House debates

Monday, 17 August 2015

Bills

Treasury Legislation Amendment (Small Business and Unfair Contract Terms) Bill 2015; Second Reading

11:59 am

Photo of Bernie RipollBernie Ripoll (Oxley, Australian Labor Party, Shadow Minister Assisting the Leader for Small Business) Share this | | Hansard source

Labor does support the Treasury Legislation Amendment (Small Business and Unfair Contract Terms) Bill 2015. That said, there are some issues that stakeholders have raised with the opposition, and I am sure also with the government, regarding the bill. I want to take this opportunity to highlight those issues to the government, in addition to the concerns the opposition has. No doubt the minister will be aware of these concerns, as many of them were raised during the consultation period and again following the exposure draft.

This bill amends the Australian Securities and Investments Commission Act 2001 and the Australian Consumer Law, which is set out in the Competition and Consumer Act 2010, to extend the unfair contract term protections currently available to consumers to cover businesses with fewer than 20 employees agreeing to standard form contracts valued at less than a prescribed threshold. The bill does this by amending the Australian Consumer Law, which is in schedule 2 of the Competition and Consumer Act 2010, and the Australian Securities and Investments Commission Act 2001 to cover standard form contracts that are valued below a prescribed threshold.

The prescribed threshold applies when one party to the contract is a small business with fewer than 20 employees—that is done by a headcount approach applied when defining what a small business is—and the up-front price under the contract does not exceed $100,000, or $250,000 if its duration is more than 12 months. The up-front price is defined in section 12BI(2) of the ASIC Act. It must be disclosed at or before the time that the contract is entered into. Part 2 of the ASIC Act contains provisions that protect consumers from unfair contract terms. This chapter extends these provisions to also cover small business contracts. The existing concepts of 'unfair' and 'standard form contract' can be found in sections 12GB and 12BK of the ASIC Act. The ASIC Act and the ACL currently contain minor consumer unfair contract term protections. The ASIC Act's requirements apply to financial services and products, and the ACL applies to the supply of goods and services other than financial services or products and the sale or grant of an interest in land.

The government has indicated the Australian Competition and Consumer Commission were provided with $1.4 million in the 2014-15 budget to support the implementation of this bill. However, what is of concern to many stakeholders is the government's own estimates of the additional compliance costs that will be carried by business. The government's own explanatory memorandum states:

Persons who offer contracts to small businesses may incur a once-off transitional cost (including seeking legal expertise) to implement any system changes and ensure contract terms comply with the unfair contract terms law. This cost is estimated to be $50 million in the first year …

There are many in the business community who rightly feel this estimate is on the conservative side and claim this will add many millions of dollars in red tape compliance costs for business. The explanatory memorandum also notes:

Businesses that offer low-value standard form contracts to small businesses may need to review and amend their contracts to ensure they are compliant with the new protections.

I have received many representations from the business community, who have noted their strong concerns about these costs, along with other substantive issues, which I will note in my contribution this morning. There is no doubt that much of the small business sector in Australia sees this bill as being the answer to many of their problems, or issues they deem to be problems. For some time now, small business representative groups and stakeholders have lobbied governments on both sides of politics to have unfair contract terms currently available to consumers extended to small business.

I have heard many stories, told in many ways, from small businesses and small business groups that small businesses, like consumers, are offered contracts on a 'take it or leave it' basis and often lack the resources to understand or negotiate contract terms. This can result in a risk to the parties, mostly the small business party, who are often less able to manage these risks. As we all know, the costs of obtaining legal advice, particularly for low-value contracts, are often prohibitive and sometimes disproportionate to the potential benefits. These views are strongly held and have been imparted to me by various characters from peak representative groups in many different ways. This is what our democracy allows for, and that is a good thing. I get that, and I understand that this issue is very real for many small business people.

Equally, and as importantly, when a change of this nature and significance is being considered, there will undoubtedly be those who have an opposite view—that the consequences of such a change will have an equally negative impact on their business. I am very conscious that there are many concerns within the business community over what some see as the far-reaching impacts of applying unfair contract protections to standard form contracts between business-to-business interactions. Many have expressed the view that, while the laws would provide some protections to small businesses, extending them would also expose small businesses to claims from other small businesses regarding unfair terms.

I think it is also important here to note that, in the government's consultation regulatory impact statement, RIS, which was issued by Consumer Affairs Australia and New Zealand, the Office of Best Practice Regulation observed that the RIS acknowledges (1) there is limited empirical evidence about the scope of the problem being experienced by small business; and (2) the benefits and cost of the options are difficult to measure. Yet it is clear from the commitment made by the minister before the last federal election, and again in the government's options paper, that the minister was intent on bringing in legislation that would extend the UCT provisions to standard form contracts involving small business. The government's own consultation paper even notes option 3, the legislative option, as the preferred option, with option 1, the status quo, and option 2, a light touch or non-regulatory response, which was already ruled out.

I can inform those opposite—that is, the government—that it was not only the Labor Party that noted the government was then seeking evidence that such an extension was justified. The problems are that some stakeholders see this bill as having the potential to seriously damage business confidence and certainty. It is for this reason that I am highlighting these concerns here today. It is often said that without proper and rigorous analysis we end up with laws that are not fit for purpose. On this side of the House, we seek to prevent that where possible.

By way of general comment, I would like the minister to take seriously the feedback from stakeholders. Labor is aware there remain serious concerns in some quarters about the inclusion of retail leases in the bill, and there have been concerns expressed to the opposition by those from the finance and banking sectors, from the automotive industry and even from the franchise sector. The minister is on the record many times about Australia being well down the rankings for government regulatory burdens placed on business and industry, yet here in this bill it seems the government is adding another layer of compliance, regulation and burden. It is not Labor's position one way or the other to support or oppose the views of stakeholders, but it is proper for me to bring forward these concerns here, particularly so as to prevent adverse outcomes for all parties once the legislation becomes law. As I said earlier, Labor will support the bill but, at the same time, we want to ensure the legislation does not end up creating a situation where both parties to an agreement lose out because of what may in the end be well-intentioned but ill-conceived legislation. This is why Labor is flagging these concerns, in the hope that the Senate economics legislation and references committees closely scrutinise these matters when reviewing the bill.

It is also important to recognise that it was a Labor government that introduced a national law to regulate unfair terms in contracts between individual consumers and businesses in 2010, as part of the reforms underpinning the Australian Consumer Law. The Australian Consumer Law regulates unfair contract terms. It provides that a term of a standard form consumer contract is void if the term is unfair. A term is unfair if: (1) it would cause a significant imbalance in the parties' rights and obligations arising under the contract; and (2) it is not reasonably necessary to protect the legitimate interests of the party who would be advantaged by the term; and (3) it would cause detriment, whether financial or otherwise, to a party if it were to be applied or relied on. These reforms commenced on 1 January 2011, and are set out as a schedule to the Competition and Consumer Act 2010. It is worth noting that the unfair contract provisions for consumers have only been in place since 2010, so any view on their effectiveness in such a short time is not yet available. Indeed the Minister only announced a review of the Australian Consumer Law last month; nevertheless, we will observe any findings from the review closely. I will also note that, at the time of the changes to the ACL back in 2010, Treasury flagged that the extension of the unfair contract terms to business-to-business contracts could result in increased costs to businesses. The bill confirms Treasury's concerns.

In terms of the current laws, the status quo means a small business has no legal protection if a term in a standard form contract is unfair, unless there is some other factor, such as unconscionable conduct or misleading or deceptive conduct occurring in the context of the contract. In lay terms, small businesses do not have recourse to the protections set out in the Australian Consumer Law which render void unfair terms in standard form contracts entered into by individual consumers. Labor is aware there is support for the bill from key small business stakeholders and interest groups. It is for this reason Labor will support the bill. However, it is prudent to highlight in this place the concerns of all the stakeholders, and some very significant ones at that.

Labor is also of the view, given the significance of the change and the impact this legislation will have, that the government should commit to a two-year-post-implementation review of the legislation to measure its effectiveness for all businesses. This is consistent with good practice and with the government's recent announcement to review the Australian Consumer Law. A two-year-post-implementation review acknowledges the concerns raised by some stakeholders, regarding the high costs of compliance and the red-tape burden imposed by the bill, whilst providing support for the majority of small business stakeholders in favour of the bill. It is well known the coalition went to the last election committing to extend unfair contract protections to small business, but it is equally important for the coalition, now they are in government, to hear and act on the concerns of all stakeholders when serious issues are raised in relation to small business. Labor supports the bill.

12:11 pm

Photo of Bert Van ManenBert Van Manen (Forde, Liberal Party) Share this | | Hansard source

It is with great pleasure that I rise to again talk about small business, the engine room of our economy, and to speak today about this bill, the Treasury Legislation Amendment (Small Business and Unfair Contract Terms) Bill 2015. This bill will amend legislation in order to extend unfair contract protections to small business contracts. Between 1 January 2011 and the end of December 2014, the ACCC received 1,375 small business complaints relating to unfair contract terms. While there are a number of benefits to standard form contracts, as they save businesses time and resources, there are also a number of drawbacks associated with them; in particular, they are not negotiated, and they are often one-sided and include terms embedded in the fine print.

In 2013, the coalition made the election commitment to provide a fair go for small business. I would like to congratulate the Minister for Small Business, Bruce Billson, for this piece of legislation that honours another one of our election commitments in relation to the small business sector. Small-business owners are hard-working and innovative people who are focused on growing our economy, creating jobs and frequently contributing to our local community. Small businesses are often behind the company logos you see sponsoring our local sporting clubs, donating to local charities and creating local jobs. Over the recent parliamentary recess I had the opportunity to visit a number of businesses in my electorate of Forde, and they are just a representative sample of some of the 11,000 small businesses in my electorate. Many of them are already benefiting from the positive effects from this year's budget measures for small business. This bill is another important reform that will help give small businesses access to a level playing field, so they have the capacity to grow, to invest and to create more jobs.

This legislation is a welcome new protection for small businesses, which often lack the resources to negotiate standard form contracts. The measures outlined in this bill have been developed in consultation with a wide range of stakeholders. These include the general public, businesses, industry groups, and Commonwealth, state and territory consumer agencies, as well as regulators and small business commissioners. The 10-week public consultation process to gather information about the extent of the problem attracted more than 80 submissions and around 300 survey responses. As part of the consultation process for this bill, our government found that, like consumers, small businesses are vulnerable to the inclusion of unfair terms in standard form contracts. This is because they often lack the resources to identify unfair terms and to engage in negotiations over the terms of a contract; the bargaining power to successfully negotiate the terms of a contract; and the resources and bargaining power to resist the enforcement of those unfair contract terms.

Consumers have been protected from unfair contract terms since 2010, and it is well and truly overdue that we provide similar protections to small business. Stakeholder feedback found there was significant support for addressing the problem through a legislative extension of the current consumer unfair contract terms law. This bill will amend the Australian Consumer Law, set out in schedule 2 of the Competition and Consumer Act 2010, as well as the Australian Securities and Investments Commission Act 2001, to extend the consumer unfair contract terms protections to cover standard form contracts, which are small business contracts valued below a prescribed threshold. It is time that small businesses receive the protection they need when offered standard form contracts. This bill provides a remedy for small businesses when unfair contract terms have been included in these standard form contracts.

There are three main elements to this bill. Firstly, in both the ASIC Act and the Australian Consumer Law, this bill applies the unfair contract terms provision to small business contracts. A contract is defined as a small business contract if at least one party to the contract has fewer than 20 employees and its value is below the prescribed threshold. Measures relating to the ASIC Act were agreed to by the Assistant Treasurer and the states and territories were notified of the amendments to the ASIC Act, as required under the Corporations Agreement 2002. Measures relating to the ACL were agreed to by the majority of states and territories, as required under the Intergovernmental Agreement for the Australian Consumer Law.

The second branch of the small business contract test is that the value of the contract must not exceed $100,000 or $250,000 for a multi-year contract. This transaction value threshold was chosen so protections apply when small businesses engage in day-to-day transactions, while encouraging them to conduct due diligence on larger contracts fundamental to the success of their business. Based on the consultation survey results, around four in five small business standard form contracts will be covered by these reforms.

The final element of this bill is the mechanism that will allow the government to exempt laws that it deems equivalent to unfair contract terms law. This is about avoiding regulatory duplication and unnecessary compliance costs in sectors where there are equivalent, enforceable protections against unfair contract terms.

Once this bill receives royal assent it will take effect within six months. During that period, the regulators will engage with traders to assist them in complying with the new law. Overall, this bill introduces an important reform to restore time and resources to small business. It will allow small businesses to grow, invest and create jobs rather than investing their time navigating costly and time-consuming contract terms.

We want Australia to be the best country in which to start and grow a small business. We promise the Australian small business men and women a strong economy, less red tape and a commitment to extend to the small business sector the unfair contract term protections currently available to consumers. This reform is an important one and will have a tremendous impact on the small business community. I commend this bill to the House.

12:18 pm

Photo of Melissa PriceMelissa Price (Durack, Liberal Party) Share this | | Hansard source

I rise to speak on the Treasury Legislation Amendment (Small Business and Unfair Contract Terms) Bill 2015, which I believe will protect more than 13,000 small businesses in my electorate of Durack. This bill further demonstrates my and the Abbott government's passion for small business. Since this government came into office in September 2013, employment has risen by 2.9 per cent, with some 335,000 new jobs created. As of last month, employment is at a record high of 11,810,700 jobs. This growth is largely due to the government's sound economic management and our policy platform, which is completely unmatched by those sitting opposite.

I have met with a number of small business owners who, of course, have been very pleased with the opportunity for a $20,000 tax deduction in this year's budget. This bill will now extend unfair contract term protections available to consumers to small businesses.

This government took more than 20 small business promises as part of our small business policy to the last election, and this is just one of those promises. Small business, as we know, is the economic backbone of not just Durack but Australia and, as one of the largest employers in Australia, it deserves this protection of the law.

This bill extends the consumer unfair contract term protections in the ASIC Act and the Australian Consumer Law to small business contracts. It also makes provision for exempting small business contracts which are subject to prescribed laws deemed equivalent to the unfair contract term protections.

Consumers have been protected from unfair contract terms since 2010. The government and I recognise that we need reform to ensure small businesses are protected in line with consumers. Small businesses often face the same vulnerabilities as consumers and should receive protections when offered those 'take it or leave it' types of contracts. Extensive consultations have indicated small businesses across a range of industries have concerns with unfair terms. Under these protections, the legislation will apply to small businesses which have fewer than 20 employees, combined with a transaction value threshold of $100,000 or $250,000 for a contract longer than 12 months. These protections will come into effect six months after the bill becomes law.

Protection of small business is something I have been passionate about throughout my career of 25-odd years in the private sector. Unfair contract terms are a significant concern to small businesses. The bill will allow a court to strike out a term of a small business contract that it considers to be unfair. Once this bill passes, the government will have delivered every small business commitment that we took to the last election—proof that this government is good for small business and that we are the best friend small business will ever have. Again, this bill illustrates this government's commitment to small business.

According the Australian Bureau of Statistics as of June last year, agricultural small businesses make up nearly 30 per cent of small businesses in Durack. This means over 3,600 agricultural small businesses will benefit from having the extension of the consumer unfair contract terms protections to small businesses. This, of course, is music to the ears of our farmers, who have previously welcomed the government's assistance. This includes the tax deduction available for water infrastructure, accelerating three-year tax write-downs for fodder assets and the drought relief that we have announced since coming to office. Agriculture is not the only industry that will benefit from this bill once it is passed, with more than 2,200 construction small businesses and over 2,000 distribution service small businesses in Durack also benefitting from the legislation.

This bill will ensure that small businesses confidently enter standard contracts for day-to-day activities, where the cost and time of reviewing these contracts—as well as seeking legal advice—can be enormous. As someone who used to advise small businesses, I know only too well how expense that exercise can be. Under this bill, the government will reduce the incentive to include and enforce unfair terms in small business contracts, providing a more efficient allocation of risk in these contracts, and support small business confidence in agreeing to contracts. This bill is fresh air to the diverse small business sector within Durack.

To further assist small businesses with this measure, the Australian Competition and Consumer Commission was provided with $1.4 million in the last budget to support the implementation of this bill. This money will support businesses' transition to the new protections. This will be of great benefit to the hundreds of rural, regional and remote towns in Durack, who do not have the same media coverage as those in the cities. This will be an opportunity to learn about the assistance this bill will provide to them. Following this, the ACCC will move to a more enforcement focused approach to dealing with unfair contracts.

This bill goes to the heart of the Abbott government's values in ensuring that Australia is the best country in the world to start and grow a small business. Consumers have had these protections since 2010, and the government believes in protecting Australian small businesses and consumers equally as well. The government believes that a strong small business sector leads to a strong economy, and only this government can deliver such confidence in our economy. Since coming to office, we know that we have axed the carbon tax, axed the mining tax, cut red tape and reduced the business tax rate, all of which has led to job growth and a more prosperous small business sector.

This bill gives small businesses the protection they need and deserve in order to flourish in the future. As a member of an electorate which has over 13,500 small businesses, I am encouraged by the protection that a diverse range of industries will receive under the Treasury Legislation Amendment (Small Business and Unfair Contract Terms) Bill 2015. I commend the bill to the House.

12:25 pm

Photo of Ewen JonesEwen Jones (Herbert, Liberal Party) Share this | | Hansard source

I rise to speak on the Treasury Legislation Amendment (Small Business and Unfair Contract Terms) Bill 2015. The dry part of this speech will be outlining exactly what we are trying to do here. This bill contains amendments to extend the consumer unfair contract terms protections in the Competition and Consumer Act 2010 and the Australian Securities and Investments Commission Act 2001 to cover small business contracts valued below a prescribed threshold. You will find that over 1,375 complaints were made to this, so this is something that we took to the election in 2013 and said that we would address this issue. I believe that this bill, in a large part, does do that.

What is covered in this bill? At the time of this agreement, the contract must meet the following criteria: at least one party is a business which employs fewer than 20 persons by headcount, excluding casuals, and the consideration under the contract that is disclosed at the time does not exceed $100,000 or $250,000 if the contract is more than one year in duration. Based on 2014 data, over 80 per cent of business contracts will be covered by these reforms. This will allow a court to void any unfair term of the formed contract. For example, a term that allows the business offerer in the contract to unilaterally change the price or key terms could be considered unfair. This will give small businesses greater confidence to enter into contracts, invest and grow.

I just want to assure my small businesses and my subcontractors in my area that there are still questions that have to be addressed. The thing I like most about what Minister Bruce Billson and Treasurer Joe Hockey are doing in this space is that they understand that this is not a panacea. They understand that this is not going to cover absolutely everything, because it is only 80 per cent of the contract signed by people in this space. But what is a contract? My definition of a contract is an agreed price between two parties. It does not even have to be in writing. How does that transpose into where we are going with competition and consumer protection and where we are going with that ASIC style of things when most people—subcontractors and that—do a lot of this work by a handshake or by an agreement on a broad range of things. Sometimes, there is very little stuff that is actually written down.

I always remember one great story about a mate of mine who was asked to quote on a job by a friend of his. My mate is a block layer. He gave him a quote and the builder, his mate, said, 'Look, you've missed out by a long shot. You've come second by a long way.' My mate, the block layer, said, 'That's weird, because I've gone in pretty hard on this. I'm surprised that I'm so far away from winning the job, but that's okay. If he's prepared to do it for that price, let him go with it.' Now, the other guy has gone on and gone broke. He has failed in his duty to finish the job. The builder has then rung up my mate, after the subcontractor had gone belly up, and said, 'Listen, mate. I'm in all sorts of strife over this. I need you to come in and finish this job.' My mate has said, 'I'll do it for you, but I'm not doing it for his price. I'm doing it for my price.' The builder said, 'Anything, anything.' So they shook hands and away they went. My mate finished the work, put in his cheque and got back the amount of money that was under the previous agreement. My mate played rugby league for a fair while and is not backward in coming forward, and block layers are by nature not shrinking violets. He has fronted this bloke and said, 'Mate, you have given me the wrong figure.' The builder said, 'No, we never agreed to that.' My mate took him to court over this and because there was nothing in writing the court decided that it would not hold up.

This bill will not protect people who do not dot their i's and cross their t's. This bill will not protect people who go out of their way and sign jobs for unrealistic figures. Government cannot protect people from agreeing to do work for figures that will send them broke. We have seen in my city a number of people on a number of jobs driving around now. I have spoken in this place before about truck drivers and tipper drivers with a quad dog that have been seemingly forced to take roles where they cannot make money. There seems to be two levels of pay here. That is a real issue and we must decide what has to be done.

Too many of these people that get into trucks and get into their own businesses are not in those businesses because they have a bachelor degree in economics or accounting and are able to plan these things correctly; they are in these businesses because they are good truck drivers, they know how to maintain a truck and they know how to drive a truck. They financed themselves into a truck during the boom times from the mid-2000s onward when there was lots of work on. They would have been driving for someone and then went out and worked for themselves.

The stories that are coming through to me are that too often people in this industry are running their businesses through their overdraft on their house or against their mortgage or against their property. They have $20,000 coming in a month and they think they are going to be okay, but what about their outgoings? They do not know over the course of the contract where they are going to end up. They do not have the wherewithal to do those things. It is not the business of this bill and it is not the business of the Treasurer or the Minister for Small Business to protect these people from signing these things, but it is a major issue in my electorate.

We are talking about the development of Northern Australia. We are talking about growing the population north of the Tropic of Capricorn from about one million today to between five and six million by 2050. That will not be developed and sustained by big business. That will not be developed and sustained by government. What will develop and sustain it is small business. For example, we have just seen another technical argument launched against the Adani Carmichael Mine project by an environmental group which has access to funds to fight litigation—what the Attorney-General has called environmental 'lawfare'. They are able to hold up a project on complete and utter nonsense, as far as I am concerned. We are talking about two endangered species which are in the legislation, which are in the terms of operation and which are in consideration of everything to do with the mine but they are not in a particular briefing paper. Therefore, we have once again been told that we have to hold back.

What we look like as an investment destination is not important to North Queenslanders. The fate of India and its power needs are not important to North Queenslanders. The fact that capital is very mobile and these sorts of projects do not go ahead are not problems for North Queenslanders. We are exposed because we are the ones who will build this thing, who will do the roads, who will build the bridges, who will build the houses, who will build the mine equipment and who will support the mine equipment. We are the ones who will provide food, accommodation and transport for the mine. It is the biggest industry in Queensland and here we are mucking around with these sorts of things and it does not seem to matter what contracts have been signed in that space.

We are talking about small business, and this government does take small business seriously. If we are to develop the north of Australia we must make sure that what we are doing in this space not only supports small business but is seen to support small business. We must be seen as a parliament that understands that from the bloke who turns up with the pie van to give the guys their smoko to the people that work from the port all the way out to Carmichael Mine and back to form the triangle at Abbot Point that there are jobs in there sustaining small businesses not just in towns but Charters Towers, Bowen, Ayr, Home Hill, all the way out to Clermont and all those places in between. Those are the things that we have to do as a government and those are the things that we have to do as a region in Northern Australia to make sure that we are sending the right messages to small business.

A lot of this stuff that we are doing with small business here is about sending the message that we understand the pressures that small businesses are under. We understand that people do not start their small businesses because they love filling out forms. We understand that small business people do not do this because they want to do more compliance work. What we as a government must do is send the message to small business that we are with you, that we support you, that we will get our hand out of your pocket, that you will no longer be tax collectors for us and compliance officers for us, and that you will be the people who create the wealth, create the jobs and create the prosperity for our region and for our country into the future. That is what we must do as an organisation in this place. That is why this bill here is a great start.

All these measures we have done about these things in isolation are not a panacea, they are not a fillip and they are not a cure-all. What they do is send the message to the people of this country that we understand where the jobs are created and that we understand where the wealth is created. What we are seeing in my region too often is that the big businesses come in and do the big infrastructure projects and the profit does not stay in Northern Queensland and the profit does not wash through our region. What we have to do is send the message to small business that they will be supported, and if they are on a contract that it will be fair and that it will be paid. I do not know how we can properly protect people who do subcontract work with government contracts because sometimes people work for less because it is government work and they are guaranteed a payment.

Only the person who signed the contract is guaranteed a payment. The person who is working on the site as a subcontractor or as a contractor is as exposed on government work as he is on any private work—if the builder goes belly up, he is exposed. When you are a contractor or a block layer, there is no way in the world you can go back to take your blocks back. You can, in some instances, go in and get your scaffolding equipment and those sorts of things, but you cannot pull your concrete up and you cannot get the steel in that concrete to take it back for a refund.

We as a government must send the tacit message to small business: we understand that you are under pressure, we understand where you want to go and we are doing what we can to make sure you are going to get there. Our message is: if you want to grow your business and if you are prepared to risk your home to give your children and your family a better chance to self-determination, then you should be supported. That is what I like about this bill and this suite of bills that the Treasurer and the Minister for Small Business are bringing forward.

Labor did not have a policy on this in the 2013 election, and they are completely bored when it comes to these sorts of things. There are people on the other side who have had their own small business, and they should be supporting this. What we should be doing is making sure that these things are brought forward. We have to instil confidence in our community that we are in this; that we will back you and we will do whatever we can to make sure that you are able to deliver your product on time, on price and for the amount of money that you signed up for.

That is what this bill tries to do. Will it cover everything? Of course it will not, but it is certainly a message that I like to give to small businesses back at home, in Townsville, throughout North Queensland and for the entire development of Northern Australia: that what we are doing as a government is building those buildings, putting those markers of what we stand for and the direction we want to go. The Minister for Small Business has said—and this is a bloody beauty and I will back him on it—that all anyone in this country is after is a traditional fair go. There are kids up in the gallery, behind the glass, whose parents will have small businesses and whose parents work very hard—and all weekend to keep their trucks clean—and this bill is all about making sure that your parents are able to have a fair go. When you graduate from school and you want to take the opportunity to set up your own small business—be it as a fitter and turner or a boilermaker or a truck driver or anything you want to do—there is a government here today that is putting the markers down and prepared to support you when it is your turn. So make sure that when you go home and tell your mum and dad that there is a government here that supports them. I thank the House.

12:40 pm

Photo of Craig KellyCraig Kelly (Hughes, Liberal Party) Share this | | Hansard source

I am pleased to speak on the Treasury Legislation Amendment (Small Business and Unfair Contract Terms) Bill 2015. This bill amends the consumer unfair contract terms protection, currently in the Competition and Consumer Act and in the Australian Securities and Investment Commission Act to cover small business below a certain threshold as well as consumers.

I understand that the opposition is supporting this bill, but I have a bit of a long memory. I can remember that, when the Howard government was in power, the then Labor opposition went on about how important it was to have an unfair contract provision in the then Trade Practices Act and to extend it to small business. In fact, they were elected back in 2007 with the explicit promise that they would extend unfair contract terms and provisions to small business. We know what happened: after they broke so many promises, this is one that was perhaps forgotten—when they came to power they forgot all about that promise they made to small business. They excluded small business when they implemented those unfair contract provisions for consumers. Despite the promises before the election, small business did not get a look in. Under the rotisserie of five separate small business ministers in the previous Labor government, we saw 519,000 lost in small business—enough to fill the MCG five times over and still have change. The coalition is getting on with the job and extending those unfair contract provisions to small business.

There is an argument that there should be complete freedom of contract and that government has no place to interfere to amend contracts after they have been written, but that overlooks the fact that we already have many provisions, both in statutory and common law, that address contract terms. For many years we have had provisions in the old Trade Practices Act and now in the Competition and Consumer Act against misleading or deceptive conduct. Our courts can strike that out any contract or any term of a contract that has been entered into or has arisen through deceptive conduct. We also have the unconscionable conduct provisions in the Trade Practices Act and now the Competition and Consumer Act, where courts can strike out provisions that have been written into a contract through unconscionable conduct. In New South Wales there is the Contracts Review Act that enables courts to strike out unfair contract terms. There is also the old common law remedy of a liquidated damages provision which is inserted into a contract as a penalty clause. If those liquidated damages are not a genuine pre-estimate of a loss but rather are for revenue raising or are a threat or a deterrent, those provisions can also be struck out. That common law provision, unfortunately, in recent years has been undermined by several court decisions, where several smart lawyers have been able to come up with a concept that is not actually a breach of contract or a liquidated damage provision—but it clearly is and anyone in business understands that it is—and they have been able to convince several judges that it is not a penalty clause but merely a fee for service. Thankfully, the High Court has taken some action on this to clarify what is a penalty and what is genuine liquidated damages.

Recently the High Court determined that a penalty provision can be triggered even if it is not a breach of contract. That is a very important decision by the High Court that overrules decisions of the lower courts, where large businesses have been gouging their smaller customers. This provision will now hopefully prevent that. However, the High Court still did not clarify the provision where a penalty clause gives rise to an additional obligation. As an example of this, there was one case involving film distribution where the exhibitor was only allowed to show the film once. If he showed the film again, he had to pay a sum equivalent to four times the original hiring fee. The court did not characterise this as a penalty but as an option which the exhibitor could exercise and pay for because the stipulation gave rise to an additional obligation. This was deemed not to be a penalty clause, more a fee-for-service. But it is very important that there be a distinction between something a business actively does and something that happens beyond their control and they do through failure or force. That has not been recognised by the courts.

There are still some question marks at common law about what is a penalty clause and what is a genuine liquidated damages clause. Unfortunately, this has allowed some large businesses in our economy to simply gouge and rip off small business. But, by the provisions in this bill, that will occur no more. To those companies—they know who I am speaking about—who for decades have ripped off small business with penalty clauses by charging them upwards of 20 times above what the true fee should have been, when this bill goes through the Senate and when it achieves royal assent and the six-months period before it applies expires, they will no longer be allowed to gouge small business like they have for years. My warning to them is this: if they do not take the provisions in this bill seriously and amend their practices, they should be aware of a major class action against them.

There is one provision in this bill which puts the threshold where it applies. Firstly, the business can only have fewer than 20 persons by headcount, and the consideration that the contract has disclosed must not exceed $100,000, or $250,000 if the contract is more than one year in duration. These are debatable provisions. There is no limit where there is misleading or deceptive conduct. There is no limit on the number of employees or the amount of the contract where there is unconscionable conduct. There are no limits in the common law penalty provisions, but we put limits in this legislation. We need to see how that works, and if there are cases where those limits are shown to be inadequate we should not hesitate to come back into this chamber and amend them and lift them up.

It is all very well to have these provisions to give small business opportunities, but we need to make sure that small business has access to the law. Therefore I implore the ACCC, with the extra resources we have given them, to run test cases in this area. Currently there are many large businesses that simply laugh at their small-business customers and simply say that it does not matter what the law says, it does not matter what the facts are, they can bleed them dry with legal costs. That does not happen if the ACCC steps in. Six months after this bill receives royal assent and it becomes effective, I want to see the ACCC out there on the playing field taking action against those companies that are imposing these unfair contract terms on small business. We need to make sure that we have in this country an environment that encourages people to get out and have a go in small business. It is small business in this country that will drive our future jobs growth. It is small business, as it always has been, that creates innovation. It has done that throughout history. If we allow an economic aura to develop where small business is not given the opportunity to succeed, we will be less prosperous as a nation. The provisions in this bill are some of the many steps that this government is taking to give small business in this country a better chance and I commend it to the House.

12:50 pm

Photo of Scott BuchholzScott Buchholz (Wright, Liberal Party) Share this | | Hansard source

I acknowledge the contribution of the member for Hume—a businessman in his own right before coming to this place.

Photo of Russell BroadbentRussell Broadbent (McMillan, Liberal Party) Share this | | Hansard source

Was that Hughes or Hume?

Photo of Scott BuchholzScott Buchholz (Wright, Liberal Party) Share this | | Hansard source

Hume. Is he the member for Hume?

Photo of Russell BroadbentRussell Broadbent (McMillan, Liberal Party) Share this | | Hansard source

Hughes.

Photo of Scott BuchholzScott Buchholz (Wright, Liberal Party) Share this | | Hansard source

Thank your, Mr Deputy Speaker, for correcting the record—he is my mate, Mr Kelly.

Photo of Tony SmithTony Smith (Speaker) Share this | | Hansard source

If you are going to give him acclamation, he deserves to have it recorded correctly!

Photo of Scott BuchholzScott Buchholz (Wright, Liberal Party) Share this | | Hansard source

Better directed at the right person, you reckon?

Photo of Tony SmithTony Smith (Speaker) Share this | | Hansard source

Yes. We do not want to bounce up the member for Hume too much, do we!

Photo of Scott BuchholzScott Buchholz (Wright, Liberal Party) Share this | | Hansard source

Sound advice from the chair. Most on this side of the House come from a small business background so we intently know the sensibility, the heartache, the stress and the anguish that small business people experience. There would not be too many times during a small business person's life when they do not have the panic, the worry, about their bills getting so high that they wonder where they are going to get their next sale from to meet their expenses. My electorate is predominantly horticultural; farmers are another extension of a small business. This legislation goes some way towards addressing unfair contract terms, which they deal with on a day-to-day basis, so it gives me great pleasure to address the Treasury Legislation Amendment(Small Business and Unfair Contract Terms) Bill 2015.

The Abbott government are committed to ensuring Australia is the best place to start and grow a small business, because the choreographers of this bill have the mindset of small business. Mr Billson, our small-business minister—you would not find a more enthusiastic minister in this place—has held that portfolio for some time. When the other side were in government, it was like a roundabout of ministers holding that position. This is a senior position in our ranks and it is linked directly to Treasury and in direct communication with the Prime Minister.

The government took more than 20 small-business specific promises to the last election. A key promise was this commitment to extend to small businesses the unfair contract term protections available to consumers. So, with this legislation, we have met another small-business election commitment. That is because we are a party of small business, people who have been on that journey. Our party is not beholden to the big union movements. We run our own shows. Our members understand firsthand what it would be like to put their lives and sometimes their homes, if they are mortgaged, on the line to make sure that they provide jobs, opportunity and growth for our nation. The small-business sector is the engine room of our economy and provides more than 80 per cent of jobs. With more than two million actively trading small businesses, representing 96 per cent of all businesses, they are an important driver of the Australian economy. Australian small businesses are the drivers of enterprise, and, when the small business sector is performing well, the whole economy benefits. I repeat that: when the small business sector is travelling well, our economy is travelling well. Measures like this, measures that have been brought to this House, enhance small businesses and enable them to get the engine wheels of our economy moving.

It is those small-business men and women who are hit the hardest by poorly designed government policy by bureaucrats or politicians. While a solution might work for the big end of town, it could be completely removed from the real-life challenges for small businesses—and I see that firsthand in my electorate. Small businesses are personal. That is why Mr Abbott's coalition government are committed to ensuring small business is front of mind in every cabinet decision. That is why the coalition have moved the role of Minister for Small Business into the cabinet, as I alluded to earlier. We are committed to putting small business at the front and centre of policymaking, and that is why we have moved policymaking responsibility for small business to the Treasury portfolio.

As part of the 2015-16 budget, we developed the largest Jobs and Small Business package in this nation's history. It included $5.5 billion worth of incentives to help small business to start, grow, prosper and, importantly, create jobs. If we could get every small business to put on one more employee, our unemployment rate would not start with a six. With every policy incentive that we can bring to this House, we encourage that; that is the intent of this government.

The Jobs and Small Business package included a small business company tax cut to bring it to the lowest level in almost 50 years. That was enshrined in small business measures bill No. 2 or No. 3, which I had the opportunity to speak on. It also included an immediate tax reduction for all asset purchases by small businesses, up to $20,000. In my electorate, there is the Stark family at Warwick Cattle Crush who have an engineering firm, and they build livestock-handling equipment. Immediately after the budget, due to the amount of orders that flooded in because their price point is around $20,000, they put an extra five staff on. So that had the immediate effect that the government anticipated.

In addition, we understand that not all businesses are structured as companies, so the package included a five per cent tax discount for unincorporated businesses. I think that was in small business measures bill No. 4. That was a five per cent tax discount for every tax holder. So, if you have a tax system set up as a partnership, such as you and your wife, there was a tax deduction of up to $1,000 for each tax recipient. That measure was to try and match the tax deduction given to the incorporated sector with one for the unincorporated sector, of which 70 per cent of our small business sector is made up. The coalition understand small business and the vital contribution the sector makes to our communities and the economy.

Consumers have been protected from unfair contract terms since about 2010. However, the former government, despite its initial interest, decided not to offer similar protections to small business. In many cases, small businesses have no more market power or ability to vary 'take it or leave it' standard contract forms than an individual consumer but lack the consumer style protections that provide for an unfair term to be struck out of such contracts. We knew it was time that small businesses, which often have the same vulnerabilities as consumers, also received protections when offered 'take it or leave it' contracts.

This Treasury Legislation Amendment (Small Business and Unfair Contract Terms) Bill 2015 seeks to amend the Australia Consumer Law, as set out in schedule 2 of the Competition and Consumer Act 2010, and the Australian Securities and Investments Commission Act 2001. This legislation will extend consumer unfair contract term protection to cover standard form, small business consumer-like contracts that are valued at below the prescribed threshold.

This is a long sought after and very much welcome new protection for small business, and one that the coalition has long supported. Extensive consultation has indicated that small businesses across a wide range of industries have concerns about unfair terms. Unfair contract terms can come in a variety of forms and can be used to unfairly shift risk to another party who may not be well placed to manage it. For example, they may permit one party to unilaterally vary terms, limit their obligations, terminate or renew the contract, levy excessive fees on outstanding moneys or affect the availability of redress.

We are supporting small business to confidently enter standard-form contracts for day-to-day transactions where the cost and the time to review these contracts and seek legal advice can be disproportionately high. Under the new protections a court will be able to strike out a term for a small business contract that it considers unfair. This will reduce the incentive to include and enforce unfair terms in contracts with small businesses. Under the new protection the contract will be a small business contract if at least one party has fewer than 20 employees and its value is below the prescribed threshold of $100,000, or $250,000 for a multiyear contract.

In designing the legislative amendment the government consulted extensively with stakeholders. The transaction value threshold was chosen so that the protections apply when small businesses engage in day-to-day consumer-like transactions, while encouraging them to conduct due diligence on large contracts fundamental to the success of their business. It is right and reasonable for all enterprises to seek advice on larger contracts beyond these values. It is important to make it clear that we do not believe it is the government's role to be contract nannies nor to be injecting agency bureaucrats to pore over specific clauses of multimillion dollar commercial transactions that small businesses should only enter into after much thought, careful examination and taking proper advice.

State and territory governments were actively engaged in the development of this measure and consumer affairs ministers formally agreed to the proposal to amend the Australian consumer law in April 2015, as required under the Intergovernmental Agreement for the Australian Consumer Law. In line with the corporations agreement of 2002, the Commonwealth notified the states and territories that these legislative protections would be mirrored in the ASIC Act. The protections will come into effect six months after the bill receives royal assent. The Australian Competition and Consumer Commission, which the government provided $1.4 million to in the 2014-15 budget, will support businesses transition to the new protections. With this legislation the government is restoring time and resources back to Australia's two million small businesses to invest in their business's success rather than navigating a costly and time-consuming maze of standard form terms.

I take this opportunity to say that the coalition government are the champions of small business. Since coming to office we have reduced 50,000 pages of red tape, freeing up small businesses to be able to spend time with their clients rather than laboriously trolling over red tape until midnight. Our environment minister has approved just over $1 trillion worth of environmental approvals. That engine room will start coming through and small business will be the benefactor of those environmental approvals for our nation.

The horticultural sector, the agriculture sector and dairy farmers all rely heavily on contracts. This bill gives additional security. It gives additional protection to dairy farmers and to growers who may have an ongoing relationship with a multinational company or potentially one of two retailers. It allows them to then have an arbiter. It is our first step in getting away from take it or leave it contracts. The member for Forrest, the good government whip, has an electorate similar to mine. She is equally passionate about the regional and rural sector. Her electorate will receive an equal amount of benefit from this bill as mine will receive. I thank the House for its time.

1:04 pm

Photo of Nola MarinoNola Marino (Forrest, Liberal Party) Share this | | Hansard source

I acknowledge the contribution of the member for Wright, the previous speaker. I thank him for that contribution. The Treasury Legislation Amendment (Small Business and Unfair Contract Terms) Bill 2015 amends the Australian Securities and Investments Commission Act 2001 and the Australian consumer law, which is set out in the Competition and Consumer Act 2010, to extend the unfair contract term protections currently available to consumers to cover businesses with fewer than 20 employees agreeing to standard form contracts valued at less than a prescribed threshold. I also acknowledge the work of the Minister for Small Business, who is a tireless worker in this space.

In many cases, as we know, small businesses have no more market power or ability to vary the take it or leave it standard form contracts than an individual consumer does. However, they actually lack the consumer style protections that provide for unfair terms to be struck out of such contracts by courts. Consumers have been protected from unfair contract terms since 2010. The ASIC Act and the ACL currently contain mirror consumer unfair contract term protections; however, existing laws for small business largely only address unfair behaviour in business dealings rather than unfair contract terms. It is time under this minister and this government that small businesses, which often face the same vulnerabilities as consumers, also receive protections when offered take it or leave it contracts. This legislation will extend the consumer unfair contract terms protections to cover standard form small business consumer-like contracts that are valued below a prescribed threshold.

This is a long sought after and very much welcomed new protection for small business and one that the coalition has long supported. Extensive consultations have indicated that small businesses across a wide range of industries do have concerns and issues with unfair contracts. The consultation has included the general public, businesses, industry groups including farmer organisations, the Commonwealth state and territory consumer agencies, regulators and small business commissioners.

Unfair contract terms can come in a variety of forms and can be used to unfairly shift risks to another party who may not be well placed to manage them. For example, they may permit one party to unilaterally vary terms, limit their obligations, terminate or renew the contract, levy excessive fees on outstanding moneys or affect the availability of redress. This might, for example, include a large firm requiring payments from producers or processors in order to stock or sell their products—a practice that should in reality be called a kickback. This is not uncommon in some sectors of the Australian economy.

Under the new protections, a court will be able to strike out a term of a small business contract that it considers unfair. This will reduce the incentive to include and enforce unfair terms in contracts with small business. The requirements of the ASIC Act apply to financial services and products, and the ACL applies to the supply of goods or services other than financial services or products and the sale or grant of an interest in land. The bill extends the consumer unfair contract term protections in the ASIC Act and the ACL to small business contracts that meet the prescribed criteria and makes provision for exempting small business contracts that are subject to prescribed laws that are deemed equivalent to the unfair contract term protections in the ASIC Act or the ACL and which are enforceable. Under the new protections, a contract will be a small business contract if at least one party has fewer than 20 employees and the value of the prescribed threshold is $100,000 or $250,000 for a multiyear contract. Small businesses also often lack in-house legal expertise. The cost of obtaining legal advice, particularly for low-value contracts, can be disproportionate to the potential benefits of entering into such contracts. Where small businesses decide to not enter into contracts due to their lack of confidence in understanding and negotiating terms or due to the cost of obtaining legal advice, they may miss out on market opportunities.

Why is this sort of action necessary? I want to look at the actions of those who might seek to misuse market power in contract negotiations. As far back as 2009, the Financial Review reported that the Australian Competition and Consumer Commission had recognised the power that Coles and Woolworths have in shopping centres and sought to broker a deal to stop them abusing this power. I want to talk about the court case in 2011 and the judgement made by Justice Gordon in relation to the case between the Australian Competition and Consumer Commission and Coles Supermarkets Australia. In the reasons for judgement, I notice that Justice Gordon stated in her introduction that Coles 'is the second largest retailer of grocery products in Australia'. She said that Coles engaged in unconscionable conduct in its dealings with a number of suppliers of products that it sold. She said:

Coles' misconduct was serious, deliberate and repeated. Coles misused its bargaining power. Its conduct was 'not done in good conscience'. It was contrary to conscience. Coles treated its suppliers in a manner not consistent with acceptable business and social standards which apply to commercial dealings. Coles demanded payments from suppliers to which it was not entitled by threatening harm to the suppliers that did not comply with the demand. Coles withheld money from suppliers it had no right to withhold.

That is was in the introduction.

Further in section 8, Justice Gordon also said that in claims proceeding the ACCC alleged that Coles by its conduct in relation to its dealings with the five named suppliers contravened section 22 of the then ACL. In general terms, that conduct involved Coles seeking payment from those suppliers outside of the terms of the arrangement negotiated between the supplier and Coles. The payments demanded by Coles were for so-called profit gaps, waste and markdowns, short or late deliveries and were deducted by Coles from moneys due to be paid to that supplier for products that it had already supplied to Coles. That was the conduct of Coles.

I am particularly concerned about the conduct of Coles in this matter and other matters. We cannot forget who actually owns Coles—and this is the thing that disappoints me the most and gives me the most grief. Since 2007, Coles has been owned by Wesfarmers. This cooperative of farmers was established by a group of WA farmers over 100 years ago. It has had its 100th anniversary. It has grown to be one of the biggest companies in Australia. I had a look at it, because what concerned me most was when I read about this sort of unconscionable conduct. When I thought about Wesfarmers, the Wesfarmers I knew, and the cooperative that it was, I was astounded that this sort of behaviour could happen in a company owned by Wesfarmers. I looked at the book to celebrate its 100th anniversary last year, in 2014, called 'A rural perspective'. When I was thinking about the treatment of Coles' suppliers, I thought I would look at what drives a company like Wesfarmers. I looked at the comments in the book by the chairman, because these are its historic values. Mr Every spoke well and long in the introduction to that book about the importance of Wesfarmers' culture. He said it was a culture 'underpinned by an operating style of integrity, honesty, openness, transparency and community involvement'. He also said, 'Our values today also trace to our origins patience, honesty, boldness, innovation, resilience and a long-term commitment to the communities in which we operate.' I find that those very, very essential parts of the Wesfarmers culture are inconsistent with the behaviour of Coles, as proved by the case taken by the ACCC, towards those suppliers.

I think it is a great tragedy that a company that had its foundations in the rural sector could condone this sort of behaviour by Coles in 2011—keeping in mind that Wesfarmers has owned Coles since 2007. Yes, it has restructured and it is a company, but this is not the only instance of such behaviour. We have seen in numerous ways the influence of these two major supermarkets, particularly in a state like Western Australia. I refer here to my own industry: the dairy industry, where the majority of milk that is produced in the state is sold in the domestic market and where the $1 dollar milk strategy has had a disproportionate effect on prices paid to farmers—and we are seeing that on a regular basis.

This type of legislation is particularly important for suppliers who are particularly vulnerable—and there are very few who are more vulnerable than those who produce a perishable product such as milk. Milk is not only produced on a daily basis; it has to be collected by a tanker on a daily basis. It has to be at a particular temperature. It has to meet a range of standards. It is then taken to a processor, processed and sold as quickly as possible. That means that the producer of a product is particularly vulnerable in the market. Often, in my state, they have very few buyers and very stringent conditions for the production of their product. That very vulnerability is exacerbated and then able to be taken advantage of.

I am particularly keen, through the bill before the House, to address some of the vulnerabilities that small businesses face. When we look at the bottlenecks for businesses throughout Australia, we can see there are those that can limit or restrict production. There can also be bottlenecks at the retail level in getting Australian food from the farm gate, from where it is grown, to the dinner tables around the nation. I looked at what Justice Gordon had to say. He mentioned in his remarks that Coles and Woolies between them control at least 60 to 70 per cent of the retail market. When you look at that avenue to market, the vulnerability of those that produce perishable product is even more apparent. That, of course, gave rise to the actions that Coles was able to take over a period in 2011. We know that in other countries, including the UK or the US, it is not as concentrated at all. This is a real concern. Historically, the Labor government chose not to act at all, so I am particularly pleased that we are starting the process here today.

We know that the ACCC is charged with keeping down costs and maintaining competition. We also know that often the income derived from food production in Australia does not reflect the effort or the risk involved, yet the drive to lower prices impacts on producers more than any other sector. We know that the income and profits for our food producers in Australia are lower than for other sectors and other industries. I know Australians value very much the produce that they have access to. We in this country know that our farmers produce some of the highest quality food in the world. They do it under sometimes very extreme conditions, given the nature of our climate. I will continue to represent them in every way that I can. I am particularly pleased that the government has chosen to assist small business through the legislation before the House.

1:18 pm

Photo of Eric HutchinsonEric Hutchinson (Lyons, Liberal Party) Share this | | Hansard source

I associate myself with the member for Forrest's comments about the Treasury Legislation Amendment (Small Business and Unfair Contract Terms) Bill 2015. Coles, as a business, was established in my electorate in the very small town of Wilmot in the far north-west of Tasmania. Tragically, 18 months ago the original Coles shop burnt down. Apart from the history that was lost, the tragic circumstances of that fire have created huge difficulties for the local community there. It is a small town with, essentially, no other businesses. It has really taken a huge effort by many people within that small community to offer even the most basic of services such as access to bread and milk, postal services and the other things that that business provided.

In my former life I was involved in a lamb export business. We had a customer in North America. It was a branded Tasmanian lamb project. We were able to offer the consumers in the New England part of North America a product that was traceable back to the individual farmers concerned. I remember well that at the time we were able to provide a better price to the producers concerned. The final sellers had a point of difference in the marketplace that they were able to take advantage of with the restaurants they supplied and also with retailers. It was a very small project—only about 300 lambs per week. We were not, unfortunately, able to get them killed in Tasmania, so we found an abattoir in Victoria. The abattoir involved was also a major contractor, as it happened, to Coles. We were not competing. We were going to an export market; Coles were using this abattoir for their domestic market. After six months of it going very well—it was not easy; it is never easy in business, Mr Deputy Speaker Broadbent, as you well know—we were advised that we would no longer be able to use that particular facility. It was suggested that the processor involved was given an ultimatum: it was either us—and we were a very small proportion of their weekly kill—or the customer that they simply could not do without. They were left with no choice at all. This example goes to the heart of this bill—the small business portfolio more broadly and, specifically, unfair contract terms.

The purpose of this bill is to provide small businesses with the same provisions that individual consumers have. For a consumer with a contract with, for example, Telstra—or others—if there are terms within the contract that are unfair and are deemed to be unfair, there are provisions within the Competition and Consumer Act that allow individuals to contest or dispute that. That is less the case for small business. In essence, that is what this bill goes to. Additional funding of $1.5 million has been provided to the ATO for the implementation of this bill.

Photo of Russell BroadbentRussell Broadbent (McMillan, Liberal Party) Share this | | Hansard source

Is the member for Lyons going to tell us the end of this lamb story?

Photo of Eric HutchinsonEric Hutchinson (Lyons, Liberal Party) Share this | | Hansard source

Was that an interjection, Deputy Speaker? In essence, our doors closed, and what had been quite a successful project for over six months, unfortunately, became too difficult for us. Everyone loses. I would like to believe that the customers that we established in North America were the biggest losers. But, of course, the farmers involved, who were supplying that contract, lost as well. Whilst it was not his bread and butter, the processor that we were dealing with at the time lost another part of his business. It certainly was not the majority of his business; as I highlighted, it was a very small part of his business. That was one example, as I say. We should never assume; I had assumed that I had completed the story.

Indeed, I think this has been one of the areas, as a government, in which the coalition have had real success. We took many commitments on small business to the election in 2013; we said we thought we could improve policy. Not least of all of those commitments was to put a small business minister into a cabinet. Small business is a critical part of the economy, particularly in an electorate like mine. Whether it is Bicheno or whether it is St Helens—and I was there on Friday and Saturday this weekend—there are no big businesses in this part of the world. So support for small business has been very much part of the story of the government since our election, and it has been a story of delivery—as have the free trade agreements that Minister Robb has been responsible for and, indeed, as have the portfolio responsibilities of the Minister for the Environment. It worries me that all three are Victorians! They have had real success. They have really formed part of the success of the government and the things that the government can be very proud of over the past two years. The free trade agreements benefit small businesses in my electorate very much.

We are, as you well know, Deputy Speaker Broadbent, the party of small business. We understand that small businesses are the engine room in the communities that I represent. They are the people that, if they have the confidence, will employ locals. They are people that very often risk everything to start a business. Indeed, they deserve our respect at every stage. In the budget this year small businesses were the winners. Incorporated small business received a 1.5 per cent tax cut. Unincorporated small businesses—and, as we know, 70 per cent of small businesses around the country are unincorporated—will receive a $1,000 discount on their taxable income this year. Of course, there is the instant asset write-off, which has been welcomed. I have mentioned before in this place that the day after the budget of the New Norfolk I walked up the main street with a bit of material, making sure that the hairdressers all knew. They all knew that this was a good thing. They understood that of course they need to make a profit and, of course, that this was for money that they spent after May, which they could write off on 1 July this year. Of course, the same will apply the year after for assets up to $20,000—as many as they like. One of the vital areas within my electorate is agriculture; many of those are small businesses, and they have also benefited enormously—particularly in terms of the opportunity to be able to write off irrigation and water infrastructure. This has so been important. As a government, we have also supported infrastructure in that area by committing $60 million to the Tranche Two irrigation schemes within Tasmania.

As I mentioned before, the essence of this bill is to provide something more like consumer protections for small businesses dealing with big businesses. It does not suggest, though, that small businesses should sign bad contracts. This is not a nanny state. There is a responsibility and it is fundamental. There has been criticism by some that the figure of $100,000 should be raised to a larger number. But, if I am writing a contract for $1 million, I am probably going to get advice there, and one would assume that the advice that I get will be appropriate for an investment or a risk of that magnitude. This is not a nanny state. The provisions of this bill are there to be able to take out terms within an agreement that might, fundamentally, deliver. The interesting thing, Deputy Speaker Scott, as you well know, is that trade only occurs between two parties when there is a benefit to each of those parties. This will allow small businesses to be able, as consumers are, to remove individual terms within a contract agreement that are deemed and seen to be unfair. On that note, Deputy Speaker, I thank you for the opportunity to make a contribution to this debate.

Photo of Bruce ScottBruce Scott (Maranoa, Deputy-Speaker) Share this | | Hansard source

The debate is interrupted in accordance with standing order 43. The debate may be resumed at a later hour.