: Sorry, Madam Deputy Speaker. I refer to Lance Worrall, the Chief Executive—

The DEPUTY SPEAKER: No, the Premier.

Mr MARSHALL: Sorry, the Premier, the Hon. Mike Rann—who is a constituent of mine in Norwood, of course, so I should be extremely respectful.

The DEPUTY SPEAKER: I accept your apology.

Mr MARSHALL: Thank you very much, Madam Deputy Speaker. I received this fantastic response which said, 'Following the recent restructure of the Department of Trade and Economic Development, the role of family business development manager ceased,' with no further explanation. It is a catalogue of neglect for this important sector.

We looked at what this sector identified as the key issues it wanted the government to address, and let us list them in order: family business is No. 1, payroll tax is No. 2; and red tape reduction is No. 3. They are the top three issues identified in this report, so I thought, 'Where is the reference to a small business commissioner?' I read the entire document—and I commend it to the minister because it is excellent reading. I read the entire document, and I could not find anywhere in it any reference to a small business commissioner.

I thought, 'Maybe I've missed something.' My electorate officer said, 'You can type in an expression in a search bar and it will come up any time it is mentioned in the document.' Well, blow me down, guess what? There was not one solitary reference in the entire document to the mainstay of this minister's first 18 months in the chair. What an absolute disgrace! He should hang his head in shame—and while he is hanging his head in shame he should take a look at that report and maybe have a quick flick through it.

The Hon. A. Koutsantonis: This is devastating stuff.

Mr MARSHALL: It is devastating. Let's actually have a look at what we are going to get from this incredible report which the minister has presented to us. First, he says, 'One of the principal roles of the small business commissioner is to provide those business operators who have limited bargaining power, time and resources with the ability to access timely, low-cost dispute resolution services designed to avoid a costly litigation process that currently exists.' They are costly because the government refuses to accept the change which has been suggested by me to the Magistrates Court small claims jurisdiction. It is expensive for businesses to access timely and cost-effective legal dispute resolution. It is very costly in this state.

However, I put it to you that if we actually changed the threshold of the small claims jurisdiction from $6,000 (which was set back in 1991) and if they moved it to somewhere near where every other state in Australia actually exists (Queensland sits at $25,000 at the moment; we are at $6,000, a little bit of disparity there) then we would be able to go some way to addressing this issue. It is not good enough to say 'What we're going to do is put on another bureaucrat. We're going to put on another layer of bureaucracy.' The minister goes on to say:

Small business often feels powerless when dealing with state and local government bodies.

Absolutely they feel powerless because they are dealing with your government's complete inability to address the needs of this important sector. He goes on to say, and this is just so wishy-washy:

It is envisaged that businesses would make use of existing mechanisms—

Wait on, aren't we talking about something new here?

but the commissioner would become involved in instances where the provision of assistance would be useful and likely to lead to better outcomes.

What is this actually all about? I will tell you what it is about: his friend, the member for Light, has got a bee in his bonnet about franchising, and fair enough. Why doesn't he actually bring a bill to this house talking about the issue of franchising? Instead, we have got this awkward and complex amalgam of two issues. If they are serious about the franchising bring it back as a separate bill and we will actually take a look at this.

This is nothing more than a cynical cost-cutting measure. The services they will be providing can adequately be provided through the Small Claims Court, the BECs and through ministers (like the minister opposite) doing what they are supposed to do—go out and engage with this important sector, the people who actually exist in this important sector—

Members interjecting:

The DEPUTY SPEAKER: Would you like to make a point of order or—

An honourable member: Just keep going.

Mr MARSHALL: Thank you, Madam Deputy Speaker. The people who exist in this important sector are, indeed, the heroes of the South Australian economy. These are the people who go out, take out a mortgage and put their house on the line. They employ people and they drive our economy. These are the heroes of our South Australian economy, and it is not good enough to put up this piece of legislation. This is nothing more than a minister pushing through legislation that he can use to promote his 18 months in the job. It is a token.

The minister would do a lot better to get out and speak to the people on the front line, roll up his sleeves and find out what they really want—and he would find that the Small Business Commissioner would not feature in their top 50 requirements.

Mr HAMILTON-SMITH (Waite) (12:42): I rise not only as the shadow minister for industry and trade and defence industries but also as a former small business person to urge the house not to support this bill but to support other measures that will genuinely help small business. Before coming into this place I employed around 120 people in six businesses in two states. Mine was not only a services-related business but also it had a property development and construction component.

I employed builders, tradespeople, electricians, plumbers and handymen. I also employed office staff and a host of childcare workers, including teachers. I can tell you that, when payroll is about 60 to 65 per cent of your cost inputs, you are very focused as a small business person on the needs of your business. I can assure the minister that, as someone who has employed a large number of South Australians, generally when you go to the mailbox and if something is not a cheque you tend to put it in the 'pending' tray and work out how you are going to get through the next week.

I can tell you that, by the time you have paid your WorkCover levies, your superannuation charges, paid your suppliers and made sure that the wages are in order, by the time you have done all that, you have had a very, very, busy week. One of the reasons I came into this place was to try to pursue ways to ensure that state and federal governments were more supportive of small businesses. I can tell you that mortgaging your house to buy a business, then growing the business and taking the risks associated with maintaining that business are onerous.

I agree with the former speaker, the member for Norwood, that small business people are the unsung heroes of this economy, and South Australia ranks very highly in the ratio of employment that falls within companies of one to 50 employees. Compared with other nations in the OECD, we have an above average rate of participation by employees in small business. It is very important. That said, business is a tough place and it is a case of buyer beware. It is a case of getting out there and knowing your stuff. It is a case of being diligent and making sure that as you run your business you cover all bases. How do you do that? You seek advice and guidance from others in the business. You might seek advice and guidance from an industry association.

I was national secretary of the Confederation of Child Care, the industry association with thousands of members across the country, and I remember lobbying federal politicians—in fact, the former Labor government prior to 1996—on a raft of issues but also organising networking opportunities so that the businesses could learn from one another about the problems they face. There is franchising within the childcare sector across the country. There are all of the problems and many of the issues that have been raised during the course of this debate, so it is a very good example.

I was also editor of a national industry magazine and state president of an industry association, so I have had a very good grounding in these issues, which has led me to the view that the proposal here for the creation of an office of the small business commissioner will not really do much to help small business. I appreciate that the minister is trying to bring change to the portfolio, and the feedback I get from the department, from my multiple and thousands of sources (I have thousands of sources in the department, but there are fewer than 100 staff—it is funny), is that the minister is very enthusiastic and has brought energy to the portfolio but that we need to focus on the things that will actually deliver results for small business.

I do not think this will deliver results; I think it will introduce a new layer of bureaucracy, a small business commissioner, into processes that already exist. Let me give the minister some examples. If there is a dispute between a builder and a customer, the master builders have a process for mediation where the person, whether it is a small business if it is a civil matter or a private entity, can go to the MBA, sit down with the builder and pay for the process. There is a mediation process.

A lot of small business associations have these mediation processes and they are effective. They are paid for by the parties, as I understand this process will need to be paid for by the parties. It seems to me that the government is trying to introduce a layer or process in the form of a small business commissioner for resolution of disputes that will superimpose on top of processes that industry associations already have in place.

The Hon. A. Koutsantonis interjecting:

Mr HAMILTON-SMITH: The minister in his response can pick up some of the issues I am raising. I urge all small businesses to consider joining the relevant association. If they are an electrician, a plumber, a retailer—in whatever business you choose to name—I urge them to join the relevant industry association, because that is a way for them to learn and for them to have access to services that may help them with disputes and particularly give them access to information.

Larger industry associations, like Business SA (and there are others), also host an array of services for their members—the motor traders, the civil contractors, and so it goes on. One of my concerns with the proposal is that the minister will impose a public servant to do what industry associations are already doing, and my experience with business is that it is best to leave it to business. Unless there is a compelling need to impose a new process or new office on top of small business, then do not do it, let business sort itself out.

I also make the point that the small claims court is awash with dispute resolutions between small businesses and small businesses and their customers. You only need to go down there and listen to proceedings. People are not getting paid, franchising agreements have been mentioned; there are all sorts of disputes which are referred to the courts.

A mediation process is available through the legal and court process, which also needs to be used. These processes have weight and authority, and I am not sure why we would duplicate those of the associations and the courts by imposing or creating a small business commissioner. I note that it is being done in a couple of other states, but just because it has been done in another state does not mean that it needs to be done here. We need to look at the requirement for this on its merits and we need to act only if there is a perceived benefit, if it is good and if it works for South Australia.

If there is money to be spent—and I think we are talking about millions of dollars to be spent on this office over the years ahead—can I urge the minister to spend it on the things that are really important to small business, like getting their taxation down, getting their WorkCover levies down, and by seeking to reverse some of the more punitive aspects of federal Labor's industrial relations reforms, which the retail industry is screaming about?

These reforms have caused burdens to be placed not only on businesses but on workers in regard to penalty rates, weekend work and so on. One only needs to look at the current commentary in the media space to see that both workers and employers are unhappy with the arrangements. We need to cut the amount of red tape, forms and licences that businesses have to endure. We could extend that to not only land tax but taxes on motorists, insurance tax, conveyancing tax and payroll tax.

If there is money to spend, I urge the minister to spend it on tax reform, because that will really help small business; that will get their costs down. Do not spend it on hiring new public servants and public officers to duplicate what the private sector, its associations or the courts are already doing.

I have visited small business sites. One that stands out in my memory in particular is an earthmoving business bidding for work on the Northern Expressway and the desalination plant. A man explained to me in very simple language that, compared to a business in Melbourne or Queensland (a site the same size as his), he was paying significantly more land tax on the property site, he was paying significantly more to buy and register vehicles and he was paying significantly more in WorkCover fees. I have the schedule here.

Salvage and recycling businesses are paying a 6.1 per cent levy rate, antique and used goods retailing businesses are paying 4 per cent. For heaven's sake, why? Road freight transport businesses are paying a 7.5 per cent levy rate, water transport terminals, 5.1 per cent, and stevedoring, 5.2 per cent. The average levy rate, when you include GST—and I note the government often leaves that off—is still around 3 per cent.

The fact of the matter is that we need to fix the WorkCover system, we need to get taxes down for these small businesses, we need to reverse the worst aspects of the Labor's industrial relations reforms and we need to cut the burden of red tape on businesses. That will really help small business. So, I simply say that, if there is money to spend, let us spend it in those areas, not on creating a new bureaucrat. I am not into bashing public servants; they do a wonderful job, but we are essentially talking about an official who will be duplicating—for the reasons I have mentioned—functions performed by others and, again, the government will be taking its advice from a public servant.

In matters to do with small business, the government needs to take its advice from small business and from industry associations. Take your advice from the people who are creating the jobs, creating the investment and making things happen in South Australia. Do not take your advice from public servants behind closed doors alone—important though that advice is—get out there and meet people at the coalface.

Issues have been raised by the members for Mawson and Light, and by others, about franchising. I understand and can relate to some of the concerns that have been raised about franchising. There are disputes between franchisees and franchisors, but I say to the minister: you need to speak to both sides of the equation.

It is not an easy life for a franchisor to ensure that franchisees are meeting their commitments, that the brand is being maintained, that the quality of the product is being sustained and that the business for all of the other franchisees is being protected and not ripped down by certain franchisees hurting other franchisees. I seek leave to continue my remarks. I understand the minister has a matter that he wants to bring before the house.

Leave granted; debate adjourned.

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