Thursday, 11 May 2017
Competition and Consumer Legislation Amendment (Small Business Access to Justice) Bill 2017; Second Reading
The Competition and Consumer Legislation Amendment (Small Business Access to Justice) Bill 2017 is about making sure our competition laws are better enforced by giving small business better access to justice. Labor wants to empower small business private litigants to bring litigation under part 4 of the Competition and Consumer Act without the burden of prohibitive legal fees. This bill represents a policy that we took to the last election. Since its inception the Trade Practices Act 1974, now the Competition and Consumer Act 2010, has had section 46. This is a key component of Australia's competition laws. It is designed to prevent firms with substantial market power from deliberately using that power to eliminate or substantially damage a competitor, prevent the entry of a competitor or to deter or prevent competition. Businesses have the legal right to take action under section 46 if a competitor is engaged in anticompetitive conduct. However, at the moment this is hard for small and medium-size businesses to do, even when there is a clear breach of our competition laws. We all know that the larger players have the money, the lawyers and the capacity to fight these cases. In some instances they have an incentive to drag these cases out. Even where the small business has a strong case they worry that if they lose or if they have to fold they could face huge legal bills. This means that smaller players are discouraged from taking action to enforce Australia's competition laws and, through this, they are discouraged from accessing justice.
There is a concern that there is an uneven playing field between large and small businesses in Australia. The Australian Competition and Consumer Commission has taken action in this space, although it has been suggested that this is insufficient relative to the number of allegations. The issue is addressed by the Harper competition review, which found small business access to remedies to be wanting, stating:
From submissions and consultations with small business, the Panel is convinced that there are significant barriers to small business taking private action to enforce the competition laws.
This bill will address the difficulties small businesses face in getting justice under Australia's competition law. It does this by two measures. First, it allows judges in the Federal Court to waive liability for costs to small business private litigants bringing these cases. We know that all too often small businesses do not take the big end of town to task, despite the fact that they may have a strong case. This is simply because they cannot afford to risk the costs of going to court, especially when their cash flow is already tight.
We on this side of the chamber want to make sure that small and medium businesses are on the same level playing field in our justice system as big business. This bill will do exactly that. It will be up to the judge whether a no-adverse-costs order is warranted. This empowers the small business owner with the knowledge that they will be able to argue their case without fear of a huge legal bill at the conclusion. If the application is not approved, they can then make a decision knowing that they are proceeding at their own risk. Either way, they will have greater up-front knowledge and certainty about the impact of proceeding with the competition case.
The second element of the bill is that small businesses will be able to go to the Ombudsman to get early assistance to find out whether they should consider going for these new no-adverse-costs orders. The legislation would allow the Australian Small Business and Family Enterprise Ombudsman to provide professional assistance as to whether the no-adverse-costs order is likely to be granted. This is to assist in the process of a private litigant requesting a no-adverse-costs order. While this will not be legally binding, the ombudsman will assist small businesses to better understand their prospects of successful action under the Competition and Consumer Act. The small business ombudsman, Kate Carnell has commented on this bill. She has said:
Regarding anti-competitive behaviour, the ASBFEO office remains committed to ensuring small businesses have every opportunity to compete on a level playing field. Labor's proposal regarding a 'no adverse costs order' has merit, and deserves serious consideration by all sides of politics.
This bill represents a practical change for small businesses and is in the public interest. By allowing private litigants to better bring action under the Competition and Consumer Act, anticompetitive behaviour by powerful interests will be better mitigated, helping to support Australia's competition policy framework. This is a sensible proposal to provide some support for small businesses without damaging competition in the process.
Unlike some other international jurisdictions, competition litigation in Australia is primarily by public in nature. In the United States, about 10 private cases are brought for each public case. In Australia, the ratio is about one private case for every three public cases. There are certainly a number of disincentives to bringing private litigation under the Competition and Consumer Act. The primary consideration is the potential liability of opposing costs, in the situation where an applicant loses a case. When the misuse of market power is considered, the opposing costs are likely to be large given the reliance on solicitors and barristers, as well as competition experts. Further, defendants in these types of cases tend to be both wealthy and powerful. This is distinct from litigants who, given the nature of their grievance, tend to be less powerful. We think this bill is an important step to improving competition, strengthening enforcement of our competition laws and giving small business greater access to justice. We think this is an area where enabling small and medium businesses to take action here would lead to a more competitive economy, more opportunities for small business and better outcomes for consumers.
Some have linked an effects test to this bill. Labor is opposed to the effects test. However, we know that other parties in this chamber have a different position on it. This bill is separate from the effects test. It ensures that when action is taken under Australia's competition laws, the playing field is more even between small and large businesses. I want to make it clear that this is a measure that both those in favour of the effects test and those against the effects test can support. This bill simply allows better access to competition laws for small and medium businesses. Labor certainly support strong competition policy; however, we are opposed to an effects test because we have serious concerns about its impact on competition. 'Effects test' is shorthand for a test that looks at whether conduct engaged in by a firm with a substantial degree of market power has the purpose, effect or likely effect of substantially lessening competition. This is dangerous economic policy. In our view, the effects test creates a legal risk for a business every time it seeks to lower prices for its customers. We believe that consumers are the losers under the effects test. The effects test risks making businesses afraid to compete, which ultimately, in the long run, hurts consumers.
There have been many inquiries into Australia's competition laws. Since 1974 at least 10 inquiries have considered the proposal of an effects test and have rejected it. Apart from Professor Harper's review, only one other inquiry has ever recommended it. In submissions to the Harper review, the effects test has been described as 'legally unworkable', something that 'will chill competition' and something that 'will create uncertainty for business'. We believe that it will deter investment by adding new layers of red tape and will not help competition.
We believe that this bill is a better approach to competition law, by making sure that small and medium businesses have greater access to justice, and are not discouraged from taking action under our competition laws where they have a good case. However, as I have said, the access to justice policy in this bill is distinct from the effects test. It can be supported by those in favour of the effects test—the government's position—and by those opposed to the effects test. It complements the competition laws in Australia by allowing greater access to them.
We know that small businesses make up 97 per cent of businesses in Australia and they are the engine room of the economy. They employ almost five million people and contribute in excess of $343 billion to the economy every year. This scale simply cannot be ignored. That is why we would have liked to have seen Malcolm Turnbull and Scott Morrison put more of a focus on small and medium businesses in this budget instead of focusing on the big end of town. Small businesses are crucial to Australia's economy, and the budget that we have just seen confirms that the priority for this government is very much the big end of town over those working hard to grow their businesses and to create more jobs in their communities. When small businesses receive the support they need then they are able to grow, which in turn creates jobs and allows them to contribute more to the national economy.
Unfortunately, from our point of view, this budget is a missed opportunity. It has not addressed some of the most significant issues for small business. For example, it has not addressed issues including rising energy costs, delays in payments times and the delays in the rollout of the NBN. These are issues that are consistently and constantly raised with me by small businesses across Australia. We did welcome the decision to extend for one year the small business instant asset write-off. However, we are disappointed that the government has not acted to stimulate jobs or growth or to address the all-important issue of cash flow for businesses. Waiting for payments for supplies or services delivered is debilitating for small businesses right across Australia, and this budget, from my reading of it, has made no effort to address the 'payment terms' problem exposed in the Small Business and Family Enterprise Ombudsman's recent report into the practice.
In order to compete in a global economy, small businesses need access to high-speed internet to grow their business and sell their products. But, again, this budget provides no solutions for Malcolm Turnbull's substandard National Broadband Network. This inaction simply makes it inevitable that Australian small businesses will continue to struggle with one of the slowest and most expensive internet services in the developed world.
The budget also leaves small businesses to fend for themselves on increasing energy prices. We have seen a complete absence of leadership from the top of this government on energy policy. This has a real impact on small businesses. In the last six months it has been mentioned to me at almost every meeting I have had with small business. As the contracts that they have to enter into for the next three years or so arrive, some businesses have raised with me the prospect that their annual energy bill is going from, say, $20,000 a year to $90,000 a year. I do not know how the government expects small businesses to absorb that kind of increase in a year. There is no response to this from the government. The lack of any consistent national policy, move to an emissions intensity scheme or investment certainty that is required around renewables is a policy void that is impacting on small businesses. They are raising it with me. They are extremely concerned and they want to see a response from the government, and it was absent in this year's budget. Wholesale power prices have doubled under this budget, and it looks like small businesses and households will continue to have to pay the price for this government's head-in-the-sand approach to delivering a national energy policy.
This bill before us today is all about levelling the playing field when it comes to access to justice for small business. We have consulted on this bill. It was a policy that we took to the last election. My predecessor in this position, Michelle Rowland, consulted heavily on this with a range of small-business stakeholders. Since taking up this portfolio, I too have met with not just industry associations but small and medium business owners themselves to talk through Labor's policy in this regard.
I have to say that, at the small business level, the effects test itself has not been raised with me as a top priority. On the issue of creating a level playing field—this perception, rightly, and wrongly at times perhaps, that small business does not get treated fairly is certainly one that is alive and thriving in the small business community, and I think there is a lot of merit to that argument. There is no doubt that small businesses want to see some improvements to the legislation around creating a level playing field, and the feedback that we have got from stakeholders of this bill supports it. Even those stakeholders who support the effects test also want to see this legislation get through; they see it as complementary too. And, for those that support an effects test, it is not necessarily an either/or scenario. We believe that this is the best way to go, and we do not support an effects test, which is why we have developed this legislation to deal with the issue of a level playing field and have that debate here.
Certainly, small businesses think access to justice is a difficulty for them, as well as the affordability of access to justice, which is why this bill goes particularly to that point. Many have raised with me examples of where they would have considered pursuing legal action or just taking legal advice, but the costs of that and the risks to their business resulted in them deciding to just cop it, ignore it or move on. That is exactly what this bill tries to address.
There have been very concerning stories around small-business loans, for example, This has come up across my portfolio into financial services, and small-business loans are something that I think we need to do further work on. We note that there is an initiative in the budget around a streamlined complaints mechanism which will allow small-business complaints, particularly about their loan arrangements, to be considered. We are having a look at the detail of that over the next few days and we will have some questions about it at estimates.
But there is no doubt that there have been some extremely concerning stories about small businesses doing all the right things, meeting their loan obligations, making all their repayments, and then quite unfairly losing their businesses because of the actions of particular banks. I have spent a fair bit of time with people who have gone from being extremely successful business owners with long histories in the business community, with good records as employers and as contributors to the community, to having the rug essentially pulled out from under them—through, seemingly, no fault of their own—and having to refinance their loans or having their loans called in, and it has absolutely crippled them. In some instances, it has bankrupted them. Not only has the bank taken their business; it has taken their house. It has taken their super. In some instances, the banks have taken everything and left them destitute. We saw another example of that on 60 Minutes on Sunday night, with the case of the Maloneys.
I think as parliamentary leaders of the country we must look at every way we can make sure that small-business owners are not placed in that position, because there should be protections there, or, if they are, that there are protections provided to get a fair hearing, to be treated fairly at all times and to make sure that, if it gets to the point where there is a dispute, that dispute is heard quickly and, where able, there is compensation for harm that is caused. The Small Business and Family Enterprise Ombudsman has looked into this and made some comments on it. This is something that we need to pursue further. Of course, our position would be around a banking royal commission, but what I am saying in terms of running alongside this bill is that there are other ways that we need to look at making sure that small business is being given a fair go. We cannot take our eye off the ball. This does one thing, but there are many other ways that we need to support small businesses and make sure that they are treated fairly, treated with respect, and that their contribution to the community is acknowledged and they are not treated badly, particularly by the banks.
I am pleased that the Labor Party—at least their rhetoric—is about giving small business a fair go. I applaud that stated aim. I am pleased that Senator Gallagher, who has introduced this bill, has talked to small business in Canberra—one of the most privileged cities in Australia, I might add, and good luck to them—but I wonder how many small businesses Senator Gallagher has spoken to in Rockhampton, Mackay, Ayr—where I live—Townsville, Charters Towers, Clermont, the Bowen Basin towns, Dysart and Moranbah. I wonder how many small businesses she has spoken to there, because, if she had spoken to small business there, she would understand they are really struggling because of the downturn in the mining industry and the relentless campaign by the Greens to stop coalmining—a campaign which seems to be supported in this chamber by Labor senators and, I am disappointed to say, Labor senators from Queensland.
Small business in the towns that I mentioned in my home state of Queensland are desperate to see the Adani mine go ahead, and the only thing holding it up at the moment is the uncertainty on the native title issue, which has been addressed by the government and by Indigenous leaders across Australia. Agreement has been reached to fix that issue, but it is essential that it be done urgently and immediately, which is what Indigenous leaders want and what the Queensland state Labor government wants. If the native title issue were made certain, Adani could go ahead with more confidence and small businesses in those northern towns would be delighted because it would be a lifeline thrown to many of them who are now looking at their life savings and their small business going down the drain. So, Senator Gallagher, I urge you, if you are serious about small business, to slip up to Central and North Queensland, talk to small businesses there and see how important Adani is to them.
The government has asked the Labor Party to sit tomorrow, on a Friday. I appreciate that is a holiday for most Labor senators. We just want them to give up one day of their holiday and sit tomorrow in this chamber so that we can fully debate the native title amendment and hopefully have it passed, because the Labor Party say they support it. Certainly, the Liberal and National parties support it. I understand One Nation supports it and I understand that the Liberal Democrats support it. So it should fly through the chamber if we have a whole day's debate on it tomorrow. Will the Labor Party sit and pass that legislation, which will help Adani, which will help small business, which Senator Gallagher has spent 20 minutes telling us she supports? Will they sit tomorrow? No—tomorrow is their day off. They have a long weekend. They do not want to work tomorrow. One can only ask why. Clearly, within the Labor Party there are deep divisions over the Adani issue and the Labor Party are doing everything in their power to delay this so that Adani will walk away and the mine will not go ahead. Could I ask Senator Gallagher again: what will that do for small business in Rockhampton, Gladstone, Clermont, Moranbah, Dysart, Ayr, Bowen, Home Hill, Townsville and Charters Towers?
They are looking to Adani to save their businesses.
It is not only the Labor government in Queensland that is very keen to see this happen; Labor mayors of Townsville, Rockhampton and Gladstone are also urging that this native title issue be made certain so that Adani can go ahead and small business will be able to look to a bright future. I hope Mayor Strelow, the Townsville mayor and Mr Burnett in Gladstone—Labor mayors—will be on the phone to Labor Queensland senators saying, 'Please give up a day of your long weekend and sit tomorrow so that we can pass this legislation, so that we can give certainty to the native title owners in that area, who desperately want to see this go ahead.' Why? Because it means jobs for their people. They understand this. That is why they have, by an overwhelming majority, already supported this. It is very important for Indigenous businessmen, and there are a number of very good Indigenous small-business people in North Queensland. They are looking to the Adani project to give their small businesses a boost. But what does the Labor Party do? It takes a day off tomorrow when we could be dealing with the native title legislation and having it passed through this parliament.
Again I plead with Premier Palaszczuk: 'If you are serious'—and I think you are because I know your government desperately needs the revenue from Adani—'please give your Queensland Labor senators'—and there are only four of them so it will not cost you a lot of money in phone calls—'a call and tell them Queensland is desperate for this.' Remember, the Senate is the states house. Labor senators from Queensland should be standing up for their state. This is not a Liberal-National Party person saying this; this is the Labor Premier of the state of Queensland desperately wanting this passed, and yet the Labor Party senators in this chamber want to ensure they have a long weekend by having tomorrow off.
I am pleased that the Labor Party are talking about helping small business, but the example I have just given clearly is like so much the Labor Party do: it is not what they say—talk is cheap; it is what they do. All those small businesses in my home state of Queensland are desperately awaiting this, and what do the Labor Party do? They turn their back on them. I appreciate that Labor has no senators outside the south-east corner of Queensland and their small business minister comes from Canberra, but I urge Queensland Labor senators to get out of the south-east corner and I urge the shadow minister to get out of Canberra and talk to small businesses in those areas and see what they say about Adani and the native title thing. If you were serious in your job, you would do something to make sure that that goes through.
The government on Tuesday night announced a budget that will set the growth in the years ahead in a positive way for Australians. In this budget the government has continued the very substantial concessions to small business in last year's budget. If the Labor Party want to help small business, they will do two things: (1) allow the Adani bill to pass through the parliament tomorrow, by sitting an extra day, and (2) support the budget legislation when it comes forward. As we all know, the Labor Party have not been very good at passing budget measures in the past, but we do ask them to support the extended instant asset write-off that was announced in the budget on Tuesday night. The budget extends the $20,000 instant asset write-off for a further 12 months to 30 June 2018. The turnover threshold will also be lifted to $10 million. This measure will substantially improve the cash flow for small business, helping them reinvest in their businesses, replace or upgrade their assets and employ more people.
The Turnbull government has also committed budgeted money—budgeted money, as opposed to what you will hear from Mr Shorten tonight, who will throw around promises of money without paying for those promises; he will no doubt put it on the big credit card that Labor is very good at operating—to reduce red tape by providing up to $300 million to states and territories to remove unnecessary regulatory barriers. This builds upon the $5.8 billion of red tape reductions delivered by the coalition government.
While I am on this subject, I divert slightly to the low-value GST bill which is currently before the parliament and on which the committee has reported with some comments by the chair. It is a committee on which the government has a majority, but that does not stop us Liberal and National Party senators from criticising or making suggestions to government legislation where we think it appropriate. Senators may have read where the government majority committee unanimously has recommended that the starting date of that bill be delayed by one year to allow agencies and businesses to get ready for it.
The committee also raised an issue in the context of small business and having the shippers actually collect the new tax on goods under $1,000 rather than the vendors, for many reasons which I will not go into here. But I think the government has a different view—although the committee is seeking clarification of this—in that, because the shippers already collect the money for goods over $1,000, why can't they do it under for goods under $1,000? That is a question that the committee has raised, and I look forward to the government explaining that. It seems to me that it would be better to continue in the same vein. I only mention this because I think any senators who go and talk to small businesses outside Canberra will understand that small businesses have been doing it tough in the face of competition from overseas suppliers of goods.
You can understand why buying your goods online overseas is attractive to many Australians, because they do not have to pay the 10 per cent GST. They can get the same goods from the shop downtown, but they would have to pay the 10 per cent GST. Whether you like the GST or not, it is there and it is part of Australian life these days. But, if you buy overseas, your overseas competitor does not have to bother about that 10 per cent. So, for a start, the overseas competitor can sell the goods at 10 per cent less. The low-value GST bill is a way in which the coalition is trying to help small businesses.
I walk around many towns in Central and North Queensland and it is really distressing to see the number of closed shops and to think that many people have put their life savings into these small businesses and they have gone bust. There is a lifeline in Queensland, and that is called Adani. That must go ahead for many reasons but certainly small business in those areas would be delighted to see that happen. I just cannot understand why the Labor Party will not sit tomorrow so that we can debate the Native Title Amendment (Indigenous Land Use Agreements) Bill, which is the last real hurdle holding up Adani going ahead. If we could deal with that tomorrow—the Labor Party say they agree, One Nation agrees and the Liberal Democrats agree—we could get that bill through, Adani could have confidence to go ahead, and small business in central and north Queensland would be delighted. But we cannot get the Labor Party to sit tomorrow—I don't know, they might be used to three-day weekends! But please, why don't we sit tomorrow? You have paid for it, and we could deal with that bill, debate it fully, and hopefully get it passed.
If anyone happens to be listening to this debate and they happen to be from Queensland—and they will understand just how important this is to Queensland, particularly to Queensland's small businesses—then I would ask them to get on the phone and ring the four Queensland Labor senators. There are only four of them; it will not cost you much in telephone costs. But get on the phone to them. It might be a trunk-line call because they are all in Brisbane, and if you do not happen to live in Brisbane there might be a little bit of extra cost, but there are only four of them. Get on the phone to them and say: 'This is important for small business in Queensland, this is important for Indigenous small business in Queensland and this is important for Indigenous workers in Queensland.' It is important for all workers. It will mean 10,000 new jobs in an area which is currently struggling with substantial unemployment following the mining downturn a couple of years ago.
This bill, the Competition and Consumer Legislation Amendment (Small Business Access to Justice) Bill 2017, will not really do anything for small business—
I am sorry Senator Gallagher; perhaps they do not understand that what you are doing is encouraging more litigation. As a former lawyer, I tell you that if you start on litigation, the only people that will win are the lawyers. Yet this is what the Labor Party is doing; perhaps these days they have a lot of lawyers who are members of their party. That might be why they think it is a good idea.
The government has embarked on another course which we think will help small business. One of the provisions of this bill obliges the Australian Small Business and Family Enterprise Ombudsman to provide legal advice on the prospect of obtaining an order of no costs. That is not good public policy—we should not have government agencies giving legal advice of that nature. If a party took up litigation on the basis of such advice from the ombudsman, and if the courts did not grant this order in their favour, can the party withdraw from the litigation without cost penalty? It is also not clear what liability the ombudsman's office would have for providing legal advice which turned out not to be accepted by the court. So there are a lot of flaws in this bill; unfortunately, time does not allow me to go through all of them.
The government is trying to help small business by giving confidence to the Adani mine, which will really help small business. We are also bringing in tax cuts whereby 3.2 million small businesses will pay less tax as of this current financial year, and more small businesses will be able to access small business tax concessions as a result of the change to the definition of small business, raising the threshold from $2 million to $10 million. Those tax cuts were legislated for in May this year, and that will really help small business. We are reforming the competition policy, as suggested in the Harper review in section 46 on the misuse of market power; we are levelling the playing field for small business, to encourage competition and greater productivity; and we have extended the unfair contract term protections to small business entering standard form contracts—that provision commenced in November last year.
It is no good for Labor to bring forward these bills which they know will not be passed. It is no good for Mr Shorten to get up tonight and promise money he does not have. If they want to help small business, Labor need to support the government's proposals for small business in the back tax—and please, can I ask the Labor Party: if you are serious about small business, sit tomorrow! Curtail your long weekend, and do what you are paid to do: come into this chamber tomorrow and debate this, so that we can get this bill through. It not only benefits Adani, workers and Indigenous people, it also benefits the steel mill in Whyalla—I cannot understand why any South Australian senator would oppose that.
I will not be lectured by Senator Macdonald on the issue of supporting Australian industry and Australian steel—
Senator Ian Macdonald interjecting—
Every time Senator Macdonald opens his mouth on this, it is extremely unhelpful. I am one of the few people in this chamber who actually genuinely likes Senator Macdonald—
No; I acknowledge his long contribution and his advocacy for the people of Queensland, and I do have genuine respect for him. But if he was fair dinkum about the issue of the steel industry and about government procurement—the federal government did not commit yesterday unequivocally to use Australian steel in the billions of dollars they will be spending on rail in this country. They did not commit to that. Instead, we hear all these protectionist arguments.
Every steel contract is important. But in the totality of what is occurring in the Australian steel industry, there are a whole range of measures: weak anti-dumping laws, and weak laws when it comes to procurement—which have been dealt with to some significant degree by the changes in procurement laws that my colleagues and I negotiated with the finance minister a number of months ago. But we need to—
Mr Acting Deputy President, that is very unhelpful in relation to this. As much as I genuinely like Senator Macdonald, that is not helpful.
This Labor bill, the Competition and Consumer Legislation Amendment (Small Business Access to Justice) Bill, is about access to justice. My colleagues and I wholeheartedly support this bill. The intent of this bill is to do something about the chronic lack of access to justice in this country when it comes to dealing with disputes, particularly commercial disputes. As I have done before, I disclose that I am the proprietor of a very, very small law firm with 2.6 lawyers working in it, where we do principally personal injuries work and a bit of commercial work. From my time as a practising lawyer—and I still have a practising certificate, so that I can do my pro bono work in gambling cases and the like—I know that the justice system in this country is broken when it comes to access to justice. There are so many people in this country who have a genuine dispute and who are told by their lawyers: 'You have a 70 or 80 per cent chance of winning.' But they still will not go ahead with that case because of the risk of adverse cost orders which could cause them to lose their home.
But it goes beyond that. There is an independent supermarket proprietor—I will not name that person—who is very successful; he has a significant turnover and employs many, many people in more than one state. He tells me that if Coles and Woolies do something, whether it is predatory pricing or some other conduct, which his lawyers say could lead to a successful action for abuse of market power—under our current laws—his lawyers tell him: 'You have a really good chance of winning. But, by the way, it is going to cost you $3 or $4 million to run it, and you could be up for adverse cost orders of millions of dollars more.' That is not a justice system.
We know what the Productivity Commission said back in September 2014 when they looked at access to justice arrangements. They said:
There are widespread concerns that Australia's civil justice system is too slow, too expensive and too adversarial.
That goes to the nub of the problem that this bill seeks to address. We know what has happened in other countries, including in the UK. My understanding is that this bill picks up on elements of best practice, so that we can have a system where there are filters and safeguards in place before an action is brought, to deal with frivolous and vexatious actions; a system where you need to show that you have a prima facie case where you have a matter that has got real merit in it but that is subject to dispute.
Getting rid of adverse cost orders will not mean that it is going to be a pushover to deal with these cases, but it will mean that at least parties will know what they are up for in terms of their own costs. It will mean that they will not be subject to being 'deep-pocketed' by a much larger corporation that can drive the litigant, the plaintiff, into the ground. This bill attempts to address that. The bill, in terms of the specific provisions, may need some fine-tuning, may need some extra work done to it, but the principle of the bill that has been introduced here by Senator Gallagher is a very good one. That is why we support it.
Can I also say, on behalf of my colleagues, that we also support, with some amendments, the 'effects test' that the government is putting up, in the Competition and Consumer Amendment (Misuse of Market Power) Bill 2016. It is something that the Nationals have been outspoken on and something that I have worked on for many years with people like former Senator Joyce, now the Deputy Prime Minister. We think that will make a real difference for those small and medium businesses in disputes involving large corporations which abuse their market power. But we think that that bill will be so much more effective, will do what it is meant to do, if it incorporates the elements of this bill.
To Senator Gallagher, I say, 'Imitation is the sincerest form of flattery.' We are going to flatter you by moving a whole range of amendments based on this bill to the government's effects test bill, because we think that is the right thing to do in order to make that piece of legislation work much more effectively. It is no good having a rolled-gold piece of legislation on an effects test. The effects test needs to be modified. It has been constrained in its current form in terms of the government's bill. If we have these amendments in substance, it will mean that the bill will have genuine teeth, because people will be able to have their day in court without the fear of being bankrupted by taking a meritorious claim to court.
That is why, as a team, we support this legislation. It is a worthy piece of legislation. It is long overdue. I congratulate Senator Gallagher for moving this legislation. This is the way forward. If you want to have effective competition and consumer laws in this country, you must have an effective system of access to justice, and this bill goes some considerable way to achieving it. That is why we so wholeheartedly support it.
I want to speak to the Competition and Consumer Legislation Amendment (Small Business Access to Justice) Bill 2017, but I feel it is important to address some of the comments that have been made by some of the previous senators in this debate. I will start by echoing some words from Senator Xenophon that he said towards Senator Macdonald—that he is very fond of the senator. Senator Xenophon, I am one of the many senators who are very fond of you, but even I at times have to question your judgement when it comes to friends! Senator Macdonald appeared to spend a large proportion of his time speaking on the bill. I will be speaking a little bit more broadly about other issues. I will take the precedent that we are able to have a wide-ranging debate on this issue.
I want to note the incredible work of Senator Gallagher from the Australian Capital Territory. I do not quite understand why this became a point of attack. Yes, Senator Gallagher is from the ACT. While at times—especially when we have to sit over long winters—we all question the ACT for many different reasons, I do not understand the idea that, because she is a senator from the territory that she represents, speaks to people from the territory that she represents and was the Chief Minister of the territory that she represents, it somehow means that she cannot possibly have had conversations with people outside of the ACT and cannot possibly have had conversations with people in Queensland or other places. I note that Senator Gallagher has actually spent more time in Queensland than the Treasurer of Australia. The Treasurer has not even visited Queensland this year, let alone the Northern Territory, which he has not visited, it appears, since becoming Treasurer. I cannot speak to Western Australia and other states.
I want to commend Senator Gallagher and her predecessor from the other place, the honourable member for Greenway, Michelle Rowland, for the work they have done on this bill. Senator Xenophon touched on this quite well: fundamentally, we in this country have a legal system that is not fair in practice, even when at times it may be fair in theory. There is a huge disconnect between what is the law and what is access to the law. What this bill attempts is to do what it can to close that gap in the legal system—it is not going to be perfect, because there is no perfect solution. We pass bills constantly in this place, and they all seem fantastic and great and they are equitable and fair and we have these great principles of 'everybody is equal before the law', as we should have those principles. At the same time we have a legal system where access to justice makes a big difference. In this particular case, access to justice relates to the power of large corporations, as opposed to the power of small businesses, when it comes to being able to access those legal remedies. That is the real problem, the real challenge, that we have to face and that this legislation attempts to face.
Here is the reality. I come from a family of small-business people. My parents had a small cake store in Castle Hill in the north-west of Sydney when I was growing up. They now own a small business in the Queen Victoria Building—a King of Knives kind of retail outlet. When you deal with small—
I will take that interjection. Senator Fierravanti-Wells wants to know whether the fact that my parents own a knife store is what has made me so effective in the New South Wales Labor Party. I remind the senator that the art of using a knife is knowing when not to use one, not knowing when to use one.
There are two separate debates that we are going to have. There is going to be the debate around the effects test. I think the Labor Party position on that has been quite clear. We do not believe the evidence is there and we do not believe that it is the right approach, but there are others who support the view. I have heard a lot of arguments about the effects test. I think it is an important debate to have. It is not mutually exclusive from this bill and it is not mutually exclusive from the debate we are having. They are two separate pieces of legislation. I believe access to justice in fact is a far more important principle than what we are looking at. Frankly, the idea that larger businesses are able to use the threat of the costs that may be incurred from legal action to prevent people from using their rights under the law is a highly concerning one. Let us not kid ourselves: it is a tactic that has been used, not just in business cases. Those of us involved in politics have seen these kinds of intimidatory tactics used, especially around defamation and other areas. But a tactic of big businesses with big pockets is to tie up and make the legal process so difficult and expensive for a smaller business as to prevent them from being able to get the legal remedy that they may seek, to prevent them from being able to get the outcome they may want.
When you as a smaller business are dealing with larger institutions that have their own army of lawyers, that have the sunk cost of in-house counsel—let us deal with a hypothetical: the type of situation where there may be a dispute over a brand or a site or a location of a business. The idea that some small business with a handful of staff is really going to be able to compete at a legal level with the enormity of the legal representation that is presented by some of these companies creates an unfair playing field. While the legislation itself, and how it is written, may not be the problem—the legislation itself presents everyone as being equal before the law—we all know and have seen used time and time again the tactic of having lawyers and access to justice as the vehicle for preventing equity and preventing justice from being carried out.
This bill looks at restoring that balance. It will never be perfect. We are never going to have a system that will perfectly give equal opportunity before the law, but this bill looks at how much of that gap can be closed. It is about making sure our competition laws are better enforced by giving small business a level of access to justice that they do not have.
Businesses have the legal right to take action if a competitor is engaging in anticompetitive conduct. However, it is so hard for businesses to do that even when there is a breach of competition laws, as the justice level between them is so stretched. I think the Australian Competition and Consumer Commission, the ACCC—who we will have before our estimates in the next few weeks and we will have an opportunity to go further into the conversation we have with them—have highlighted their concern at the idea that the access to justice is not really there. This bill will address the difficulties small business face in getting that justice, because it does two really important things.
Firstly, it allows the Federal Court to waive liability for costs to smaller business private litigants bringing these cases. Senator Xenophon presented a figure from his life experiences as being those who have a strong case and a good case, but you are never sure before the law, nor should you be—there is always a risk involved when there is a lawyer. A good lawyer may advise that they have an 80 to 90 per cent chance, but that 10 per cent chance of having costs awarded against them may be so significant that they are unable to pursue that action. Secondly, businesses will be able to go to the ombudsman to get early assistance to find out whether they should consider going for these new non-adverse cost orders. In fact, there will be an independent procedure for them to be able to get the information that they need to determine whether they should or should not pursue this.
This is an important equity measure, an important step to be taken for equity. Senator Macdonald spent the whole of his 20-minute speech talking at length about the small business contribution and the small business relationship between the Adani coalmine in northern Queensland—sorry, I will be fair, the proposed Adani mine in northern Queensland—and its impact on small business. The point he was making was about the flow-on effects that a project like that will present to small businesses. I believe that if we are talking about small businesses and we are talking about equity and fairness, then the big issue of fairness that we need to address—and this bill goes in part to start doing that—is the inequity between larger corporations and how they pay their tax and how small businesses, which do not have those legal structures, do not have those opportunities.
Senator Macdonald went on at length about Adani and about their supposed record of being great corporate citizens. I feel that it would be only fair to make a contrast with a company like Chevron, that we have had the opportunity to hear from recently. At the end of April the new managing director of Chevron Australia, Nigel Hearne, fronted a Senate inquiry about corporate tax avoidance held in Perth in Western Australia. This whole notion of inequity between small business and big business was really brought to light for me by seeing a situation where you have a company the size, nature and structure of Chevron that has paid no corporate tax last year, will pay no corporate tax this year, paid no PRRT—petroleum resource rent tax—last year, paid no PRRT this year and will likely not be paying it for many, many years into the future.
When we talk about justice and equity for small business we have to ask ourselves: where is the justice and equity when the small businesses of Australia are paying their taxes, paying their fair share, and the larger corporations are able to structure themselves in ways that allow them not to do so? My issue with the structures of companies like Chevron is not that what they are doing is illegal, as I do not believe what they are doing is illegal. My concern is that in many, many cases what they have done has been legal; what they have done has been allowed under our laws. Sure, there have been some shark tactics—there are matters before the Federal Court at the moment. There are issues that are being challenged by the tax office, and I give the tax office credit for doing that. But these are the real issues—these are the equity issues that have to be addressed.
At the moment, the oil price is $50 a barrel. At today's price, Chevron and other multinational corporations will not pay PRRT, petroleum resource rent tax, for the whole life of the projects. We are giving away this entire resource without getting back the tax that is meant to be there for us to be able to recoup something. How is that fair for small businesses, when they do not have those opportunities? How is that equitable?
We heard from the CEO of Chevron himself, Mr Nigel Hearne. He was previously the CEO of Chevron Appalachia, and under his watch there was an explosion at a Chevron-owned oil well in Pennsylvania that killed a 27-year-old contractor who was working on the site. It also forced nearby residents to be evacuated. Five days after the explosion, when the fire was still smouldering, Chevron sent letters to local residents who might have been impacted and offered them a voucher for a large pizza and a two-litre soft drink. After this incident, the state of Pennsylvania's Department of Environmental Protection issued Chevron with one of the largest fines it has ever levied. The parents of the killed worker reached a $5 million settlement with the company after the state confirmed the site was not properly supervised.
Before that role, from 2011 to 2013 Mr Hearne was the general manager of Chevron's refinery in Richmond, California. This is one of Chevron's largest refineries, and, under Mr Hearne's watch, a fire at the refinery nearly killed 19 workers and caused 15,000 people to seek hospital treatment. According to a report by the US Chemical Safety Board, a federal government agency, a pipe rupture released flammable high-temperature light gas oil, which then partially vaporised into a large opaque vapour cloud that engulfed 19 Chevron employees. The cloud ignited, and the explosion caused a large plume of vapour, particulates and black smoke, which travelled across the surrounding area. There was an emergency warning for three nearby cities in the following weeks, and approximately 15,000 people sought medical treatment at nearby medical facilities, for ailments including breathing problems, chest pains, shortness of breath, sore throat and headaches. California's Attorney-General and the local District Attorney brought criminal charges against Chevron for the incident. Chevron pleaded no contest to six charges, agreeing to increase oversight by state agencies and pay $2 million in fines and remediation costs. Separately, the state's occupational safety and health regulator fined Chevron $782,000 and issued six 'serious' and nine 'wilful' violations for the incident. Less than three weeks after the incident, health and safety inspectors were back at the refinery and issued five 'serious' and two new 'wilful' violations, with fines of over $173,000. This is the track record of the CEO of Chevron in Australia.
We are debating here how it is that there is one set of rules for larger corporations, one set of standards for the big multinationals, and yet, when it comes to small business wanting access to justice, access to decency, access to fairness, that is not present. There is a huge gulf between the ways in which different groups of people, different groups of businesses, are treated in our society. Especially when it comes to justice—and I believe justice relates to tax justice as well as legal justice—we should be asking ourselves: why is it not fair; why do these gulfs exist; why is there this gap?
The bill that we have before us is not going to fix all these problems. The bill that we have before us is not going to fix the huge inequity between small and big business in Australia. No one piece of legislation will. But it goes a step in the right direction towards providing justice. It goes a step in the right direction towards creating a fair, more equitable, more even playing field insofar as it relates to being able to get court access and court justice. This is a bill that represents a commitment that the Labor Party took to the last election. It was developed by wide consultation with a lot of businesses, many of whom said that, at a practical level, the theoretical structure of the law, as important as that is—and everyone believes that is important—it is the practical reality of how it is implemented on the ground that really affects the day-to-day lives of different businesses and that really affects the day-to-day lives of business operators. Where we need to be looking at is not just having the perfect laws in theory passed through our parliaments but making sure that everyone has equal access to that.
Equity in business does not just stop here. There is a huge equity issue. I note that Senator Scullion from the Northern Territory is here and he can talk at length about the challenges of inequity when it comes to, particularly, Indigenous Australians and others. I think we in this parliament do a very good job in many instances in framing laws that we believe are fair and equitable, and that are fair and equitable. But the challenge always is at a delivery level when we leave a chamber like this or a place like parliament. Let us not kid ourselves; we are all very privileged to be here and we are privileged people. Having that same kind of access on the ground on a day-to-day basis and having that same kind of representation before the law—that is always a really big challenge that we struggle with.
In conclusion—and I note I have used up my time—this is a bill that is about making sure competition laws are better by giving a little bit of a leg up to small businesses in the unfair fights that they have to face. Businesses who have a right to access and go laws often do not do so because of the fear of the costs that are associated with it. Even when small businesses have a strong case, they have to be very careful about the fact that larger players have a lot of money and a far greater capacity to fight these cases.
There is a worry that if they lose their case they could face large bills and be driven out of business. They do not have the same kind of risk profile that larger businesses, especially those that have huge in-house legal teams that are already sunk costs, are able to deal with. I note that the ACCC has been very strong on this issue. I note that other consumer groups have been very strong on this issue. I note that the small business lobby has been very strong on this issue.
I commend this bill. I believe it is a bill that should be supported by the Australian Senate.
Before addressing myself to the Competition and Consumer Legislation Amendment (Small Business Access to Justice) Bill 2017, I propose to spend some moments on the importance of the Native Title Amendment (Indigenous Land Use Agreements) Bill 2017. Also, I foreshadow that I will be responding to what I believe to have been a highly inaccurate and cowardly statement by Senator Dastyari about Chevron and its now managing director, Mr Hearne. I think it is a disgrace that a person under parliamentary privilege would come in and make the statements that he has made. But I will get onto that in a few moments, because he is wrong. This chamber and those listening need to know just how wrong and how dastardly Senator Dastyari has been in that attack on Chevron.
Let me go, if I may, because it is directly relevant to the opportunities in small business access, to that associated with the native title amendment bill that is before us. I have to urge everybody in this chamber that, before we rise and return to our home states and territories, we have to address this anomaly. It comes about as a result of the fact of a decision of a justice in McGlade in the Federal Court in Perth recently in which he overturned what had been the decision of a justice in Bygrave previously in relation to native title claims, particularly the percentage of native title claimants associated with them. In Bygrave, the justice had the view that so long as there was greater than 51 per cent of native title claimants then it was possible to proceed with what is known as an Indigenous Land Use Agreement. Where the McGlade case has caused the change and has caused the ruction, is McGlade has effectively required 100 per cent of claimants to be in agreement before anything can proceed.
Yes, it has something to do with Adani mine. But, by Jove, that is one of the very few. I learned from my very good colleague Senator Scullion that there are some 126 agreements around Australia associated with native title that are affected by this decision. They are going to affect the benefits to native title claimants associated with those Indigenous Land Use Agreements. These land use agreements are themselves, of course, voluntary. They are providing an opportunity for native title groups to use those rights in beneficial ways, particularly in relation to economic development to provide certainty for all parties doing business on native title land. And if Senator Dastyari and his colleagues, and indeed everyone in this chamber, is genuinely interested in ensuring the continued benefit to native title recipients under those ILUAs then it will be in their greatest interests to make sure we do not rise from this place until we deal with it.
There is a bill before the chamber. It will address the concerns that McGlade has raised, and it is incumbent on all of us. If we fail to, each one of us must go back to those native title groups, including those in the Indigenous areas as well as the companies with whom they deal, and explain to them why there is now no certainty. I know on a personal basis a colleague who, only this week and next week, is associated with some negotiations on native title. This particular person is in the eastern states this week representing the interests of Aboriginal people, and next week in the North of Australia he will be representing the interests of a mining company. He is an absolutely eminent man of great integrity, but I know that this negotiation is now on hold whilst we deal with this issue.
It is the case that a grant that is made under an invalid Indigenous Land Use Agreement will itself be invalid against native title—that is in my state with the Noongar people for whom this particular judgment was made in the Federal Court by Justice McGlade. It will have application right around Australia and, I dare say, the islands adjacent to us. This is of critical importance and, if people really want to do something in the small business space to continue to encourage Aboriginal people under these ILUAs, to continue to encourage other companies to deal with, to participate in and to work for the improvement of people in those communities, it is essential that we deal with this native title amendment Indigenous land act.
I appreciate the fact that Senator Dastyari has remained in the chamber—I thank you for that. Senator Dastyari made the comment a few moments ago—and, if Hansard proves I am wrong, I am willing to be corrected—through you, Acting Deputy President, that Chevron had paid no corporate tax in the last couple of years. I can tell you that—perhaps wrongly—I used a mobile phone in the chamber to check only in the last few minutes with the senior executive of Chevron of Australia, who assured me that in the last four to five years that company has paid no less than $4 billion of tax. If you listen to Senator Dastyari, you would be invited to draw the conclusion that company had paid no tax. Those were the words that were used: no corporate tax paid. They were your words—through you, Acting Deputy President. Senator Dastyari should know about the petroleum resource rent tax. It is a super profits tax after you have met and have reimbursed certain costs. He is making the comment that, in the projects with which Chevron is associated, they have paid no PRRT. For heavens' sake, the project at Gorgon on Barrow Island has only got two of three new LNG trains up and running. The project at Wheatstone has not yet commissioned its first one. How in heavens' name would a person who pretends to have the economic knowledge that Senator Dastyari pretends to understand and believe and stand up in this place and draw the inference that this company has paid no PRRT when indeed they have not yet got to the stage of making a profit? What Senator Dastyari failed to say was that this company, Chevron, which he is so keen to run down, has invested no less than—
Isn't it amazing? Did I interrupt Senator Dastyari when he was attacking a fine company investing billions of dollars in my home state? No, I offered him the courtesy of silence. But the words that I am saying are resonating with Senator Dastyari, because he is trying to close me down.
I assure you, Senator Dastyari, no offence was taken. I do want to place on the record the fact that this company, in two major projects—at Gorgon and Wheatstone—are investing US$130 billion. To put it into perspective, in today's dollars, that is a project 15 times the size of the Snowy Mountains Scheme—US$130 billion. They will employ 19,000 people in construction. Over the 40-year life of those two projects they will contribute trillions of dollars to the Australian economy, over 100,000 jobs, billions of dollars in taxes and royalties, and, yes, a petroleum resource rent tax. They have invested billions of dollars with local small businesses in Western Australia, around Dampier, Onslow and the other ports. They have effectively developed the town of Onslow. Whilst comments were made by Senator Dastyari—about a person who cannot defend himself and on projects outside of Australia—I can relate to this chamber, as I have done in the past, the very fine occupational health, safety and welfare record of that company.
Finally, in passing, before I go back to addressing the subject of this discussion today, I should say to those who have any concerns about Chevron in the environmental space that Chevron's Gorgon project on Barrow Island is, in fact, in an A-class reserve. It is by far and away, as a result directly of Chevron's investment and care for the natural environment of Barrow Island, the best managed A-class reserve anywhere, not only on mainland Australia but around the Australian coastline. I reject, totally and thoroughly, the assertions made by Senator Dastyari.
I now turn, if I may, to the bill that is before us. I say very proudly that the coalition government always has and always will back small business. We will back it like a Melbourne Cup winner: up the straight, all the way, past the finishing line and through to the parade area. I will tell you why—because it is the engine room of the Australian economy. It employs nearly five million Australians in rural regions, in remote areas of Australia and in suburbs. It employs people at the lower end of the skills level as well as through to highly skilled people. It is the most versatile of all of the employment groups in this country. I am very proud to say that, in the budget of only the last couple of days, we announced a further tax cut for small business and, of course, we will see the company tax rate reduced to some 25 per cent. For those who quite rightly say that an enormous number of small businesses are not companies, it is important to record that there is also a five per cent tax discount for unincorporated companies, for sole operators and partnerships. These are the real issues that help small businesses and encourage further employment of young people and older people in our economy. There is the tax deduction of being able to write off in the one year $20,000 for assets purchased, and multiples of them—not just one. As a restaurant and cafe owner said to me when we first introduced this, 'I can now bring forward by four months the start of my new business because I can purchase different equipment to make that operation run—each one up to $20,000—and I can write it off fully in the first year.' That restaurant is up and running with 14 or 15 staff already.
I am very proud to say what the coalition government is doing and will continue to do. Having run small and medium sized businesses and still assisting constituents where I am able to, in terms of their obligations under the BAS, PAYG, superannuation et cetera, I can say it is the small-business person who really does the work for the Tax Commissioner. They fill out the BAS at the end of every quarter, make sure that the superannuation commitments are met and paid and ensure, of course, that workers compensation insurance and public liability insurance are paid. It is no wonder it is so difficult to make a quid in small business. But this government has cut red tape by $4½ billion, simplifying those processes that I was just speaking about, and removing many small businesses—up to half a million of them—from the PAYG system.
A scheme which I am very minded towards and I think needs enormous support from the parliament is the employee share scheme. If we can get employees to actually own shares in the business in which they are employed, then of course they have that greater incentive, because they themselves are part of the ownership. I, for one, will be watching that aspect of it very, very closely.
We have seen in recent times the opening up of the China-Australia, the Korea-Australia and the Japan-Australia free trade agreements. The best example of all, of course, is the cherry producer in Tasmania who has taken his cherry exports from a very small proportion to being a very significant exporter of that horticultural product into the Chinese market with significant improvement in employment, as I understand it—perhaps Senator McKim would be more familiar than I am and might know—
There you go: we have proof here of the evidence of not only the quality of the product but also, hopefully, the quality of his staff—through you, Deputy President, to Senator McKim.
These are the initiatives being taken by this coalition government in the services sector and the commodities sector to encourage small business even more. An ombudsman being appointed—and reference is made to the ombudsman in the bill being proposed by the Labor Party, and I will speak some more about the ombudsman's position. It is proposed in the bill to enable the ombudsman to provide assistance, as I understand it, with advising a private litigant on the arguments that might be made and the evidence needed to satisfy a court to grant a no-adverse-costs order. That of itself sounds all right. The only problem is: to what extent might it compromise an ombudsman who afterwards may have been seen to have given advice to an applicant or to a private litigant only to find out that that advice is now the subject of a challenge? We cannot really have a circumstance in which the ombudsman could themselves be the subject of a court action as a result of incorrect or inadequate advice given to a litigant. So there are, I think, difficulties associated with that particular element.
I applaud the Labor Party for putting this bill before the chamber. It recognises that they do have an understanding of some of the challenges associated with the issues of small business in Australia—expanding small business.
For those of us who have been in business all our lives, we actually do not like the term 'small business' all that much. It suggests that you want to remain small. Of course you do not want to remain small; the whole objective of business is to grow that business and move, perhaps, towards medium business and, in so doing, to employ more people.
I come back to the employee share scheme: imagine the scenario as long-trusted employees are part of an opportunity to expand a business and then indeed the next step—not always the best step for a business in my own experience—to move into export markets and be able to develop both your services and/or commodities along those lines.
Mention is made in this legislation—and I come to the decision of the coalition government in accepting the recommendations of the Harper review on the repeal of section 46 of the Competition and Consumer Act and replacing it with a provision that prevents firms with substantial market power from engaging in conduct that has the purpose, effect or likely effect of substantially lessening competition. I join with Senator Dastyari in the concept of the capacity of a larger company to be able to use its market power, market strength, to be able to dominate a small business. I have no difficulty with that argument; he just chose the wrong example in my humble opinion.
I will give you an example of some of the big retailers who will proudly announce to the retail market that they are going to undertake a huge discount of some product, only then to go back to the farmer, the supplier or the horticulturalist and say, 'Oh, by the way, we're undertaking a big discount on milk'—or a big discount on chicken or a big discount on some other product, be it almonds or whatever—'and, by the way, we're going to pay for most of it by reducing the payment to you in that scenario.' That is abuse of market power. It places the small business in a situation where they cannot negotiate their way out of that, as they are locked into supply and of course they have no alternative. So there are definitely circumstances where we have to ensure that big business does not have that unfair competitive advantage.
Legislation that we have introduced in this space, the Fair Work Amendment (Small Business—Penalty Rates Exemption) Bill—which we introduced into this parliament in 2015—is directed at protecting the interests of small business and indeed protecting the interests of employees in small business. We have also of course seen the involvement of the ACCC. In November of last year they released their report going to the whole concept of unfair trading relationships between large and small business, particularly where small businesses are, in a sense, forced to sign contracts or are at least influenced to sign contracts. Under the provisions of the ACCC, which the government accepted, we now know that a small business can challenge a term in a standard form contract, which is also a small business contract, on the basis that it is unfair. Big business were not happy with us, and they lobbied very, very hard against us. But the decision was taken to ensure the protection of small business.
As we all know, most small business people are their own accountant, their own person associated with marketing and they are their own person associated with sales. As I said earlier, at the end of every quarter they are the person sitting down trying to work out the BAS, trying to work out revenue and expenditure and trying to make sure they get superannuation liabilities paid et cetera. They are not the sorts of organisations that have huge teams of lawyers, accountants and others.
The coalition will continue to support small business by way of entrepreneurship, by way of innovation and by way of start-up and particularly by protecting small business when it comes to competition with big business and indeed with big unions. Whilst the Labor Party's bill is there to be debated, it does miss most of the elements important to small business.
I rise to speak to the Competition and Consumer Legislation Amendment (Small Business Access to Justice) Bill 2017. In commencing my comments I want to commend the work of Senator Gallagher in putting together this bill, which I think is very much targeted at the heart of the problem regarding competition between large and small businesses.
Before I go to my more substantive comments on the bill, I feel compelled to make some comments in respect of the contribution made by Senator Macdonald earlier in the debate. Senator Macdonald, in the course of his contribution, found ways of talking about Adani and the native title bill and then went on to discuss the low-value GST report which the Senate Economics Committee has handed down and had a good discussion about some of those points. In their own right, there were some interesting and perhaps constructive comments made throughout parts of Senator Macdonald's contribution, but they certainly lacked any connection with the very worthwhile bill that is before the chamber for consideration today, which is unfortunate.
I welcome Senator Xenophon's support for this bill. I note that he said that imitation is the sincerest form of flattery and that there would be comparable amendments coming forward from his party in relation to government legislation to address this area. I think that illustrates the fact that this bill does go to the heart of many of the problems that are affecting small business—they are fighting in the marketplace, trying to do the right thing and conduct their business, but they are rubbing up against the interests of big business, who have a substantial advantage over them.
We know that this is an issue. Senator Dastyari, in his contribution, talked about that issue—where businesses have deep pockets, they are able to, essentially, deny others the right to access justice. This is a huge concern. It has been identified by the Productivity Commission, which made some recommendations in respect of protective cost orders in 2014. We know that this is a very important issue. Unfortunately, we do not see a great deal of wholehearted support for this proposition on the other side. Instead, we see the government going down the track of the proposal to amend the effects test, which we have some concerns with.
This bill is the right pathway to improve competition in our economy. On our side of the chamber we understand small businesses and the struggles they face against the much bigger, well-funded and well-advised corporations. We know that small businesses face many barriers when it comes to taking action against anticompetitive behaviour by the big end of town. Rather than implementing the Deputy Prime Minister's latest thought bubble, which was the effects test, this bill delivers real change for small businesses.
An effects test is shorthand for a test that looks at whether conduct engaged in by a firm with a substantial degree of market power has the purpose, effect or likely effect of substantially lessening competition. This is dangerous economic policy. It is not just Labor that is saying this. I note that, in relation to the inquiry into the government legislation, the Waste Buying Group—a waste and recycling services business in the commercial industrial marketplace—made a submission which was quite informative. This business indicated that it was operating in an industry dominated by huge multinational firms who practise a range of tactics designed to hold a client bound to service contracts. They say the consequence is that it leads to poor competition in the marketplace and results in high prices and poor service outcomes for the client base.
One would think that this is one of those types of businesses that would wholeheartedly embrace the effects test and any purported effort to even up the position of large and small businesses. However, that is not the case. This business indicates that small business and clients will simply not be able to afford the costs of expensive trials in relation to this matter. Based on their experience, they believe that the ACCC will be overwhelmed with work, under resourced or just not interested. They believe that the ACCC—this is their own view, not my own view—is not an authority they can rely upon to advocate for the industry. In their submission, they recommended the introduction of an affordable tribunal to adjudicate abuse or market-power competition issues, so that small businesses or their clients could access it. That is a good illustration of the fact that this is not a Labor thought bubble; this is something that does have support out there amongst small businesses who understand that the government's approach is flawed.
The effects test risks making business afraid to compete, which ultimately hurts consumers. This will create a legal risk every time a business seeks to lower prices for their customers, and what obviously will happen in that situation is that consumers will be the losers. This is at a time when we are all faced with cost-of-living pressures. We know that we have wage growth at record lows. We know we have increasing unemployment and below trend economic growth. In this environment, we need all of the resources of the market to bring prices down so that consumers can benefit from that, so that families can make ends meet. This is a hugely important consideration.
Labor are not the only group of people warning of a lawyers' picnic if the government's legislation on the effects test were to pass. The small business lobby group COSBOA themselves have stated that they are concerned that the wording will create a lawyers' picnic, as predicted by the opponents of the effects test. When even the original proponents of the policy are saying that it is dangerous, you know that the government has made a complete mess of competition policy.
Labor do welcome strong competition policy, but it must be informed and enforced, and the government package is neither. What we are seeing are dangerous legislative proposals without addressing either the resources of the ACCC, which was commented on by the Waste Buying Group submission, or making it easier for small businesses to litigate in their own private capacity. In the words of former Treasurer Peter Costello, 'a so-called effects test will protect competitors, especially less efficient ones, from competition'.
Since 1974—and I think this point has been made previously—there have been at least 10 inquiries into Australia's competition laws which have considered a proposed effects test and rejected it. Apart from Professor Harper's review, only one other inquiry has ever recommended it. So there is a reason why 10 out of 12 inquiries have recommended against an effects test. The reason for that is it is bad law. It is going to have a detrimental impact on the consumer. In the submissions to the Harper review, the effects test has been described as legally unworkable, something that will chill competition and something that will create uncertainty for business. These changes will deter job-creating investment in Australia by adding to the new layers of red tape and barriers to investment which have already been imposed by the coalition government.
It is little wonder that the government's own former Minister for Trade and Investment, Mr Robb, is opposed to this latest anti-investment measure. The Turnbull government's proposed effects test is a move to satisfy internal politics. This is not about policy. A level-headed analysis of the effects test shows that the Prime Minister is using competition policy as a political prop. We know that the Prime Minister himself has said previously that he would be deeply concerned about the introduction of an effects test, and we have seen other people such as Mr Samuel, the former ACCC chairman, saying:
Under the Harper amendment, businesses would curb their competitive behaviour because of the legal risk. This would have drowned the commercial activity of big business in a sea of uncertainty. Lawyers and economists would need to sit at the right hand of business CEOs to guide them on the legality of every significant transaction.
It is quite clear that it is Mr Joyce, the Deputy Prime Minister, who has become the government's chief economic spokesperson, and this is detrimental to the Australian consumers and the broader economy.
Labor understand that cost orders from courts represent an insurmountable barrier for many small businesses. We have the Competition and Consumer Act, but if it is too expensive for small businesses to take action then clearly that is a problem; our society is the worse for it, with some anticompetitive conduct not made public and not properly addressed. It should not be acceptable today for big businesses with deep pockets and armies of lawyers to overwhelm small businesses. The legal fees are a significant obstacle for small businesses across this country.
To generate this public good of a fair, competitive economy, it is important that small businesses be given the ability to raise court actions without the threat of long, expensive and protracted court cases. It is important that a well-funded and well-advised large firm is not able to wear small businesses down. The Turnbull government has refused to address this inequity despite, as I said earlier, the Productivity Commission and the government's own competition review saying that small businesses are disadvantaged in the court process. Labor's Competition and Consumer Legislation Amendment (Small Business Access to Justice) Bill 2017 will restore the balance by letting a small business request a no-adverse-costs order early in the court case. Allowing small businesses to seek relief from adverse-costs orders at an early stage of the judicial process will provide financial certainty to the private litigant. A judge would hear this application and decide on the merits. This would require amendments to the Federal Court Rules.
This is a sensible change, a pro-small-business move that empowers them to make full use of the laws that we have on the books. It is also in line with international trends. Other countries are trying to find ways to encourage private litigation so the public interest can be served. In the United States there is a view that public interest in private litigation occurring is so great that positive measures should be taken to actively encourage it. Consequently, a private party which successfully proves an antitrust claim is entitled to treble damages—three times the proven loss caused by the conduct. No such policy currently exists under Australian law. In the European Union the commission has called on all jurisdictions in which costs follow the event, as in Australia, to carefully review the appropriateness of this approach in competition cases as, again, there is considered to be a significant benefit to the public when private matters are pursued through the courts. In the United Kingdom the Competition Appeals Tribunal has been established and has been granted discretion to make any order it sees fit in relation to costs, as opposed to the usual rule. So there is international interest in the approach that has been taken by Labor on this matter. It shows that we are at the forefront of seeking to address one of the key concerns that small businesses have today.
When it comes to the issue of mitigating risk, Labor's legislation will enable the Small Business and Family Enterprise Ombudsman to provide professional assistance as to whether the no-adverse-costs order is likely to be successful. There are risks when opposing no-adverse-costs orders. Where legal action has no or little cost, the risk of frivolous or vexatious litigation increases. In fact, if legal action is of sufficiently low cost, the threat of vexatious legal action could be used when negotiating with a larger firm. However, these risks can be mitigated and do not outweigh the potential benefit of increasing private litigation under the Competition and Consumer Act. It is proposed that the small business ombudsman be funded to vet applications, preventing adverse-costs orders under part IV of the Competition and Consumer Act. This process is designed to provide advice to the potential litigant and will not mandate a no-adverse-costs order in any court case. This will help small businesses to better understand their prospects of obtaining a no-adverse-costs order and will act to reduce the risk of frivolous litigation where the ombudsman does not see merit in the litigation. This will not constitute legal advice under this bill, and the ombudsman cannot provide advice and support to private litigants. The ombudsman will be restricted to assessing whether there is the possibility of a no-adverse-costs order. Where the ombudsman positively vets an application from a potential private litigant, a letter of support will be provided to the applicant. This nonbinding letter of support would indicate to the applicant that there is a good case for a no-costs order to be approved by a judge.
This is a pragmatic approach and it is the sort of approach that gives small business the confidence to use the legal system. Unfortunately, there is a widespread view amongst not only small businesses but also other members of the community that, when they are taking on a large adversary in the court system, they might as well not even try, because the odds are stacked against them. This very pragmatic approach breaks down those barriers to access to justice. It assists small businesses and private litigants, as opposed to the introduction of the effects test, and confers a useful and practical power on the new ombudsman. A three-person section in the small business ombudsman has been costed at $500,000 per year.
Small business is crucial to Australia's economy. The budget that we have just seen confirms that Mr Turnbull is a Prime Minister for the big end of town over those working hard to grow their businesses and create jobs. Small businesses make up 97 per cent of businesses in Australia and are the engine room of the economy. We all use that terminology, but it is true. They employ more than 4.7 million people and contribute in excess of $343 billion to the economy every year. This scale simply cannot be ignored. That is why we would like to have seen Mr Turnbull and the Treasurer put more of a focus on small and medium businesses in the budget instead of focusing on the big end of town.
This bill is about making sure our competition laws are better enforced by giving small business access to justice. Businesses have the legal right to take action if a competitor is engaging in anticompetitive conduct. However, at the moment it is very hard for small businesses to do this, even where there is a clear breach of our competition laws. Even where a small business has a strong case, they have to think very carefully about the fact that larger players have money and a far greater capacity to fight these cases. Of course, there is the worry that, if they lose, they will face huge legal bills. We know that small-business people have gone into business often leveraging their homes, taking on financial burdens and employing people. This means, in effect, that small players are discouraged from taking action to enforce Australia's competition laws. This is contrary to the public interest.
This bill will address the difficulties small businesses face in getting access to justice under Australian competition laws. Small businesses are too often discouraged from pursuing strong cases. This bill empowers small business to go forward to enforce our laws to ensure that the legal system is fairer for everyone and to ensure that true competition applies. Consumers are the winners in that situation. This is a win-win bill. I encourage those opposite to support this bill.
I am pleased to follow Senator Ketter to speak in support of the Competition and Consumer Legislation Amendment (Small Business Access to Justice) Bill 2017, which has been lodged and introduced by Labor. It is another sign that, despite the government's rhetoric to the contrary—and I will come to that a little bit later—Labor does have a very good understanding of the real needs of small business and is prepared to take action via introducing legislation like this to back in small business and ensure that they do get a fair deal and a level playing field.
Anyone who has dealt with small business or has run a small business understands that small businesses do face many barriers to taking action, especially against anticompetitive behaviour by the big end of town. One of the reasons for that is that big businesses do invariably have deep pockets and armies full of my former profession, lawyers. The risk of small businesses being overwhelmed and having to pay big business's legal fees is a significant obstacle when they are considering standing up for their rights. Unfortunately, even though this inequity has been recognised for a very long time, the Turnbull government has, nevertheless, refused to address this inequity. That is despite the government's own Productivity Commission and competition review saying that small businesses are disadvantaged in the court process.
As I say, I am very pleased to speak in support of this private member's bill introduced by Labor. As its name suggests, the Competition and Consumer Legislation Amendment (Small Business Access to Justice) Bill 2017 will help deliver some level of access to justice to small business. It will restore the balance by letting a small business request a no-adverse-costs order early in a court case. For those who have not been involved in litigation before, first of all I say: well done! It is something that is very well worth avoiding if you ever get the opportunity.
But one of the strengths of our system of litigation, particularly compared to the American system, is that, generally speaking, if a party brings legal action against another, particularly for a civil claim, they do have to think twice about whether that legal action has good prospects of success and whether it is frivolous because, at the end of the litigation, Australian courts do typically award costs to whichever party succeeds in a case. So, if you bring legal action against someone and make a claim against them, you need to think about the prospect that, if you lose, you may be facing quite a hefty order to pay at least a portion of the successful side's legal costs.
Overall, I think that is actually a good thing in our legal system. We do, from time to time, see what seem to be absurd examples of litigation in the US, and I think everyone would acknowledge that the US's legal system is pretty out of control compared to Australia's. We hear terms like 'litigation frenzy'. It is a much more litigious society than our own, and I think that one of the reasons for that is that, generally speaking, American courts do not order costs against an unsuccessful party in litigation, so there is not a tendency to issue adverse costs orders, and that means that people in the US can, pretty much without any repercussions, initiate legal action even though it may actually not have very much prospect of succeeding. We do not have that system in Australia. We have a system where unsuccessful parties in litigation run the risk of having to pay the successful party's legal fees, or at least a significant proportion of them, so that does give people pause for thought before they charge into a lawyer's office threatening to start legal action. Of course, the downside of that is that, if you are a smaller player, whether a small business or an individual, the fact that you may, at the end of a litigation, need to pay the other side's costs, again can be a bit of a deterrent from taking legal action which might actually be warranted.
As a lawyer, I have had many occasions where I have advised small businesses and other smaller parties, whether individuals or families, who have come to me with what, on its face, seems to be a reasonable claim—a claim that, though you never have a 100 per cent guarantee when you start legal action, on its face looks like it might have a reasonable prospect of succeeding—but, as the person's lawyer, you are obviously duty-bound to inform them that if all goes wrong and they do lose then there is a possibility that they could be up for the other side's legal costs. I have certainly personally advised more than one potential client about that, only to see them say, 'It's just not worth the risk,' even though they may have had a reasonably strong chance of succeeding in their legal action. The kind of work that I did—acting, usually, for plaintiffs—meant that they did not have the same level of resources as companies that they would take on, and very often they would weigh up the risks and decide that it just was not worth the risk of getting an adverse costs order. So that is a deterrent to litigation and sometimes does tilt the scales a bit too much towards big business.
So our bill, Labor's bill, seeks to restore that balance by letting a small business request a no-adverse-costs order early in a court case. As I say, we do not want that used frivolously. We do not want that to open the floodgates to litigation. So one of the other things that this bill provides for is: when a small business seeks a no-adverse-costs order early in a court case, a judge would have the ability to decide that, if the case has merit, the small business will not have to pay a big business's legal costs. So there is a check and balance in there. An application would need to be made to a court, and a judge would still need to weigh up the evidence. It would not be a full hearing of the case, because that in itself would run up massive legal costs. But this bill seeks to get that balance right, giving small businesses the opportunity to present their case, or a portion of their case, and have a judge determine whether the case has some merit and then have the ability to issue a no adverse costs order.
This bill will also enable the Australian Small Business and Family Enterprise Ombudsman to provide professional assistance as to whether the no adverse costs order is likely to be successful. Again, we do not want people just trotting off to court and starting up legal action that has no prospect of success and that inevitably will result in an adverse costs order. This bill provides a capacity for small businesses to get some advice, prior to taking legal action, about whether a no adverse costs order is likely to be successful.
Working as a lawyer for over 10 years, I have had many instances where I have advised small businesses and other clients about their chances of succeeding in litigation, and they have weighed up the costs and the benefits. Most recently, before I entered the Senate, I practised in the area of class actions, which is a relatively new area of law in Australia. It has been going a lot longer in the US. I had the privilege of acting for individuals and small businesses in a couple of fairly large class actions. One was on behalf of shareholders in the National Australia Bank, and that was an action essentially about misleading the share market to do with the subprime crisis in America. Another class action that I was privileged to be involved in was on behalf of hundreds of horse breeders and horse owners and other people in the horse industry, who brought a class action against the Commonwealth in relation to a massive quarantine failure.
I mention this because many of the clients that we were acting for in those two class actions—and the firm I worked at obviously runs many more than just those two—were small businesses. If you spoke to them, there was no way that an individual shareholding small business or an individual horse industry small business could possibly have had the resources to take on either the National Australia Bank, in the first case, the shareholder case, or the Commonwealth of Australia, in the case concerning quarantine failures. These people had absolutely suffered some sort of financial loss through the wrongdoing of either the Commonwealth or the National Australia Bank. There was always going to be the matter of having to prove that it was the fault of the defendant, but there was no doubt these people had suffered financial losses, some in the thousands of dollars, some in the tens of thousands and some in the millions. But, no matter what size of loss they had suffered, there was absolutely no way they had the resources to fight a prolonged legal battle against some of the biggest defendants in the country, who would roll out their armies of lawyers and paralegals to review every single document. They would incur millions and millions of dollars in legal costs and invariably drag out a court case.
Class actions tend to run for three or four years. They are long, complex pieces of litigation. But there is no way that the ordinary small business out there can undertake that kind of legal action on an affordable basis. And that is one of the reasons we have seen a growth of litigation funding in Australia, where class actions can be run by plaintiff law firms, who have the security of getting their fees covered as the case rolls on. But the clients, the small businesses who take this legal action, only end up having to pay back those legal costs if they have a successful outcome.
I think that our class actions system in Australia, with litigation funding, has evolved to an extent that it does provide access to justice for many small businesses, who can band together, rather than each taking individual action against a large defendant for a similar wrong. They can band together with dozens or hundreds of other businesses or individuals who have suffered similar losses as a result of the same wrongdoing. They can come together and have someone else pay their legal fees and take the risk of an adverse costs order if the action is unsuccessful. That way, they are able to get access to justice which they would not be able to get on an individual basis.
But, while it is true that our class actions system and litigation funding system in Australia has evolved to an extent that it can provide access to justice to people, there are nevertheless some cases which are too small to be run as a class action and be viable.
The reality is that, as I say, they are long, complex cases where legal fees are expensive. If you are talking about a loss that has been suffered by people of, say, $10 million to $20 million all up, at one level that is a large amount of money, but, once you get legal costs taken out of that, there would not actually be a lot of money left over. That is the kind of instance that this bill will support. It will give opportunity to small businesses whose losses are not so great that they can afford to take the risk of incurring lots of legal costs and incurring adverse costs if they are unsuccessful in their action. We want to make sure that small businesses that have suffered relatively smaller but significant losses can still have their day in court. That is a pretty basic right in the Australian legal system, and this bill will enable that by giving some level of protection for small businesses that they will not face an adverse costs order if they bring a case that does have some merit but, at the end of the hearing, fails. All in all, this bill will give small and medium businesses greater power to enforce their rights under Australia's competition law.
The other thing I wanted to touch on in my contribution to this debate is an incredible misconception which has been perpetuated by conservative parties and some of their supporters in the business community over many years—that is, only those in the conservative side of politics are friends of small business. It is one of those mantras that we hear from conservative parties—and I can see my friend Senator Smith over there agreeing with that mantra. Well, he is wrong, and not for the first time. I know it is an article of faith in conservative parties that they are the defenders of small business and that Labor is anti-small business. If you have a look at the facts, you will see that nothing could be further from the truth. I will be honest—there are some issues that, from time to time, Labor takes a different position to—
I will come to that, Senator Hume. There are times when Labor takes a different position on issues to some parts of small business. Penalty rates is an example of that. We have heard some small businesses be vocal about their desire to see penalty rates being cut. But equally—and this does not get quite as much attention—there are many small businesses out there that are quite happy to pay penalty rates to their employees. And they remain so despite the decision of the Fair Work Commission, backed in by this government.
Even in the duty electorates that I represent in Queensland there have been high-profile examples where small businesses have come out publicly and said that they want to stand by their employees. They understand that, if they pay their employees properly, and if all other small businesses do so as well, that will ensure there is a flow of money coming through a particular town that can be spent in other small businesses. It does not help small businesses to impose a massive wage cut on employees of those businesses, because all they are going to do is keep their money in their pocket and not spend it in the neighbouring small business down the street. I can think of a butcher's store near Yeppoon in Central Queensland which has come out publicly and said that they are going to continue paying penalty rates to their workers on Sundays—and good on them. Lush, who are a retail chain that sells bath products that my wife likes to go and spend lots of money on all the time, have said that they are going to maintain penalty rates for their employees. Again, good on them! They are taking a broader view than the penny-pinching view that some businesses take, which is a very short-term attitude that sees them cut back on their wages bill without understanding that what they are actually doing is cutting their own throats by reducing the amount of money that is available for their own customers to spend in their own business and in the businesses down the street.
Even with an example like penalty rates in which conservative governments and conservative parties hold up as something that all small businesses hate, it is actually not the case. There are many who understand that supporting their workers with decent wages actually enables the entire society and entire communities to prosper, which in turn creates more jobs.
I was reflecting on my very brief time as a state member of parliament in Queensland, and I well remember some of the conversations that I had with small businesses in my old electorate, particularly in the suburb of Albany Creek. There was a jeweller that I used to run into from time to time. He ran a jewellery store that was, basically, a family business. His biggest complaint was never things like penalty rates or tax issues, or the things that conservative governments trot out; his biggest complaint was that he could not get any fair treatment by the shopping centre owner, who kept on lifting his rent and lifting the payments he had to make to the shopping centre owner for utilities, whether it be electricity or water or other things. There was nothing he could do as an individual small-business owner to take on the shopping centre owner. There was no way that he would have the resources to wander into court and take up what seems to be quite a legitimate claim and quite an abuse of the law by a shopping centre. There was no way he had the resources to do that and in addition face the risk that, if he lost any legal action, he would potentially have to pay the costs of the shopping centre owner in that litigation. This bill will help people like Wayne Goddard, who ran that jewellery store, and will help many other small-business people right around the country. It will give them the ability to take up legitimate legal action against big business without the fear of having to pay a massive legal bill at the end of a case if it does turn out to be unsuccessful.
Some of the other things that small businesses raise with me as impediments to their business: I was in Rockhampton last week meeting with small businesses there, and one of the biggest complaints that they had was the difficulty they have dealing with big business and having no certainty about orders placed for their products by big business. That was what was stopping them putting people on to work for them. They did not know from month to month whether their major big business customers were actually going to keep ordering from them. We heard that from farmers. We heard that from manufacturing firms who were supplying to some of the biggest multinationals in the mining industry.
They are the kinds of things that are stopping small business from growing. We do not hear anything whatsoever from this government about how they are actually going to support them and how they are going to overcome those problems. Instead, this government, like conservative parties before them, just keep on pulling out the old bottom drawer, pulling out the tax stuff, pulling out the penalty rate staff and ignoring the fact that there are many small businesses who are quite comfortable with arrangements as they currently stand and actually have real problems, different problems, that this government are ignoring.
If you speak to any small business in the country, whether it is someone who is operating from their home or from a small shop, the first thing they are probably going to hit you up with is the NBN and the failure of this government to provide a decent telecommunications network which will allow them to operate quickly and efficiently, and communicate with their suppliers and their clients and people overseas. This government has had a gross failure in the provision of decent telecommunications infrastructure in this country, particularly through the NBN. I am sure someone must have done some kind of analysis of the impact that that has had on economic growth. They are the real difficulties that small business is facing in this country and they are the things that this government should be concentrating on.
In particular in this bill, this is another attempt by Labor to even the playing field between big and small business. It will give small businesses their day in court for the very first time, and I would hope that the alleged supporters of small business sitting opposite might rethink this and support the bill.
What incredible hypocrisy. I have never heard anything like it: an attempt by Labor to level the playing field between big and small businesses. That is extraordinary. I know you have heard those words, Senator Watt, come from this side of the chamber, but I have to put my hand on my heart and say it is the first time I have ever heard it come from your side of the chamber. The Labor opposition have constantly opposed good quality, sensible, pragmatic policies that this side of politics, that this side of the chamber, have put forward to look after small business—those 3.2 million businesses that currently employ more than six million workers. Indeed, they are the engine room of the economy. Senator Ketter was right in saying that. They are the small businesses that we go to every day. They are the small manufacturers, the fish and chip shop down the road, the bakery, the small grocery on the corner—these are the people that keep our economy going, that keep our economy alive. Only a coalition government genuinely looks after small business. Labor looks after big business. It looks after its big business, big union mates, but it never comes to the rescue of small business, not with any genuine credibility. This bill is no different.
I am rising today to speak about the Competition and Consumer Legislation Amendment (Small Business Access to Justice) Bill 2017. This proposed bill from Labor, if enacted, would see private litigants given a power to request a no adverse costs order at any stage of a competition case. That is a part IV action under the Competition and Consumer Act. That is any stage of a competition case that they have brought before a court under proposed subsections 82(3) to 82(4). If a court grants such an order, the legal fees of the defendant would be prevented from being transferred to the litigant. In order to make a no-adverse-costs order, a judge must be satisfied that the action has a reasonable prospect of success and it raises an issue that may be significant for persons or groups other than the applicant, and that the disparity between their respective financial positions of the applicant and respondent is such that the respondent could use the possibility of a costs order against the applicant as a means to deter the applicant from pursuing the action. That is in proposed subsection 82(5).
The proposed bill would enable the Small Business and Family Enterprise Ombudsman to provide assistance with advising private litigants on the arguments that might be made and the evidence that is needed to satisfy a court to grant that no-adverse-costs order, and the Australian Small Business and Family Enterprise Ombudsman would provide assistance preparing those arguments under this bill's proposed section 15(c) and 74B of the Australian Small Business and Family Enterprise Ombudsman Act 2015.
It will come as no surprise to have heard previous speakers in this chamber say that the government does not support Labor's bill. The main reason it does not support this bill is that the bill overpromises and yet will fail to deliver its objectives. There is no point in Labor promising access to justice for small businesses when the current law, section 46, is broken. If Labor is genuine about supporting small businesses, then they should support the government's changes to section 46 of the Competition and Consumer Act.
For the benefit of the chamber, it is probably worth giving section 46 some context. On 24 March 2014, the government commissioned an independent competition policy review, known colloquially as the Harper review, of Australia's competition framework. The key focus of the Harper review was to identify impediments across the economy that restrict competition and reduce productivity. It was described as the first root-and-branch review of Australia's competition laws for 20 years. The review panel, chaired by Professor Ian Harper, undertook extensive consultation with businesses, consumers and other industry stakeholders. The misuse of market power was one of the top issues raised in submissions to that review, with stakeholder opinions divided as to the efficacy of section 46 in deterring anticompetitive conduct.
On 31 March 2015, the Harper review released its final report. The report made 56 separate recommendations on Australia's competition framework. Those covered most sectors of the economy, with implications for almost all levels of government. In examining the misuse of market power provisions, the review panel considered section 46 to be deficient in its current form. On 16 March 2016, the government announced its final position on the Harper review recommendations and agreed to adopt in full the review's recommended changes to section 46 of the Competition and Consumer Act. The Prime Minister, the Treasurer and the Assistant Treasurer emphasised the government's commitment to strengthening Australia's competition policy. They commented:
... the amendment of section 46 to deal with the unilateral and anti-competitive conduct is an important step to ensure Australia has the best possible competition framework to support innovation and boost economic growth and jobs.
Indeed, the Minister for Revenue and Financial Services, the Hon. Kelly O'Dwyer MP, explained how those proposed amendments would support and promote pro-competitive conduct in business for the ultimate benefit of Australian consumers. I quote the minister. She said:
These amendments will make markets work better for the benefit of all Australians and help to lift our long-term productivity growth. They will ensure that all business can compete on a level playing field—
that sounds familiar, doesn't it, Senator Watt?—
rewarding innovative and dynamic businesses that provide the best services at the lowest cost. This will benefit households by giving them more choice and better value products and services.
Section 46 is what is broken. This bill is entirely unnecessary.
The changes to section 46 that the government has proposed will genuinely level the playing field for small businesses to ensure that they compete on merit against those businesses that have substantial market power. The changes to section 46 balance the small business to big business market relationship and will do far more to assist small businesses than the proposed bill under discussion today. These changes are necessary and they are championed by the small business sector.
This piece of proposed legislation is expensive and time consuming. Labor's policy encourages small businesses to engage in litigation—it actually actively encourages it—and potentially that could be vexatious legislation. It does not, however, assist in the resolution of disputes at the earliest available opportunity or at the least cost to parties and to the courts. Labor's policy will, in fact, do the very opposite: it will encourage businesses to commence litigation. The applicant and proceedings will still have very high legal costs and a high evidentiary burden in challenging legal thresholds to establish a breach of the current section 46. The seeking of the order itself carries with it a legal cost in satisfying the court that the order satisfies the hurdle tests—a cost which would be borne by the small business applicant. And, if the court grants a no adverse costs order, the applicant must still fund its own case, and the case is likely to be complicated by the legal argument about the facts and addressing the expert advice brought by the respondent. The costs to the applicant for its own legal representatives are still very likely to be high.
But, most importantly, is the role of the Australian Small Business and Family Enterprise Ombudsman. The functions given to the ASBFEO would require the ombudsman to provide legal advice on the prospects of obtaining an order, and that is not at all appropriate for a public statutory office of this nature. It is not clear how a party who took up litigation on the basis of such assessment and subsequently did not obtain an order in their favour could then withdraw from litigation without a cost penalty. It is also not clear what liability the Australian Small Business and Family Enterprise Ombudsman would have should the party not be successful in obtaining an order in their favour. A party in receipt of a no adverse costs order would be incentivised to take up belligerent litigation tactics, which are very unhelpful for the presiding judicial officer and for the other party who is acting in good faith. As it stands, this bill would allow a party to request a no adverse costs order when it becomes aware that it does not have a reasonable prospect of success, rather than withdrawing the case, which is what should happen in these circumstances.
The bill would also fundamentally change the role of the Australian Small Business and Family Enterprise Ombudsman from advocacy and assistance. In particular, the addition of this function would severely limit the Australian Small Business and Family Enterprise Ombudsman's ability to advocate on issues. Advocating and assisting are what it does. They are its two key functions. The Australian Small Business and Family Enterprise Ombudsman advocates under a number of different activities, including conducting inquiries and research, working with other realms of government, contributing to other inquiries and promoting good business practice, and it assists because it understands the challenges that face small business owners. The Australian Small Business and Family Enterprise Ombudsman provides dispute resolution services for those who may be involved in a disagreement so that they can try to provide a solution to the problem without having to resort to costly litigation. The provisions of this bill fall outside the current remit of the Australian Small Business and Family Enterprise Ombudsman and would create an undue burden on that office. Additionally, Treasury does not consider that the Labor Party's estimates of the cost of $1 million reflects the full cost of this policy. Small business is indeed the engine room of the economy, but the Labor Party is no friend of small business.