Thursday, 11 May 2017
Competition and Consumer Legislation Amendment (Small Business Access to Justice) Bill 2017; Second Reading
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.