Sean Edwards (SA, Liberal Party) Share this | Hansard source

I also rise in respect of the Treasury Legislation Amendment (Small Business and Unfair Contract Terms) Bill 2015. I certainly appreciate the comments made by the other senators—Carr and Whish-Wilson—and the important indication that they are largely in support and they have flagged that they might want to make some comment in committee. However, it would appear that this initiative from Minister Billson has received fairly universal acceptance.

Just for the record, there was an inquiry into this bill, which was conducted in Melbourne several weeks ago by the Senate Economics References Committee of which I am deputy chair, and we heard from a number of stakeholders in this space who raised concerns about the various drafts of the bill. Those concerns were discussed with the minister formally and informally, as you would expect in these environments, to a point where we will table a report later on this afternoon, I suspect, to which members will be able to talk, if they would like.

This bill gives effect to an election promise which was made prior to the last election to provide what was termed a 'fair go' to small businesses by extending the unfair contract term protections which already are in place for consumers but not for the small business sector.

In framing this bill, the government has consulted widely. I think there was a 10-week consultation process which was to gather information about the extent of the problem and canvass the views which, as I say, culminated in a Senate references hearing in Melbourne.

The government received 80 submissions, and there were about 300 survey responses. Also included in the consultation were Commonwealth, state and state and territory consumer affairs ministers and they formally agreed to amend the Australian Consumer Law in April. They have been in the loop and that is obviously required under intergovernmental agreement for Australian Consumer Law.

This legislation has been far and wide, and I must say it is world-leading legislation and, from the positive comments from those opposite and on the crossbenches, it would seem quite popular.

In line with the Corporations Agreement of 2002, the Commonwealth has notified the states and territories that these legislative protections would be mirrored in the Australian Securities and Investment Commission Act of 2001. There were certainly no objections raised at that time. Based on those consultations, the public was invited to comment in May. There has been quite a lot of input into the drafting of this bill. I note that Senator Whish-Wilson will be make contribution during the committee stage and I think that is healthy, given everybody's positive sentiment.

Overall, the feedback showed that small businesses across a wide range of industries across this land have concerns about unfair terms and, like those in the consumer protections, they were looking for it.

There are some two million small businesses in Australia, and they are vulnerable to the inclusion of unfair terms in standard form contracts because, just like consumers in rental agreements at the electrical stores and those types of things, they do not often have the time or the expertise—and certainly nobody has lawyers in house at that level of business—to critically analyse a lot of the contracts that are offered to them. For example, it could be a lease on a property or it could be a banking contract. This legislation is about providing those two million businesses out there in Australia with a bit of an umbrella when it comes to the kinds of contracts that you would expect as a normal part of business. The feedback that was received will seriously guide the implementation of this law once it comes into effect, which is set down to be six months from the time of assent.

This legislation will extend the unfair contract terms protections to cover standard form, small business contracts that are valued below a prescribed threshold. It contains amendments to Australian Consumer Law, which will flow on to the Australian Securities Investment Commission Act. This will enable a court to declare void an unfair term. This relates to a unilateral change in price and, if you are dealing with a duopoly in, say, the retail supermarket sector and you are a small business supplying into that sector, it will mean that you have some recourse available to you.

This applies to a contract where at least one party was a business with fewer than 20 employees when it agreed the contact—so fewer than 20 employees when the contract was entered into; not pre-empting the growth of a business—or the contract value does not exceed $100,000 or, if the contract is for more than one year, it does not exceed $250,000. The size of a business will be determined by a head count, and that is a reasonable position to take. The head count measure has been found by the Australian Bureau of Statistics to provide a good proxy for small business and the figure of 20 full-time equivalent employees has served government policy well over time. The size of a business is important, but so too are the threshold limits for day-to-day transactions.

Where advice on a contract's terms may be disproportionately high, the onus is on a small business to undertake due diligence for high-value contracts fundamental to the success of their business. So this legislation does not obfuscate the obligation on small businesses to undertake due diligence on contracts of a higher value. There can be significant differences between high-value contracts and those day-to-day contracts that are thrust before small businesses. It is certainly not the role of our government—and this has been a mantra of this government—to be a nanny to small business. It is reasonable for small businesses and large enterprises to seek advice on larger contracts. It is my experience that responsible small businesses and ones that are somewhat entrepreneurial understand this responsibility.

This bill is an important reform that will have significant positive impact on Australia's two million small businesses. Before I complete my contribution here this morning, I want to outline two concerns that were raised at the hearings by stakeholders and that were taken to the minister. The first issue concerns the lack of a comprehensive disclosure regime to encourage small businesses to seek professional legal advice. This policy was designed to address the take-it or leave-it contracts only. Contracts that involve the need for diligent negotiation were not included because those contracts are not standard-form contracts. So that is quite a reasonable position that the minister has taken.

The second issue which came up was the contention by some of the larger stakeholders, mainly the Australian Bankers' Association, that the period for implementation at six months was too short. But, having discussed that, the transition period for implementation of the new protections does follow the input from the majority of stakeholders. Some parties have argued for a longer transition period and some have argued for a shorter transition period. Those small businesses that would be direct beneficiaries of this have argued for a shorter time frame. The ones which have to make substantial changes have argued for a longer time frame, and that is not unusual. The government considers that the transition period balances these priorities. When you have such world-leading legislation, it is always hard to find a position which will give happiness, peace and order to every stakeholder.

In order to assist businesses to comply, the ACCC will work with businesses and industry groups to identify any kind of problematic terms which come about and they will encourage compliance. This approach was taken for consumer protections and led to most businesses choosing to delete or amend any of the problematic terms. In order to address this the ACCC has been provided with resources. An additional $1.4 million has been provided to support businesses to comply with these extensions of protections. This will obviously include the ACCC releasing guidance material at the start of the six-month transition period. Information will be key to the implementation of this and communication has been resourced. Those small businesses will be set to enjoy the benefits of this legislation in the shortest possible time frame. For the bigger businesses, where it is problematic for them to make the transition in a quick manner—they move a little more slowly—they will also enjoy the support of the ACCC through a transition period.

I am pleased to see this legislation come before the chamber. I am pleased to hear the conciliatory remarks about it and I look forward to the committee session.