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Monday, 17 August 2009
Page: 8081


Mr DREYFUS (7:05 PM) —Franchising is a very popular form of doing business in Australia. I am indebted to the Parliamentary Joint Committee on Corporations and Financial Services, for some statistics from their report of December 2008, entitled Opportunity not opportunism: improving conduct in Australian franchising, that give us a bit of the context in which this question should be considered. What they say in the report is that in 2008 there were approximately 1,100 business-format franchisors in Australia, compared with 960 in 2006 and 850 in 2004. They go on to say that there are an estimated 71,400 franchised units in 2008, turning over $61 billion in 2007 and employing over 400,000 people. We can see from those statistics just what a large contribution the franchising industry and businesses that are conducted in the form of franchising make to the Australian economy.

Indeed, it is a much more common form of business than it is in the United States. We read elsewhere in the report that it has been estimated that there is one franchise for every 20,000 citizens in Australia, which is around five times the density of franchise systems in the United States. So we should be in no doubt as to the importance of this sector and we should also be in no doubt that this sector is growing.

It is also important when considering the form of regulation that is appropriate for this industry to consider the fact that the mandatory franchising code was only introduced in 1998 and followed the introduction of a voluntary code in 1993. What we have seen in the years since the first introduction of the voluntary code, and then the introduction of a mandatory code, is increasing popularity of this form of business and a continued expansion of the sector. What also needs to be steadily borne in mind in considering regulation is that most of the franchising businesses in Australia, from the point of view of both franchisors and franchisees, are successful businesses which are conducted in an amicable way.

That said, we all know—every member of this parliament knows—that there are problems in the franchising sector. Every member of this parliament would have received, I would be certain, complaints from people involved in franchising in their electorate offices and those complaints would possibly have been in respect of some very large franchise systems and possibly in respect of some quite small franchise systems. What is also clear is that the problems that members of this parliament have heard from people in the franchising sector are not new. They did not suddenly come into being in November 2007 on the change of government. Rather, they are problems which have been identified, have been experienced and have been known of for very many years. There is more than a little disingenuousness in the speech that we have just heard from the member for Canning in this area. I would need to put into the history of this matter the Matthews Review, commissioned by the former government, commissioned by the Minister for Small Business in June 2006. I am just going to say a little bit about the history of this matter. In the last full year of the former government—


Mr Randall interjecting


The DEPUTY SPEAKER —Order! The honourable member for Canning will refrain.

There is a lot of sensitivity from the other side of the chamber because the member for Canning knows very well, Deputy Speaker, that the former government simply failed to act on most of the major problems that arose in this sector, and I would point to what the former Minister for Small Business did, which was to wait until the last full year of the former government, 2006, before she commissioned what was to be called the Matthews review. She commissioned that in June 2006. It was quite a prompt piece of work by Graeme Matthews, because he reported to the government in October 2006. We had to wait a few months before the Minister for Small Business got around to responding. She responded in February 2007 because she wanted to be seen to be taking action, it would seem, in the election year. But even that response was not acted on in the form of amendments to the franchising code until August 2007 and, demonstrating the speed with which the former government thought it appropriate to act in this area, were not to come into effect until 1 March 2008.


Mr Randall interjecting


The DEPUTY SPEAKER —Order! I ask the honourable member for Canning to refrain.


Mr DREYFUS —It all reflects the intense sensitivity on the other side of the House, and I am setting some context here.


Mr Randall interjecting


The DEPUTY SPEAKER —Order! The honourable member will resume his seat. I would ask the honourable member to treat the House the way it should be treated and I ask him to stop interjecting.


Mr DREYFUS —Thank you, Deputy Speaker. The small number of amendments to the franchising code which were accepted by the former government did not of course come into effect until 1 March 2008, almost two years after Graeme Matthews was commissioned by the former government. So one would not look to the former government, that is the government of which those opposite were members, to see any real track record in undertaking effective reform in this area. It was left to this government to pick up the pieces and embark on some serious reforms and try to legislate in an appropriate manner, which is what is now being engaged in.

The joint standing committee started its inquiry in June last year and it has conducted a number of hearings in Sydney, Brisbane, Canberra and Melbourne—and I see that we have the member for Oxley, the chair of the committee, here with us in the chamber. It conducted these hearings across Australia. It received 159 submissions and, if one looks at the list of submissions, they were from individuals, from academics, from franchisees, from franchisors, trade associations, lawyers and, indeed, from a member of this parliament. You, the member for Lyons, also made a submission to this report.

In June 2009 the government published an options paper and we can expect to see a government response soon. What is important to note about this, Deputy Speaker, is that this is an industry which is not one—and I have noted the thousands upon thousands of franchised businesses in this country—where one should jump straightaway to instant action, and I repeat, it is more than a little disingenuous for any of those opposite to be suggesting now that there should be instant change.


Mr Randall interjecting


Mr DREYFUS —What is really striking is to note that the voice expressed opposite, that of the member for Canning, was not heard in 2006 or 2007 crying for change.


Mr Randall —Deputy Speaker, I rise on a point of order. The point of order is that the member needs to be accurate and tell the truth. I have been involved in this issue—


The DEPUTY SPEAKER —Order! There is no point of order.


Mr DREYFUS —If this franchising question and the questions raised by this motion are so crucial, why is it that franchising does not get even one mention in the opposition’s small business package announced with great fanfare by the Leader of the Opposition on 6 April 2009? I happen to have that here with me, Deputy Speaker, and one can look at this so-called small business package and see that there is a heading about ‘Tax loss carryback’, a heading about ‘Superannuation Guarantee relief’, a heading about ‘OECD best practice regulatory burden’, a heading about ‘One-stop-shop regulatory portal’, a heading about ‘Support for family businesses’ and a heading about ‘Cabinet-level representation’. This package makes not one single mention of franchising as an area in which reform is needed, notwithstanding that this much-announced and heralded small business package of the opposition came some four months after the report of the joint standing committee.

And when one does go to look at the points in the so-called Small Business Action Plan of the opposition, they too—as does the motion here today—ignore the steps that have been taken to support small business by the Rudd government. So in calling, as the opposition does, for a program to be developed to provide support and advice for family business succession planning and business professionalism, the opposition would ignore the fact that the government has already introduced $46 million to fund 90 small business advisory services and business enterprise centres, $10 million in funding for a Small Business Support Line and $10 million in funding for the Small Business Online program.

The same could be said for each of the other supposed initiatives being announced here in April by the opposition, again not mentioning franchise at all, with the possible exception of the strange suggestion that the opposition is putting forward for superannuation guarantee relief, which would cost some $5 million over the forward estimates and do nothing for the 1.1 million non-employing small businesses in Australia. As for the suggestion that there should be cabinet level representation, why was that not implemented by the former government? The Minister for Small Business in the former government was never, of course, in cabinet. The motion and the speech we have heard from the member for Canning ignore the need for care in legislating in this area. (Time expired)