Ms GAMBARO(9.48 p.m.) —I also rise tonight to speak to the Trade Practices Amendment (Fair Trading) Bill 1997 . The principle of fair trading is what any small business stands for. The objectives of a fair go, competitiveness and a workable system are all part of providing an environment for small business to grow and prosper. As a whole, small business is after reforms that are workable and achievable and will be for the betterment overall. A system needs to be in place to encourage our small business operators to employ more people, to use apprenticeships, to have incentives and to achieve goals.

Coming from a small business background, I know of the rigours of being a small business operator. The demands of the time, the effort on family life, the week-to-week worries of turnover and how bills will be paid and the economic and physical wellbeing of employees and families for which you are directly responsible are all part of that process. It is tough and this government recognises and has listened to the needs of small business in providing a landmark package which is being hailed as one of the most significant announcements for small business in 20 years.

I, for one, never underestimate the importance of operating a small business and know of the time and effort which is needed to make it work, the risk involved and the many hours of service provided to customers. My interest in this particular area is very strong and it was very satisfying to play a role as the only government member from Queensland on the Standing Committee on Industry, Science and Technology which brought down in May this year the report entitled Finding a balance: towards fair trading in Australia. The report in many ways was quite revolutionary and is the basis for this bill which is under debate tonight.

I wish to acknowledge the efforts of many here, but I particularly wish to acknowledge the fine work of the chairman of the committee, the member for Bendigo (Mr Reid). The Minister for Workplace Relations and Small Business (Mr Reith) must also be commended for his tireless efforts in bringing down the government's response to the committee's recommendation. It is important to note that many of us on that committee came from business backgrounds. We understand the climate and the environment of trying to make a dollar, and many long hours of consultation occurred between the committee and the business community as a whole.

But the minister went one step further than we recommended. He introduced the bill on the same day as the government's response—on 30 September 1997. It will take effect on 1 July 1998. The minister should be applauded for his consultative approach in placing together not only the framework but also the whole foundation of the small business package. He led the way in delivering real proposals which will give small business real assistance. It is a response where the government is making reforms to address many of the issues concerning small business operators. It must be pointed out that the opposition had their chance on many occasions when they were in government.

Mr Laurie Ferguson —Let's talk about more recent events—Geoff Prosser.

Ms GAMBARO —Let's talk about the 13 years and what you did. In 13 years there were 17 reports. You do not like that fact, do you? There were 17 reports giving hope to small businesses in the Petrie electorate and around the country but failing to deliver on every single count. The purpose of this bill is to amend the Trade Practices Act 1974 and to prohibit unconscionable conduct in relation to small business versus big business matters, to allow industry codes as prescribed and for them to be enforced as mandatory industry codes.

As I have mentioned, the opposition were experts at producing reports and they were even experts at something else—having working parties and, boy, did they have a lot of those as well! The small business working forum of 1995—was just one of those working parties. They are a do-nothing party as they recently indicated when they announced their small business policy. The Labor Party has no policy. It has no integrated small business policy—small business in this coun try employs two million Australians—and I am sure small business are really thrilled to know this. The Howard government is an active government. It has taken just one report to make a change, and it has acted in a strong fashion in providing leadership necessary to take such decisions.

Some of the key areas in the federal government's measures include giving small business protection against unconscionable conduct; establishing a franchising code, which will be mandatory and stronger, underpinned by the Trade Practices Act; providing a model to alleviate retail tenancy disputes; giving teeth to the ACCC in small business trading rights, including representative legal actions on behalf of small business, small business commissioners and codes of conduct enforcement units, and funding for test cases; and supporting the extension of the banking industry ombudsman scheme. These are just some of the areas where this government, through the New deal: fair deal package, has provided real reforms that are warmly welcomed throughout my electorate of Petrie and across Australia as a whole.

The interest in this package of small business measures should not be underestimated. Over recent months I have spoken to many small business operators, retail tenants, real estate agents and shopping centre managers throughout the areas of Deception Bay, Aspley, McDowall, Redcliffe and Bracken Ridge. There is real interest, and there is a notion that this government has been listening to their concerns and, more importantly, is willing to take some action.

The Trade Practices Amendment (Fair Trading) Bill is specifically designed to strengthen the Trade Practices Act. A key area in which the federal government is working is that of projections against unconscionable conduct. This is a landmark move where a specific section has been placed in the Trade Practices Act to alleviate unconscionable conduct in the marketplace. The amendments ensure that those who operate under the provisions as laid out will be protected and that avenues will exist in which practices can be questioned and redress sought.

The flexibility brought about in the act will mean that consumer law protection will be widened to include small business, ensuring far more security in their position. It replicates the current consumer protection provisions contained in section 51AB of the Trade Practices Act and inserts a new section 51AC in part IVA of the Trade Practices Act. When assessing their rights, small business operators need the assurance that there are consumer protection provisions to give them certainty in their dealings. The section does not apply to transactions of more than $1 million, nor is it available to listed public companies.

The House of Representatives Standing Committee on Industry, Science and Technology found that small business needed greater protection against the exploitative nature of some of the larger firms. The committee took evidence from a wide variety of industry areas, including the film distribution industry, roof tiling, retailing and franchising. We took evidence from the Dawn Cinema, which is in my electorate of Petrie. The main problem dealt with here was refusal to deal. There were problems in obtaining supply by small independent cinemas in their dealings with vertically integrated big business.

The film distribution industry is highly integrated. Companies such as Roadshow Film Distributors, with a 55 per cent share of the first release market in 1995, and Birch Carroll and Coyle—the largest chain in Australia—are both part of the Greater Union group of companies. Claims were made that these integrated companies give special preferential treatment to their own cinemas. The result is that independent cinemas cannot obtain blockbuster or first release films until the integrated cinemas have exhausted their potential audience. This threatens the viability of independent cinemas.

The Dawn Cinema, along with other independent cinemas, has taken its complaint to the ACCC alleging contraventions of section 46 of the act. Another example was highlighted to us by the Natoli family. They provided a submission which highlighted the practice of predatory pricing, where a large retailer forced Mr Natoli's business out of the market by continually selling produce at less than cost price. He gave an example of a retailer selling eggs at 33c per dozen—clearly below cost price in any sense of the term.

The new government legislation on unconscionable conduct requires courts to consider the limitation in bargaining power which small business has when negotiating with big business. The government will legislate for mandatory or voluntary codes of practice to be underpinned by the Trade Practices Act. The ACCC will have stronger enforcement on behalf of small business. The codes of conduct enforcement unit will be created within the ACCC to administer and enforce a new system for prescribed codes. This will also involve the franchising and oil codes.

The government will promote an industry code provision which will allow for low cost and efficient alternative dispute resolution, such as mediation, conciliation, early neutral evaluation and expert appraisal and specialist dispute resolution bodies. The ACCC will be strengthened, with small business case officers in each state and territory who will be able to receive complaints. The ACCC will receive funding for test cases under the new provisions and will be able to take representative action on behalf of smaller firms. The government will appoint two small business associate commissioners who will be dedicated to small business issues. Section 7(4) of the Trade Practices Act will be amended to ensure that at least one member of the commission has small business knowledge or expertise. The government will provide $480,000 per annum to the ACCC for legal fees and support to conduct a number of test cases.

In the committee's fair trading report, part 6.1 highlighted a number of things. Common features in the complaints received included little or no ability to negotiate terms of contract; inadequate disclosure of relevant and important commercial information which the weaker party should be aware of before entering the transaction; and inadequate and unclear disclosure of important terms of the contract. Where smaller parties have committed themselves to a long-term relationship, the dominant parties sought to vary the nature of the relationship so that it was more favourable to the dominant player. When disputes arose there was no quick, cheap or market sensitive way to deal with them. Where they did exist, there was reluctance by small business to access any remedial action because of fear of reprisal.

The recommendation continues by outlining a range of situations which, in summary, provide far greater protection for small business than has ever existed. It can only be seen as a positive initiative, and it is one for which the government must be applauded. However, the point needs to be made that this notion that small business deserves greater protection is not a recent phenomenon. It has been a call from small business that has been around for quite a while. This government has acted by providing real assistance to small business which suffers under the dominance of unconscionable conduct of other parties.

But a number of retailers have welcomed this small business package. I quote:

The Federal Government has acted in a decisive manner which shows genuine leadership. The Federal Government has taken major and welcome steps to give small business a fair go . . . These are the most exciting decisions for many decades.

That was from the Motor Traders Association of Australia on 30 September. On the same day, the Service Station Association commented:

The Federal Government has today announced the most comprehensive small business package in history in response to the Fair Trading Inquiry.

Then there is this one:

The Government has demonstrably committed itself to the small end of town . . . this Government has delivered on the Reid Report and then tossed in half a dozen steak knives.

That was stated on 1 October by Rob Bastian from the Council of Small Business. This last quote comes from the Australian Retailers Association:

Retailers welcome Government Retail tenancy Proposals.

This amendment to the Trade Practice Act will give greater coverage to retail tenants, particularly in the area of disputes which may occur in leasing arrangements.

I would like to touch on the area of codes of practice; they have long been useful in business life. The flexibility in arrangements throughout different business sectors has led to the choice of mandatory and voluntary codes. The federal government has acknowledged the important role of codes, and it has recognised that in some cases it becomes necessary to underpin the code with legislation to ensure that the effectiveness and principles of the code will be upheld.

This amendment bill puts into place mechanisms by which mandatory and voluntary codes can be underpinned by legislation. However, for this process to occur, a number of set principles—as outlined in `New deal: fair deal'—need to be undertaken and deserve repeating here. They are as follows: before any code is prescribed, the government will prepare a regulation impact statement outlining both the direct and indirect effects on a business of prescribing the code; criteria will be developed to determine whether prescription of a code is justified; and each prescribed code will have to be tabled in both houses of parliament and can be disallowed by either house.

The strength of this is that it will ensure that prescribed codes will not work against parties in industries. It also allows for endorsement and a clear statement outlining the needs of such codes.

In `New deal: fair deal' one of the more significant initiatives is the move towards mandatory codes of practice within the franchising industry. The Standing Committee on Industry, Science and Technology sought for specific legislation to be enacted providing for the compulsory registration of franchisors and compliance with codes of practice. A new and stronger franchising code of practice has been drafted, and industry consultation is currently being sought. The exposure draft is available now for current comment.

Franchising is a growing sector. A good franchising system will reduce risk and provide a healthy environment for all. During my years working in the industry, I observed that most franchising disputes occurred at the time of disclosure. Greater disclosure is now required and provided by this bill. Many franchisees are victims of practices such as `churning', which uses royalties and other franchisee contributions to keep poorly managed systems afloat.

A new franchising policy council will be established. It will advise on the content of code regulation. Nine members will be appointed, including an independent chair, three member franchisors, three representing franchisees, and two service providers. A code enforcement unit will be established in the ACCC to enforce the code, including an area for test cases for legal action.

I am extremely pleased that minimum standards will be set for disclosure documents for both franchisees and franchisors. Also, a welcome training package will be developed for dissemination by industry bodies and state government agencies to inform prospective franchisees of the advantages and disadvantages of taking up a franchise.

I have experienced many cases of potential franchisees falling in love with the idea of franchising and not undertaking sufficient research into their reasons for wishing to purchase a franchise. During my time as Queensland Marketing Manager with the Franchisors Association of Australia and New Zealand, I observed and noted on various occasions that people were unwilling to pay $9.95 for a publication put out by the Franchisors Association advising them about franchise agreements, documents, disclosure statements and legal advice—and yet they were willing to spend $300,000 on purchasing a franchise system. Many wanted to franchise under-developed systems after only a short time of operating them. I would caution them very much against this.

Most franchisors are responsible members of the business community and do act ethically. But, unfortunately, there are many newcomers in this industry who do not uphold the same ethical standards. The ethical franchisors—the ones who do the right thing—get the best legal and accounting advice; they belong to the association; they have undertaken professional courses and development programs to ensure that they keep up with the latest domestic and national trends; and they provide quality training and support for their franchisees.

Many people think franchising is a great way to instant wealth. A good franchise requires a number of years work before any favourable returns come to fruition. Similarly, it is no good going into a franchise such as, for example, for Baskin and Robbins if you do not like children. If you do enter into one, I can guarantee that you will spend your whole day cleaning counters from children's ice-cream spillages. A franchise involves working long hours and demands a high level of family participation. There is a great deal of social cost when things do not work out—stress, family breakdown and poor health are just a few.

Franchisees will now have the legislative protection afforded by the amendments to the Trade Practices Act. This will enable them to have recourse against unconscionable business conduct by franchisors. I believe that a very positive initiative is that the government will also provide the ACCC with resources so that all small business will have access to the new protection measures in regard to unconscionable conduct.

The federal government will work with states and territories, industry groups and small businesses themselves to ensure that information on fair trading issues is readily available. Small businesses will have a better awareness of their legal obligations, their means of access to justice, and what to look for when purchasing a franchise or entering into a commercial lease. They will be better off overall.

The Trade Practices Act amendment will provide retail tenants with further legal rights under the Trade Practices Act if a retail leasing contract or particular by their landlord is unconscionable. This amendment will provide retail and shopping centre tenants with significant legal rights not previously afforded to them.

The federal government has also proposed that there will be wider changes in the retail tenancy sector in the future. We recognise that the power to unilaterally bring about changes in this area is somewhat limited by constitutional constraints. But we have pressed ahead, and we are working closely with state and territory governments to bring about a nationwide change to retail tenancy legislation.

I have been actively involved in decisions with many retail tenants in the Petrie electorate. This government is also looking at preparing information in a range of resourceful packages such as kits, the Internet, material provided on BizLink and information videos. I commend the report to the House, and I fully commend all the amendments. (Time expired)

Debate interrupted.