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Economics Legislation Committee
Australian Small Business and Family Enterprise Ombudsman

Australian Small Business and Family Enterprise Ombudsman

CHAIR: We will resume this hearing with the Australian Small Business and Family Enterprise Ombudsman. Welcome, Mr Billson. I believe this is your first time before the committee in this role. That is correct, isn't it?

Mr Billson : Yes, that's correct.

CHAIR: Thank you very much for being here. I believe you have an opening statement, so please go ahead.

Mr Billson : Thank you, Chair. I would like to make a short opening statement. I recognise that my agency is a relative newbie to this committee as a result of recent machinery-of-government changes. I am now 13 weeks into my tenure as the Australian Small Business and Family Enterprise Ombudsman or about one-twentieth into the term. The first couple of months have included a long list of meetings with a huge range of small businesses, industry associations and peak bodies representing the breath of the sector. Combined with some time on the ground, we are hearing of a number of issues in our space. Some are ongoing and long-term issues you'd be familiar with and some are emerging issues particularly around the impairment of recovery for some small businesses in the COVID environment and also the impact of shutdowns.

It's too early to gauge the impact of the current Victorian circuit breaker lockdown, but prior to the snap restrictions the signs were encouraging for small businesses and the family enterprise community. What's happened in Victoria has highlighted the need for certainty and predictability for businesses in any sort of lockdown, particularly around what sort of supports will be available for the sector.

Broadly speaking, there is evidence of confidence in the small-business sector. The ABS tells us that the unemployment rate is dropping, businesses are keen to employ and we are hearing about businesses having difficulty finding both skilled and unskilled staff. Cooks and chefs are in particularly high demand, but unskilled workers are similarly difficult to find. The ABA reported in April that only 0.2 per cent of small-business loan deferrals remained outstanding. Ensuring that those businesses with outstanding deferrals engage with their banks early is going to be critical to helping those businesses either restructure or, sadly, in some cases, make a dignified exit.

Unfortunately, 17 out of 19 industries monitored by CreditorWatch saw an increase in payment times in the last month. We have also seen a slight uptick in small-business insolvencies, still lower than we would see in a normal year but picking up compared to last year's numbers. Overall, and despite some expectations to the contrary, there are a few areas of recovery impairment. That notwithstanding, our economy and by extension the small-business sector is not doing badly. The OECD seems to agree, with predictions of growth at 4.5 per cent for 2021.

Inquiries into our assistance line are pretty steady. There were 1,731 contacts received during the March quarter—1,400 of which were dispute related. We are still seeing a flow of franchising disputes through our administration of the dispute resolution mechanism in the franchising code. Over the last couple of months we have also seen a slight uptick in payment disputes. We are also seeing a spike in cases relating to penalties applied when superannuation payments are made late, but the superannuation guarantee charge penalties of 200 per cent are being remitted back to the hard floor of 100 per cent. My team is working closely with stakeholders, including the ATO, to address these issues in a timely and thoughtful manner, and I am very proud of the work that they do.

It is great to see the updated franchising code released this morning. I am always pleased to see the strong bipartisan support for reform in this space, which is so important to small businesses. I congratulate the Senate—and some senators here have been active in that role. My team and I are looking forward to working with key players in this space to ensure that the reforms are clear and transparent to small business. The work of my assistance team highlights the need for robust alternative dispute resolution and a streamlined access to justice system for small business. Australian businesses have an unusual reliance on regulators to address infringements upon their businesses' economic interests. My office is currently undertaking some further work, engaging with our colleagues in the Attorney General's Department, to understand what else we might be able to do to shift the dial.

Access to finance is still an issue for the small business sector. We know that before businesses even get to the application stage bank managers and finance brokers provide advice about the likely success of a finance application, which leaves many of those businesses not even applying. When a borrower uses a family home or personal guarantees to secure business loans, the application of consumer lending concepts and obligations to business loans further hampers access to credit for these businesses.

Insurance is still a major problem in the sector. Small businesses in northern Australia have enthusiastically welcomed the government's announcement of an expanded reinsurance pool for cyclone issues in northern Australia. But according to a survey we conducted when doing our insurance inquiry, only 12 per cent of businesses were from the northern Australian area, so about 88 per cent of businesses still face issues in this space. We've been engaging with the insurance industry to understand any possible industry-led solutions in this space. We will continue our information gathering and work in this area. Hopefully that gives you a flavour of what we have been up to and what we're dealing with for the moment. I will leave it there. We're happy to take any questions the committee might have.

CHAIR: Thank you, Mr Billson. Do we agree to accept that as a tabled document? Thank you, Senator O'Neill. I have couple of quick questions to start off with. If you had to name a couple of priorities, moving forward, what are the key things that you think are affecting business and where you can help?

Mr Billson : I mentioned insurance. We are seeing the inability to access affordable insurance being a barrier to some businesses even being able to trade. It covers a range of areas—property insurance, particularly where there is a sense of heightened risk. We've got examples of adventure tourism businesses, that are active near national parks, that are thought to be such a high risk no-one will touch them. We've seen professional indemnity challenges, particularly for smaller professionals that might not be able to convince insurers that their quality assurance arrangements are top class. So large firms in certain professional service sectors are able to access insurance but smaller firms are not.

Public liability is a big challenge, particularly for, and I use the word 'adventure' very lightly—I never thought a bouncing pillow at a caravan park would fall into the definition of an adventure activity, but this is what we are seeing. Caravan park owners are being told, 'We will insure you to have people sleep at your premises, but not the bouncing pillow. And that investment you made to put in a water theme park, or something, just to add to the appeal, no.' So that is happening as well. We have put in an insurance inquiry. We put a report out last year. We are engaging with the industry and small business associations to identify some pain points. We are talking with brokers, because we think brokers play an important role, as an advocate for small businesses, in understanding the market and market conditions but also in communicating to prospective insurers what risk management steps they may have taken to be an acceptable risk. We are also having conversations now that we are in the Treasury portfolio. They have policy expertise as well.

CHAIR: Thank you very much. Finally from me—and this is probably more a comment than a question—I would very much encourage you to make sure you reach out to regional small business. They do face particular challenges, particularly around staffing, that aren't necessarily present in urban areas and in population centres. So I would just encourage you to reflect on that and, as much as possible, outreach to regional small businesses, if you can.

Mr Billson : Good observation. It leads into digital engagement also. We've seen some businesses navigating well, particularly in rural and regional areas. You'd be aware of our engagement with Australia Post, when the perishable delivery decision came up, which we were all aghast at. These are the practical challenges facing small business and family enterprises. Access to finance is still an issue. There are some COVID impaired and recovery impaired sectors that we are still working closely with. We think it's still too hard dealing with government. It's just too hard. Small business procurement—to get on a panel is an enormous task. So we think there is some scope and opportunity there, and even getting a clear message out. There are good things happening at different levels of government and across government. It's often too hard to find what they are, Chair. So, if we can play a role in synthesising and helping time-poor small businesses understand what resources are available and the challenges that may be there, we think that's a worthwhile think to do.

CHAIR: Okay. Senator O'Neill.

Senator O'NEILL: Good evening, Mr Billson. Thank you for your opening statement and for your description of some of the challenges being faced. Senator Brockman and I are actually on another committee together, the Murray-Darling Basin committee, and I want to note that, in the course of the inquiries there, I think pressure on the economies in the regions and job access and housing access are all exacerbating the capacity for businesses to grow, up and down the Murrumbidgee and Murray rivers—the whole Murray-Darling Basin. There seem to be very particular pressures there that need some observation. One of the problems for those communities along the river in Queensland, New South Wales, Victoria, and South Australia has been a reticence for public servants to actually go into those communities and find out what's really going on on the ground. As a senator for most of regional New South Wales, I absolutely say that it's time for a roadshow out there and contact with businesses on the ground that aren't engaging with their local chambers of commerce and haven't got advocacy down here into Canberra. They are dealing with very, very different conditions than the usuals who do engage here in Canberra.

Mr Billson : I take that invitation, and there are plans for the coming year to get out. If there are particular regions, Senator, that you think should be early priorities on the itinerary, we'd welcome that guidance.

Senator O'NEILL: Thank you. If I could go to the insurance matters. I don't know if you were watching in the last section when I was asking questions about insurance.

Mr Billson : I was, Senator. I find these hearings very interesting. So, yes, I was watching.

Senator O'NEILL: In terms of small business insurance, you have raised in your statement this evening the fact that only 12 per cent of businesses actually are in northern Australia. One of my last questions, to Mr Kelly, I believe, was: 'What about the rest of Australia, which is also impacted by disasters and catastrophic events?' So what's happening for that 88 per cent of businesses, particularly small businesses, that are being impacted by unforeseen events?

Mr Billson : We think there's scope to consider other policy interventions. In our discussions with the Insurance Council of Australia—you might be familiar; they've had some work done, called the Trowbridge report—

Senator O'NEILL: Yes.

Mr Billson : which talked about the nature of the insurance market. There are some interesting ideas in there. We were a little unsettled that some of them involved a 30 to 40 per cent increase in premiums. That was thought to be acceptable, and we were a little bit taken aback, thinking that's a bit steep. But there are some ideas in there that we'd like to tease out a little bit more. You'd be aware the agency did release its own insurance inquiry, and one of the recommendations was around a reinsurance pool. So we're encouraged that there's some activity there. But there were a number of other recommendations that we think are worthy of having a look at. We're actually having a revisit of that report, just to see what we should pick up and re-examine. If there's feedback we've had that some of our recommendations needed a little bit more work, let's do that work. We have talked to the ICA about getting around the table with them to discuss some of their industry-led solutions.

I mentioned brokers, because we've had some feedback that the market's quite tight, generally, but, in some cases, the brokers can help present a proper account of the real risk and the mitigation factors that some businesses are addressing, and then, in other areas, they're just being told no.

Senator O'NEILL: Yes.

Mr Billson : We've had one example where a fire event saw an accommodation provider near Batemans Bay burnt out. They rebuilt and took all appropriate care—all the proper fire-related design and building steps were taken to fireproof the building to a higher standard. All of that care saw their insurance costs go from $10,000 a year to $100,000 a year, with very big excesses, or they could take out fire as a risk and that would bring it down to $50,000 a year but still with very high excesses. So these are the practical field examples that we're trying to tease out so as to understand: what are appropriate steps to make it affordable?

Senator O'NEILL: That's enough to take a business out of operation, and, with something like an accommodation business, in a place like Batemans Bay—and we know the challenges that have been facing the people of Eden-Monaro—that's jobs that are gone that really are never going to come back, despite massive capital investment and huge investment by those business owners. You're getting some of this feedback on the ground.

Mr Billson : Yes.

Senator O'NEILL: How are you feeding that up to the minister, and what sort of response are you getting?

Mr Billson : Alerting all members of the parliament to the fact that this is an ongoing challenge is part of our work. Secondly, if we identify these challenges, we'd like to be able to identify some possible solutions, so there's work being done on that as well. Then there are particular areas—and I'll use the 'adventure' definition, even though a bouncing pillow in a caravan park doesn't strike me as particularly adventurous! We're seeing some real examples like that, where people are just saying, 'No, we don't want to insure that any more.' So that is actually stopping businesses from trading. In the professional services area, some people are being told: 'No, you had some problems with an apartment complex in Western Sydney. The certifier was involved. Even though you're not one of those, you're part of the professional pool that's looked at for insurance and reinsurance and through London.' They're finding it difficult to get insurance, whereas big businesses are finding it less challenging. Even the professional services scheme, of which you would be aware, caps liabilities—

Senator O'NEILL: Yes.

Mr Billson : That doesn't seem to be having an impact on price and availability in some sectors. So these are the examples. Grab the field evidence, unpick it, understand what the policy influences are and try and map out a way forward that would improve the situation—that's the work we're currently involved in.

Senator O'NEILL: So have you put together any policy solutions that you've put to government yet?

Mr Billson : Currently, we've got the original insurance report that the office released, so that's the one that's on the table. We're picking that up again and putting the paddles on it and seeing where we need to do a bit more work. I did hear your question about how we gauge opinions. We do go to the peak bodies, and that might help shape up a discussion paper. We'll go back to them, but then often we go out and survey actual business owners to get their take on things. Eighty-eight per cent of those who'd raised insurance issues with us weren't from that northern Australia geography; they were sub the gulf, sub the tropic, and we keep focusing on those issues.

Senator O'NEILL: I did ask a question that wasn't particularly well received by the chair and others. It was: 'How bad does it have to get before you're at "Break glass in emergency"?' In terms of a scale, where are we in terms of small businesses not being able to get sufficient insurance to do what they need to do, at a price that they can afford, to get on and do the job?

Mr Billson : It varies on market and product. What we're seeing is that there's no single policy thread that will address all of them, and that's why we've tried to spend some time with the Insurance Council of Australia to understand—

Senator O'NEILL: The pressure points.

Mr Billson : how they're rating and profiling risk—what they are seeing from their side of the equation. In some cases, it's actually born out of a lack of information as well. If you go to London and talk about natural disasters in Australia or other impacts, they don't always have a great granular insight. So it might be an information gap as well. So I would say that it's a very high challenge and risk for a smaller professional services firm and, in some cases, it's stopping them being able to trade. We've got case studies of where normal commercial activity is basically being told, 'No, you can't do that. We won't insure you.' And, for others, it's a cost and availability issue. The costs are going up, exclusions are increasing and excesses are going up—it's a price thing, and it's really having an impact on margins as well. We hope to unpick that a little bit more so, hopefully, the next time we're at the committee we'll have information that is a little more granular about where the most immediate priorities are. I'd just put forward that that adventure lens seems to be a really big issue right now.

Senator O'NEILL: Mr Billson, you're quoted as saying of the 2021-22 budget:

Tonight's budget represents a substantial financial and strategic commitment to making Australia the best place to start, grow and transform a business …

Did you attend any functions hosted by the Liberal or National parties related to the 2021-22 budget?

Mr Billson : Did you ask whether I'd attended any functions?

Senator O'NEILL: Yes.

Mr Billson : No.

Senator O'NEILL: Have you been invited to speak at any events hosted by the Liberal Party or National Party since your appointment as the small business ombudsman?

Mr Billson : No.

Senator O'NEILL: Are you still a member of the Liberal National Party?

Mr Billson : I was never a member of the Liberal National Party.

Senator O'NEILL: Sorry, the Liberal Party.

Mr Billson : My family holds a Liberal Party membership as a family in Melbourne.

Senator O'NEILL: And you consider yourself still part of that family, so you're embedded in that?

Mr Billson : Well, the fact is I haven't been home for a few weeks. The last time I checked, I would say yes.

Senator O'NEILL: Just to be clear.

Mr Billson : I didn't want to go home so I could be here in person tonight, because I don't think I'd be allowed back if I went to Victoria. But last time I checked, my wife was very happy to have me.

Senator O'NEILL: So, yes, you and your family are members of the Liberal Party.

Mr Billson : Yes.

Senator O'NEILL: To your knowledge, can you confirm what we just heard a little while ago—that all of the functions of the small business division of the Department of Industry, Science, Energy and Resources were retained in the transfer to Treasury. There's nothing that you're aware of that has been dropped off, other than employing your first person?

Mr Billson : Other than that, that would be my understanding. To be honest with you, I haven't looked too carefully at the department's circumstances. I've been more focused on my own agency and the MOG, the machinery-of-government changes. But my understanding is as you describe it, Senator.

Senator O'NEILL: What is the funding allocation for the office of the ombudsman for each year of the budget over the forward estimates?

Mr Billson : It's of the order of $6.48 million, and then there's some additional administered funding. You would be aware that we facilitate a business tax concierge service. Where people might in a dispute with or thinking about challenging the tax office, we offer some support there, including some subsidised advice about prospects. That's the administered funds. I did hear the Treasury portfolio indicate that we're getting some additional resourcing. I'd heard that. I'm keen that that's the case. We're just gaining an idea of what that looks like, because we did make a request for some additional staffing, one of which was related to roadshows, interestingly, and being able to arrange those, and to some data analytics capability. We also have some additional responsibilities around the franchising code and case management, and also around advocacy work. Of course, there's a communications task that we try to do well. You'd be aware that, under our act, there's an assumption that people will write to us about their issues, but often we can see issues through social media and we need to track and monitor that. We have in the past outsourced some of that activity and we're looking to bring that inside. I've still to see what the nitty-gritty of that is, but that's an explanation of it.

Senator O'NEILL: Thank you for the fulsome answer. I will go to the $6.48 million. That's in total for what period of time—or is it per annum?

Mr Billson : That's an annual budget allocation.

Senator O'NEILL: Per annum?

Mr Billson : Correct.

Senator O'NEILL: It doesn't go up or down; that is your base funding for each of the years?

Mr Billson : It moves as per enterprise bargaining adjustments. One of the underlying factors is the salary trajectory, so it's adjusted for that, but then the recurrent expenditure is fairly constant.

Senator O'NEILL: In terms of the additional resourcing for staffing, have you advanced a budget to the government?

Mr Billson : We have put forward a proposal.

Senator O'NEILL: What's the request for staffing?

Mr Billson : Basically what I just outlined to you.

Senator O'NEILL: In terms of dollars?

Mr Billson : About $1. 5 million.

Senator O'NEILL: For staffing alone?

Mr Billson : Yes.

Senator O'NEILL: And in terms of data analytics?

Mr Billson : Yes, that covers that spread that I just outlined.

Senator O'NEILL: Okay. So franchising is embedded in the $1.5 million ask, as is advocacy?

Mr Billson : Yes, that's correct.

Senator O'NEILL: And advice plus communications—all of those things?

Mr Billson : Yes. Data analytics is also part of it, and I mentioned the social media stuff. The other issue is some admin assistance with organising roadshows.

Senator O'NEILL: Thank you. Are you confident that funding will not fall below the level when the department support was transferred to Treasury?

Mr Billson : No, as I heard, I am pleased that there has been an increase in resources. That is an allocation for the financial year we are shortly commencing. There is some provision beyond that, but that is dependent on the review of the agency, which you would be familiar with.

Senator O'NEILL: Yes. I have some questions that will go to that shortly.

Mr Billson : So there is a wait and see on that review just to see how ongoing that is.

Senator O'NEILL: In terms of the staffing numbers you have indicated you are hoping for additional resourcing as part about $1.5 million request.

Mr Billson : Yes.

Senator O'NEILL: What's your current staffing number?

Mr Billson : It's 26.7—

Senator O'NEILL: FTE?

Mr Billson : That's the ASL and the headcount is just sub 28 and then there is the statutory officer and me popped on top of that number.

Senator O'NEILL: If it increases, if you get this $1.5 million, what do you expect that to go up to?

Mr Billson : I am hoping that might give us seven to nine additional staff. But I need to be briefed by the portfolio on the details of that.

Senator O'NEILL: Whether you will get that?

Mr Billson : Yes.

Senator O'NEILL: In your role as a small business ombudsman, were you consulted regarding the presentation of your funding in the budget papers?

Mr Billson : No.

Senator O'NEILL: And are you aware of when the decision not to present small business funding transferred from the Department of Industry, Science, Energy and Resources explicitly in the Treasury portfolio budget statements?

Mr Billson : No, I can't shed any light on that. We're not part of that process.

Senator O'NEILL: You would have heard my question earlier, but, given that there are just five references to small business in the hundreds of pages of portfolio budget statements, does it concern you—in the way it concerns me—that there wasn't a specific detailed allocation of funds to small business?

Mr Billson : I would have anticipated that there would be a dossier of small business measures right across the whole of government.

Senator O'NEILL: Does that exist?

Mr Billson : It's existed in the past. I don't believe it was produced this year. I think the timing of the Machinery of Government changes may have made that a complicated assignment. But I would have anticipated that. In terms of our information we have put out to stakeholders, small business and the family enterprise community, we have tried to distil small business relevant measures across all portfolios just to make it more convenient for time poor business owners and leaders to understand some of the moving parts.

Senator O'NEILL: Yes, it is concerning. It's a good initiative that you have undertaken to do that. I guess one of the things that concerns me is that that echoes the removal, following the coming to power of Minister Abbott, of the Women's Budget Statement, which had been around since Hawke era. When you remove those statements, looking at a particular population, it can be a little bit out of sight, out of mind for the government. So I am sure that you might join with me in wholeheartedly encouraging the government's to a much clearer strategic, visual and transparent reveal of what they are actually doing for small business—because they talk about it all of the time.

Mr Billson : I would.

Senator O'NEILL: Good.

Senator Hume: Senator, we can recite it now, if you like.

Senator O'NEILL: There were only five mentions, so that should be a pretty short recital.

Senator Hume: All the things that the government is doing for small business.

CHAIR: Do you want to ask Mr Billson how many small businesses he has come across who have read the portfolio statements?

Mr Billson : I can only commend you to my publication and our newsletter, which try to distil information and be that concierge. That was part of the idea in the creation of the agency, so hopefully that'll make it a bit easier to navigate. Not everybody wakes up wanting to read Budget Paper No. 3. I personally enjoy it, but it's not everybody's cup of tea!

Senator O'NEILL: It's an acquired taste! Perhaps you might provide the committee with those documents that you've referred to in terms of the work that you've done. I notice you've provided us with some documents here.

CHAIR: It's not in the pack?

Mr Billson : No, but I can.

Senator O'NEILL: Thank you. Digitally would be great.

Mr Billson : It's publicly available, and it went out on our newsletter as well, to our audience for our electronic newsletters and other stakeholder portfolio agency groups as well.

Senator O'NEILL: In your opening statement you traversed a fair bit of the territory that you're covering off. How many small business complaints and queries is the office expecting to deal with in each year over the 2021-22 budget estimates?

Mr Billson : We haven't got an exact number. We are tracking around that number that I shared with you for the last quarter. It's about 1,700 a quarter, but we are anticipating and gearing up for more activity as a result of the franchising changes. To be honest with you, we're also hopeful that visibility will encourage more small businesses to realise there's a resource available to support them through the agency, because we've had some feedback, for instance, when we were in Darwin the other day, with a few people saying, 'I didn't know you guys existed,' so we've got a bit of work to do there as well.

CHAIR: Could I get clarification on that, Mr Billson. The franchising changes were only announced today. I've been sitting here and haven't had a chance to look through them in detail. Does that give you more work because of the nature of the changes or because it directly addresses those issues to you in terms of a new responsibility for franchises?

Mr Billson : Both, Chair. We expect it'll highlight that there's mediation and dispute resolution support available, but it also places an opportunity for the parties to agree to arbitration—it hasn't been there previously. It's something that Senator O'Neill would be very familiar with. So there are a few new mechanisms that we have to be a part of and administer as well as some reporting requirements back to the minister on the kind of traffic that we're seeing throughout our administration of that dispute resolution process.

CHAIR: Great, thank you. Sorry, Senator O'Neill.

Senator O'NEILL: I'm trying to avoid my self-indulgence of asking too many questions about franchising at this point in time, because you do know, Mr Billson, how much I have been keeping my eye on the target there to make sure that small businesses that are sold a pup in the franchising sector don't continue to lose their families, lose their houses, lose everything that they've ever had. It has been a long, long time to get the government to act, so I appreciate the support of the Senate in getting through the private senator's bill that I advanced. I really am pleased that the government decided to respond a week later, and I'm very pleased with the report that the committee advanced in the following week. So there's been a bit of activity. How much more work, do you think, from the 1,700 per quarter, will the increasing focus on franchising and getting people on board with a code generate for you? Is that the bulk of the seven to nine additional staff that you're seeking?

Mr Billson : We're thinking it will require some greater legal competency within the assistance team, because there are some questions of law that arise from the current arrangements and we want to make sure that we provide good guidance to the parties. One of the things we do if we can is when there are early signs of dispute that not all of them end up in dispute resolution. We can coach the parties on how to interact constructively and get a resolution that way. There's still an emphasis in the code to have disputes resolved in systems, so that's something that we want to encourage as well. But, when they come to our office, usually those avenues have been exhausted. We've got work to do getting the parties to respond in a timely way, to be clear on what the dispute is and then to present the dispute resolution tools that are there. You'll see in here though there's new potential for disputes around the basis for people exiting franchise systems.

Senator O'NEILL: Yes. It's been very difficult for that to be negotiated, both for the franchisor and the franchisee to be fair, but particularly for the franchisee where they have less power.

Mr Billson : That's right, and, in here, there are new avenues that give people an opportunity to discontinue that relationship. That may cause a new basis of a dispute. So the scope and the reach of the protections in the code do increase the prospects of a dispute, and now there are new dispute resolution mechanisms, including, where it's agreed, arbitration, as a way of getting some outcomes. Group dispute resolution—something you were very strong on as well, Senator—is now accommodated in here. There are new topics around unforeshadowed capital expenditure that might generate a dispute. We think both the complexity and the need for legal surefootedness from our office, and the range of issues that may come within our scope, are likely to increase.

Senator O'NEILL: Essentially, your role is going to grow as a significant curator in that space?

Mr Billson : Yes, and as a provider of information, which is required of us in those regulations.

Senator O'NEILL: If you find that the work in that area increases more than you anticipate, what would you do? Would you approach the government for further funding, or is that an offer that's been made to you?

Mr Billson : Not initially. We would probably work with the resourcing that we've got. Within the budget that you were asking about earlier, we're notorious underspenders. So there is some scope there if we need to bring in some particular expertise to help, or we could re-juggle the team just to see where that settles if the new regulations flush out disputes that have been there in the background. It's hard to predict that. We'd have to keep an eye on that.

Dr Latham : We have been administering dispute resolution under the existing Franchising Code, so this is a step up around that.

Senator O'NEILL: There's a degree of expertise already on board that will be expanded with the increasing remit.

Mr Billson : Yes. There's also the Dairy Code. We were asked about that in the other committee we appeared at before. There's a review being conducted on that. I think I shared that there were not a lot of matters referred to us under the Dairy Code. Since then we've had a couple more, and perhaps the review itself might highlight the existence of the code to those producers in the dairy industry. That spotlight on those codes tends to increase awareness and then generates more traffic for the agency and our core lines.

Senator O'NEILL: In terms of reviews—a slightly different one—there's a review of the agency itself as ASBFEO. When did you become aware of the review? Was it before or after your appointment?

Mr Billson : That's a difficult question because, as you might be aware, I was involved in creating the agency, and—

Senator O'NEILL: There's a regular review scheduled.

Mr Billson : Yes. Can I describe what I normally describe—there is a comment within the office when there's something odd about the legislation: that 'some peanut thought this was a good idea'. That peanut was me. I became aware of that and the time lines for it shortly before being appointed—that that was going to be a quick priority. I think there's an aim to have that review back to government by the middle or near the end of this month. It landed in my lap when I'd arrived.

Senator O'NEILL: You indicated you've been 13 weeks in the role. When was the first time you met with the new minister to discuss the review?

Mr Billson : No. It had life before I was appointed. As I understand it there were some discussions with my predecessor, the agency and the then host portfolio, the department of industry, about the upcoming timely nature of that review. Because the industry portfolio was the one that instigated that, they were trying to source a review lead. Carmel McGregor is the review lead. Those wheels were well in motion before my appointment. I learned of the urgency of the timing shortly thereafter.

Senator O'NEILL: Do you know about the selection of Ms McGregor to do the review?

Mr Billson : No, I was just told that was who had been chosen. Our discussions with Ms McGregor have been really positive. She's been very interested in input and we've helped facilitate consultation for her and her team just by giving notifications out—contact people and sources of insight that might be helpful for her.

Senator O'NEILL: Minister, could you provide on notice the selection process for Ms McGregor and the tenure, the cost et cetera—general information about why she was selected, what the period of time for employment is, how much it will cost and any other relevant matters for the committee? That would be helpful, thank you.

Have you discussed the office of the Australian Small Business and Family Enterprise Ombudsman with the minister?

Mr Billson : Yes. This is the new minister. The new minister visited our office on the day after his appointment. I was happy to explain what we did. I introduced him to the staff, outlined the different functions that we are involved in and, as part of that discussion, pointed to areas where we could be more effective.

Senator O'NEILL: Have you had only one meeting with the minister?

Mr Billson : Yes—

Senator O'NEILL: When was that?

Mr Billson : although he did join us at the parliamentary briefing we had—

Senator O'NEILL: Breakfast, early last week.

Mr Billson : with the deputy opposition leader.

Senator O'NEILL: I'm sorry I was unable to be there.

Mr Billson : Thank you for your RSVP. That was the day after his appointment, so I haven't had any other—

Senator O'NEILL: Did you meet with the previous minister?

Mr Billson : Did I? I don't think I did. I think the time lines were pretty tight. I think there was an intention to meet. I'd have to check. I certainly had phone conversations with the then minister welcoming me and wishing me good luck. But it was pretty smartly after that that we got into the work, and I understand the minister was a bit busy with the Senate. I'll have to check whether I have actually met with him. Do you remember?

Dr Latham : I don't think you did.

Mr Billson : I don't think I did. I have met with their advisers, though.

Senator O'NEILL: At any point in time, with either of the relevant ministers—the Prime Minister or the new current minister—have you had any discussions about the range of current functions that you have as the ombudsman?

Mr Billson : I did suggest that, as part of the review—we'd made a submission to the review about things that we may be more able to help with if there was clarity around, for instance, an alternative dispute resolution toolkit that we could deploy.

Senator O'NEILL: So you offered a road map for expansion of capacity? Is that a fair way—

Mr Billson : That was a general conversation, and, in our submission to the review, we did point to some areas where we could add more value.

Senator O'NEILL: Is that document public?

Mr Billson : I don't think it is, but I can't see a reason why we couldn't—

Senator O'NEILL: Would you be happy to make it available to the committee?

Mr Billson : If I could check with Ms McGregor—I have no problem with it. I'm not sure what her brief is, but I'm happy to make that available. On that point, though, we have also engaged with the Attorney-General's Department around digital service providers and suggested that a quick alternative dispute resolution mechanism might help. For instance, if someone was selling an ad word for your business name, that's not particularly classy. You might have some strong views about that. How do you get those addressed quickly and in a timely way? And there are other areas—for example, if our retail platform registration was discontinued for no apparent reason. So we have made some suggestions where we think we can add some value to those known challenge areas.

Senator O'NEILL: To be clear, the current functions that you've indicated that you have, including advocacy, are all set to be maintained? There is no threat to any of the work that you're currently doing?

Mr Billson : No—none that I'm aware of. Certainly I haven't seen what the review is of Ms McGregor and what she's recommending, but certainly, from our point of view, we think having that voice is a vital component of the agency. We've made that point pretty clear to the review panel and Ms McGregor, and I understand others have likewise. So I'm not aware of any problem there.

Senator O'NEILL: In all the times that we took evidence from Ms Carnell, it's fair to say that her advocacy for small business was very, very well informed, very significant and, sometimes, quite at odds with what the government wanted. That advocacy role is under no threat; is that correct, Mr Billson?

Mr Billson : That's correct.

Senator O'NEILL: So you will continue to be an independent, advocating voice for small business?

Mr Billson : Yes, fearlessly so.

Senator O'NEILL: The consultation period for the review is quite short, as I understand it. How many weeks is it?

Mr Billson : I'm not exactly sure. I think it was about—

Dr Latham : It has ended now.

Mr Billson : Yes, it has ended. I think it was about six weeks, if I'm not mistaken. Again, I could check with those who commissioned Ms McGregor, but there was a multipart process of proactive interviews and inquiries of people that they were seeking opinions from—an open-ended invitation for anybody who might wish to make a submission. And then we assisted, at their request, with pushing out information prompts for people to make contributions and gave the review a list of people who'd had dealings with the agencies, so they could gauge their own feedback.

Senator O'NEILL: Do you know how many formal submissions there have been?

Mr Billson : No, I don't.

Senator O'NEILL: And do you know why this six-week period was set? Is that the standard practice?

Mr Billson : I don't know, but I was led to believe it was to work within the delivery time frame that was required for the review to be completed.

Senator O'NEILL: Based on?

Mr Billson : The legislation spoke about a window of time.

Senator O'NEILL: So that's the six-week period we'd find in the legislation?

Mr Billson : Not the consultation period, but there was, I think, within five years of the agency being established—

Senator O'NEILL: I thought it was four or five years.

Mr Billson : there shall be a review. So there was that time line, and then, I understand, the portfolio, in engaging Ms McGregor, stepped back and ran the Gantt chart in reverse, so the review was concluded.

Senator O'NEILL: Would you be able to find out on notice if the six-week period is the same time as was previously the case when reviews have been undertaken?

Mr Billson : I certainly can ask.

Senator O'NEILL: Thank you very much. In terms of funding, could your funding be altered—adjusted up or down—based on the findings of the review?

Mr Billson : I think the answer would be yes. The indication that I've had is that no-one's contemplating it going down. The indication I had was that additional allocation that—

Senator O'NEILL: The $1.5 million?

Mr Billson : Yes. It was established for the coming financial year. The question of the out years, though, is in the contingency reserve, subject to the outcome of Ms McGregor's review and the government's response.

Senator O'NEILL: And there's no visibility of that contingency quantum for this committee, based on the evidence that we took a little earlier.

Mr Billson : That may or may not be right. That's not something I can offer authoritative feedback on.

Senator O'NEILL: Have you sought assurances that your funding will be maintained?

Mr Billson : No, I haven't. I've been encouraged by the enthusiasm for our work. The previous host portfolio, industry, recognised that we could do things that were essential for the small business and family enterprise community and that our on-the-ground connections were really valuable and gave us an engagement that the department couldn't readily achieve. I've had similar very positive responses from the Treasury portfolio. So I have no sense that there'd be anything other than increasing expectations of our activity.

Senator O'NEILL: Thank you. Were you contacted regarding the design of any measures in the 2021-22 budget?

Mr Billson : No, other than our own request for resourcing, and I think it's fair to say I was more proactive than contacted on that.

Senator O'NEILL: Okay. How much of the digital economy funding in the budget is directed to small business?

Mr Billson : I saw a number of elements that we picked out.

CHAIR: That's probably a question for the department, to be fair.

Senator O'NEILL: Did you get a present for the digital economy into your entity?

Mr Billson : No, but we thought a number of the measures were a present for small business. I guess our lens was trying to make sure that the small business and family enterprise community knew that that was there. Even the cybersecurity centre that we host is doing some outstanding work, and we've been talking with them about how visible that is and how accessible and consumable that is for small business and family enterprises. On some of the stuff around procurement—the e-invoicing—I co-chair an adoptions network. That was mainly in the digital economy space. We picked out a couple of those ones in particular because we thought they were very relevant to small business. We thought the regtech area in navigating workplace relations obligations was a really positive technology piece, but that popped up in the deregulation agenda. That is just to give you our lens on it. We thought expanding the ASBAS digital solutions program was very relevant, so we drew attention to that in our material as well.

Senator O'NEILL: In another committee that I'm hoping to return to to ask a few more questions, I wanted to ask about Zara, which is a clothing brand. I saw Senator Hume's head go up. She must have shopped at Zara as well. It's a pretty big company with an international footprint. It was found to have $2.8 million in underpayments, or wage theft. That was announced today. I can't understand how much is going to a business of that scale in terms of regtech and how much is going to small business. So my question really is: what quantum of the digital economy funding is carved out for small business? Can you answer that or take it on notice?

Mr Billson : I'd take it on notice, and I'd have to get some advice from the other portfolios to whom those allocations were assigned.

Senator Hume: I can probably assist with that too. Obviously, small business adopting digital technologies is one of the business priorities in the Digital Economy Strategy, but it hasn't been carved out in terms of dollars, because a lot of the strategies there apply to large businesses as well. But I can take that on notice for you.

Senator O'NEILL: Yes, thank you, because often it's the big ones that soak up the money and it's the small ones that actually need the government support to change.

Senator Hume: There have been some initiatives—ASBAS, for instance—that are specifically targeted to small business.

Senator O'NEILL: If you could identify those in quantum to make it clear which bits are for small business—what's been absolutely guaranteed for small business—I'd appreciate it. How many small businesses do you believe were consulted about measures that were relevant to them in the lead-up to the 2021 budget?

Mr Billson : I couldn't tell you that. I'd have to channel that one through the portfolio.

Senator O'NEILL: Could you assist with that, Senator Hume?

Senator Hume: I'm not going to name the number of small businesses that we're consulting, but obviously there were a lot of peak bodies that were consulted as well, plus an awful lot of information that gets fed up through the budget process in the normal course of business.

Senator O'NEILL: So no specifics there. Do you know how many small businesses filed for insolvency in 2019-20?

Mr Billson : I actually do have those numbers. Let me just dig them out. We monitor what's said through ASIC and, as I mentioned earlier, through CreditorWatch as well. They have those figures. We were hoping we might have had last month's numbers, but we may not have them. If you're okay with it, I can grab the current data off ASIC and take that on notice and come back to you, if you're happy with that. We have noticed that it's increasing but still less than previous years. There are a number of datasets that are there, but I'll dig up that information and bring it back to you.

Senator O'NEILL: Thank you very much. What I'm trying to get, in a table form if I can, is the comparison between the period 2019-20—maybe even with the regional variation embedded in it so it's a pretty good picture—and the latest estimates for 2021. If you haven't got the data tonight maybe having it on notice will give you a little more time to get it out. I did note that you indicated in your opening remarks some change to insolvencies.

Mr Billson : Yes. They're currently down about 50 per cent from the same time last year. That's for the latest data that we've got, which is running from the end of last year into early this year. That's now trending up a little bit again but it's still below that more familiar rate. We'll dig that material up for you. We'll grab the ASIC numbers for you and then the CreditorWatch. They're a little more contemporary in terms of what they're seeing through their channels as well.

Senator O'NEILL: In terms of the causes of insolvency, I'd be particularly interested if you could flesh those out a little. I'd like to know how much of it relates to some of the matters you've raised. Is insolvency in particular places related to inability to access finance? Is it related to inability to access affordable insurance? Is it related to changes in franchise structures? I'd like not just amorphous numbers but some reasonable data about what is really going on in terms of insolvency.

CHAIR: Mr Billson, is that a dataset you control?

Mr Billson : No. We'd source that from a number of datasets and then we'd probably ask some questions as well.

Senator O'NEILL: I think it's really important for us right now to have a sense of exactly what's going on and where. We've talked about the macro, but small business really are a fleet-of-foot microresponse to the particular context they find themselves in, and there are very variable elements to that.

Mr Billson : Yes, and regional variations as well.

Senator O'NEILL: Absolutely.

Mr Billson : With your agreement, we'll see if we can have 'a look under the hood' from the published material and see what we can get our hands on.

Senator O'NEILL: Thank you. Could I go to a couple of questions with regard to skills shortages.

Mr Billson : Yes, ma'am.

Senator O'NEILL: Senator Brockman has talked about how different the market is in regional Australia. Have you met with the minister to discuss strategies to address the skills shortages that we're currently finding?

Mr Billson : Not at this stage, no.

Senator O'NEILL: Do you believe that's part of your role?

Mr Billson : It is one of the themes we're looking at to see whether we put more time, effort and energy into it. We try to pick areas where we think we can have the most positive impact. Where we have engaged with the minister is around those sponsored visa people whose visas expired over COVID and in some cases weren't renewed. In all cases, people couldn't leave Australia either, and we had a number of businesses contacting us saying they just couldn't get the talent they needed to keep their business operating at the level they'd have liked to.

It has been at that level, so we've focused primarily on that skilled visa area at this stage. But through our travels around the country we're getting reports of not only skills shortages but labour shortages and in some cases in the hospitality sector people not having lunchtime servings so they can do breakfast and dinner, because they might not have the people to actually keep the business running all day. So that's the feedback we've had, and it seems to resonate with the Seek employment data that has come out, which gives you a state-by-state comparison. Then you look at some of the sectors and industries where there has been a real growth in job vacancies and job applications, and it seems to line up with the feedback we're getting on the ground.

Senator O'NEILL: Thank you. Have small businesses approached you regarding staff and skills shortages? Are there particular sectors that are coming to you? I know Atlassian, as an example of that tech end, really has had a very big problem for several years, but in addition to that sector are there other sectors that you are very aware of under incredible pressure?

Mr Billson : Yes, hospitality is the big one that we get the most contact about, and it's usually through the lens of, 'I had a visa staff member, I don't have them now, I'm not sure what to do.' So there's that. I suppose that has been the main feedback we've had on the road, really, hasn't it? I'm just trying to check. It has mainly been anecdotal information that people, chambers of commerce and industry associations have brought forward. I know the Restaurant and Catering Association have been very vocal about big skills shortages, particularly in domestic tourist destinations and how difficult that is, and then also where there has been a heavy reliance on the student population for the workforce, that has probably been the other area where we've had questions.

Senator O'NEILL: What's your response capacity, and what do you do in response to acquiring this information about staffing and skills shortages?

Mr Billson : Where there's a particular decision that either the government or an agency can or hasn't made, we can get involved and try to make sure that that small business's case is well understood and advocate in some cases for a revisiting where there'd been a 'no' given.

Senator O'NEILL: So it's individual cases that are presented to you?

Mr Billson : Yes, it is. We haven't undertaken any economywide work in the area of skills. That has not been an area that we've focused on today.

Senator O'NEILL: Do you believe you have need of that kind of role in terms of your advocacy?

Mr Billson : It's the sort of thing we'd certainly look at, but we'd also have a look to see whether Mr Boyton and the skills commissioner and those other agencies with a particular tasking might be better placed and have better labour market economic information. We certainly have strong anecdotal information, so we'd weigh up whether we're the nearest, neatest correct entry, if I could use that phrase, to do that kind of work or whether there's expertise elsewhere.

Senator O'NEILL: Have you had any complaints regarding recruitment and an increase in JobSeeker applications with the return to mutual obligation arrangements?

Mr Billson : We asked the assistance team about this the other day, and we hadn't, actually. The only real area we've had concerns about, a vivid example, is a skills agency that might provide particular, in this case engineering, talent to a major firm, feeling like their talent was being cherrypicked and that that was in breach of the supply agreement, service agreement. That has been the only real vivid one of late, but not any complaints as such. I don't think our helpline has had any observations about it either, so not a lot of traffic on that at all, Senator.

Senator O'NEILL: Have you done any research into the impact of the receipt of unsolicited applications for jobs as people try to breach those mutual obligation requirements?

Mr Billson : We haven't, no. We regularly liaise with about 32 industry associations and ask them what their membership is raising with them, trying to home in on areas where we can have the most useful impact. That hasn't emerged in those conversations to date.

Senator O'NEILL: For those 32 industries that you're consulting with, could you provide any summary documents of your observations at this point in time? I'm sure you're doing that in pretty real time.

Mr Billson : That's our policy forum, so we try to take guidance from that group.

Senator O'NEILL: And do you publish what you find from them, or do you put that out?

Mr Billson : Not usually. Normally they're giving counsel and advice to where they think we could best be applying our energies. At the moment that seems to be universally around insurance, to be honest with you. That's a strong theme that keeps coming up and even through the states' small business commissioners. Three of those colleagues have raised insurance as well.

Senator O'NEILL: How frequently do you do these sorts of policy gatherings?

Mr Billson : We haven't had one for little while, certainly not since I've been appointed, so we're just trying to make sure we have the right groups around that table.

Senator O'NEILL: Okay. If you do have consultations with those 32 groups, I think it would be very interesting for this committee to actually receive those almost-in-real-time descriptors of what's going on and see how much that matches with some of our observations as well.

Mr Billson : Sure.

Senator O'NEILL: I've got three final questions, but I'll just fold them all into one and give you a chance for a general reply. Could you speak to any analysis that you've undertaken or advice that you've prepared with regard to the impact of the pandemic and natural disasters on the cost of small business insurance premiums, like what you've actually done with that; if you were consulted on the specific needs of small business as part of the development of the cyclone-related funding reinsurance pool; and finally, in addition to natural disaster insurance, have you provided advice on the difficulty small business face in securing reinsurance as a result of the pandemic?

Mr Billson : A quick answer to that is that all of our work was in the report that we put out, and that had survey work, analysis, distillation of the input that came out our way and some recommendations. Some of those recommendations have found traction and appear to have been part of the rationale, I would hope, for some of the more recent budget announcements. A couple of the other recommendations haven't really taken flight yet, so what we're doing internally is revisiting that work and seeing whether we need to do further analysis or there was some weakness in our logic or our evidence last time around. The COVID lens I don't think was expressly applied to that insurance inquiry. I'm just checking with Dr Latham. He was on the ground when all of that was happening. So that wasn't applied, and in terms of the areas of concern there's the general impact of a tightening insurance market and a shift in risk appetite across a range of products. I mentioned those four streams: property protection, public liability, professional indemnity and discontinuation, business interruption. We've got traffic on all of those, Senator.

Dr Latham : Just on that COVID side as well, the only one that really came out at the time we were doing it was trade credit insurance, so it was early days.

Mr Billson : And of course business interruption is very topical, and ASIC is pursuing that.

Senator O'NEILL: And we know that business interruption is very much a reality for Victorian businesses hitting 4.0, and there has been considerable noise in the public place around this lockdown happening when JobKeeper is no longer available. Have you had calls or advocacy from businesses in Victoria to get the government to listen to their plight and to respond to the pressing need that they have to try and keep their businesses afloat during this lockdown?

Mr Billson : They haven't contacted us, although we have observed, as you pointed to, some quite vocal expressions of what people think should or shouldn't be happening. Our view is we'd like to see a more predictable response under various lockdown scenarios so everybody knew what was going to happen next and what they could count and depend on. With the idea that this was a circuit-breaker, I think lots of businesses thought it'd be quite short and maybe weren't as exercised by it. As there are conversations about whether it's going to be extended, we're seeing more calls, but they haven't been directing those to us at this stage.

Senator O'NEILL: So if small businesses are facing challenges, they should contact you to give you a sense of the scale of the problem?

Mr Billson : Sure, we'd be very happy to hear from them. That sort of feedback gives us a sense of where we can best apply our energies and have a positive impact to achieve what we were talking about earlier: the best place to start, grow and transform a business. When we are, then we'll know our work is done.

Senator ROBERTS: Thank you, Mr Billson, and your staff for coming. Small business we know is Australia's largest employer. It's the engine room of our economy. The previous small business ombudsman in a report titled A tax system that works for small business in February 2021, page 8, recommendation 21, stated that the government must undertake tax reform:

ATO to be prohibited from charging penalties and interest, issuing garnishee notices or instigating other recovery action on tax debt arising from a decision that is disputed ...

We support this change, as the ATO's current policy could kill many struggling small businesses, and it's not fair. It's completely unjust. On May 13, 2021, the Hon Stuart Robert MP, Minister for Employment, Workforce, Skills, Small and Family Business said in parliament that the government too would back small business over the ATO. The message is clear. In your new role as ombudsman, will you be advocating for this tax reform, and if so, what are you doing?

Mr Billson : Yes, we are advocating for a very thoughtful use of the enormous powers the tax office has.

Senator ROBERTS: They are enormous.

Mr Billson : They are very substantial.

Senator ROBERTS: They make laws, basically.

Mr Billson : We've been consistent on three fronts. One is that they have quite a lot of discretion about how they use it, so we've been trying to put a spotlight on how that discretion is exercised so that it's consistent and thoughtful. Deputy Commissioner Deb Jenkins and I meet regularly about our experience with tax office interactions. I think you might have missed my absolutely gripping opening remarks where I did touch on some of these issues, Senator, where we've had punitive penalties of 200 per cent for payments of superannuation guarantee contributions being made in a timely way but not processed in a timely way, and that can trigger a liability. The tax office are saying to us that their former position of, 'These are the rules, we've not got a lot of wriggle room with those 200 per cent penalties,' they're now reflecting on, dialling back a little bit and putting more discretion that is less punitive into their decision-making.

Secondly, a measure has been recently announced that an aggrieved taxpayer seeking a decision from the AAT can actually ask the AAT to direct the tax office to suspend recovery action. You'd know well if they'd judged that we were liable for a tax amount, they can pursue the recovery of it even though it's disputed, and in some cases we've heard that that can limit the aggrieved taxpayer's capacity to argue their own case.

Senator ROBERTS: And to stay in business.

Mr Billson : That's right, and so we welcomed that announcement. We thought that was a good step in the right direction. There's also scope for them to come to our office. So if there is a dispute a small business has with the tax office, our concierge service can do three things: (1) if we think it's really odd, we can suggest to the tax office that they might want to take another look at this, because we think they've perhaps made an error; (2) there is a mechanism to get fresh eyes review within the tax office so someone else can have a look at the assessment to see where that judgement—

Senator ROBERTS: That is a fundamental problem because the assessor can sometimes be the reviewer of the assessment.

Mr Billson : Correct, and we were wary about how effective that measure was going to be. It was trialled initially, but the feedback we got was overwhelmingly positive from the small businesses that used it, even those that didn't get the outcome that they wanted. In that that tax report that you're referring to we were urging for that to be maintained as a permanent service, so that's there.

Senator ROBERTS: So you're advocating for structural change in that way?

Mr Billson : And really a thoughtfulness around the way the tax office uses those awesome powers that it has. So we surface case studies and think, 'Maybe this could've been handled a bit better.' Deputy Commissioner Deb Jenkins is a wonderful ally. I think the Inspector-General of Taxation is doing some good work as well around understanding the nature of the tax debt. It's often said that small business is a big tax debt problem. In total numbers it's a big number, but it's spread across an awful lot of small businesses. Then there are an awful lot more that are fulfilling their obligations in a very timely way, and that should be celebrated as well.

The last one is the idea of this AAT review. So we offer as part of that service, and it was touched on earlier, that $1.4 million of administered funds. We can have an aggrieved small business taxpayer come to us, say they're not happy, say why they're not happy and we will collate relevant material, suggest to them they might be misreading the tea leaves or suggest to the tax office they might've misread their obligations and see if we can get an outcome. If that doesn't happen, we may support and arrange a review by a tax expert. There are about 20 around the country that we might warm refer that small business taxpayer to where they can give an assessment of their prospects of success at the AAT, and then we may also provide a role in assisting that small business taxpayer at the AAT if they decide to proceed to that point of challenge.

Senator ROBERTS: Thank you, that's a comprehensive reply. I know one expert who has dealt with tax and small business for many years and also the next topic I'm going to get onto. He estimates that the $25 billion that small business owes to the ATO comprises 60 per cent penalty and 40 per cent principal and interest. And of course the penalty builds on that interest, so it's huge.

Mr Billson : I think there's an inspector-general report coming out on that very matter to break up the client group tax debt, and then there's some interest in what the components are, like what you describe. So I'd encourage you to keep an eye out for that report. That is also a gripping read.

Senator ROBERTS: The topic of my second question is: what can be done to reduce industrial relations complexity for small business? The Fair Work Act is about that thick when it's printed out on pieces of paper. That's horrendous for any small business employee and any small business employer to get their heads around, and we need to restore the employer-employee relationship, surely.

Mr Billson : Yes, it's difficult for many small businesses who want to do the right thing to know precisely what that is. I did point earlier to Senator O'Neill's question around small businesses measures in the budget. One of the regtech measures is to actually try and help small businesses navigate the award system. There's also an advice line for small businesses that aren't a member of an industry association. They're not of a size where they've got an HR professional, but they can get some advice. Our agency has also put out a report about simplification, and for the purposes of full disclosure, Senator, I actually authored a report for the Fair Work Commission judge His Honour Justice Iain Ross about practical steps I thought could be taken within the current law as it is to make the system work better for smaller employers.

Senator ROBERTS: Could we get a copy of that, please?

Mr Billson : Yes, I will make sure that you receive that.

Senator ROBERTS: So that addresses my next question, which is: what better ways are there for small business that are not limited just to simply developing a small business award? That'd be one thing on the list I'm sure, but are they contained in your list?

Mr Billson : It didn't actually advocate for a small business award.

Senator ROBERTS: What other measures?

Mr Billson : It actually advocated for a small business annexure to each award that was basically the essential elements that a smaller employer needed to turn their mind to. It made some recommendations around the effectiveness of the fair dismissal code. It did speak to the formation of a small business division within the Fair Work Commission so that their procedures are right sized and relevant to small employers. It also called out the impact of the club, dare I say, of industry associations, the legal profession and unions that actually revel in the complexity. It makes their insights and expertise very valuable.

Senator ROBERTS: Add to them the employer industry groups, and you've got the people who benefit from problems and no solutions.

Mr Billson : It did point out that they probably are less concerned about complexity, whereas a small business owner and leader can create a great innovation, change the very nature of society and then need to get help to understand what their workplace obligations are because they're so complex, so nuanced. It was putting the point forward that very intelligent small business owners shouldn't need to rely on external advice to be surefooted in their compliance with their employment obligations.

Senator ROBERTS: That has taken care of my next question. Are there still gaps between your office and the Fair Work Ombudsman that need to be improved—for example, small business support?

Mr Billson : They're doing more, and I've met with the Fair Work Ombudsman. We had a panel of regulators, Senator. It was a cold night in Canberra, and I'm sure we took an enormous amount of the audience away from Home and Away when we were talking about regulatory challenges. It was just a real hoot, Senator. But we were working quite collaboratively. They've got some good resources. One of the things we can do is amplify and give higher visibility to those resources and also work carefully with them. They have their own small business helpline. I actually launched it in a former life, so I'm quite familiar with the need for good advice. But we also thought there were some structural opportunities at the Fair Work Commission that could work alongside the Fair Work Ombudsman and make the system work better for smaller employers.

Senator ROBERTS: Okay. The next one is a specific around some of the broader areas you've been talking about. Do you get feedback from small business that the Fair Work system is too expensive for small businesses—for example, not just the complexity and the cost that entails and the distraction out of the business but paying go-away money because they're too busy to defend claims, those kinds of things, and employees on the same note?

Mr Billson : They tend not to come directly to us, but when we're out on the road, Senator, it is a vivid topic for those that have been through it.

Senator ROBERTS: And it applies to employees not just small business employers.

Mr Billson : That's correct, and one of the things that we were highlighting in our work is that the awards system and the power imbalance assumes that the employer has enormous resources and capability and the employee hasn't. In many small businesses it actually can be the reverse. An employee with the support of an adviser or a representative, perhaps a union that can take cases to appeal over and over again, probably has more horsepower and resources than the small business will ever have, and that was one of the recommendations that we sought to address in my report—not the agency's but the report I provided His Honour Justice Iain Ross.

Senator ROBERTS: Could you just recap—I think Senator Brockman asked a similar question—the main issues facing small business and what you are doing to sort these out? I know you mentioned bank loans. Some find it difficult to get insurance.

Mr Billson : Access to finance remains a big issue. Insurance remains a big issue. As Senator Hume was alluding to, the focus on digital engagement is very important. We see a spotty level of engagement. I would hazard a guess that a significant minority are less open to the delicious possibilities that deeper digital engagement can offer. They may have been of my vintage. There were vendors promising the world, when I had more hair, that tech would change my business. It didn't. We often hear about that, and those people, now at a more mature age, still in the economy, might be hesitant to take up some of the digital engagement opportunities there. That's a big issue for us.

We still think government procurement offers great potential for greater small business engagement, and we think that's a key priority for us. Women's entrepreneurship is also an area we're quite interested in, and I'm also quite evangelical about alternative dispute resolution. It's interesting that in Australia a lot of small businesses turn to the regulator to defend their own economic interest because they're frightened of cost order gorillas if they pursue legal recourse. They're just worried, so they turn to the regulator. This is quite unusual. In other comparable jurisdictions the people whose economic interest has been infringed upon are very up and about defending their own interests and are less reliant on the regulator. We think there might be something in that, where the way the court system operates, power imbalances may well be amplified throughout the legal process. Me as a small business, you as a behemoth business owner; you have five QCs, I've got my solicitor. We're having a discussion, and you're reminding me that if I lose, I get to pay for your crew. That can be a real disincentive to engage in that court-based process. We think we can probably come up with some better avenues. That's a priority for us as well.

Senator ROBERTS: What about tax, not just personal tax but business tax and especially the complexity of the tax system?

Mr Billson : We put a report out. When was that? May I consult the Deputy Ombudsman, who was here when I wasn't.

Dr Latham : It was February.

Mr Billson : February, that just rolled off the tongue. It's quite fresh, Senator. I can make sure we refer that inquiry report to you as well, and your winter reading list in Canberra will be abundant.

Senator ROBERTS: Thank you. Based upon your experience, although it's limited to only a few months, should the role or powers of the small business ombudsman be enhanced, and if so in what regard?

Mr Billson : Yes, we think there's some scope for having more nudge, the ability to get disputing parties around a mediation table and potentially into arbitration to get matters sorted out quickly so that businesses can get back to business.

Senator ROBERTS: What would that sort of power look like?

Mr Billson : At the moment, whilst we carry the title of ombudsman, we have no determinative power. We can't decide anything; all we can do is facilitate and enable a process, put the parties together and give them wise advice. We hope they see it's in everyone's interest to sort it out quickly. There are few areas where we think a little bit of nudge potential might encourage those parties to engage in good faith, get those disputes resolved quickly and affordably and get business back to business.

Senator ROBERTS: Since the last round of Senate estimates, three months ago, has there been any work done to identify opportunities for small business, including red tape reduction and other initiatives? Should business codes be reviewed and updated to ensure fairness for employers and employees?

Mr Billson : Yes, we've engaged on a couple of reviews that other portfolios are doing. We've also been active on mutual skills recognition across jurisdictions, which was a measure included in the budget, so that if you were a tradesperson in one state you could readily ply your trade in another and have your qualifications carried over. We've also had some discussions with industry associations about their pain points, particularly where they might be multijurisdictional. As an example, you may have seen we've been active in the Australia Post area, where they felt complex and differing state regulation was a reason for them to announce that they intended to discontinue perishable goods delivery. We said, 'Don't discontinue it; let's work out what these regulatory challenges are that you speak of,' and so we're engaged in that process as well.

Senator ROBERTS: What about review of the business fair dismissal code from both an employer and employee perspective to make it fairer for both?

Mr Billson : That was a recommendation in our report—actually to make it function as it was intended might be a more accurate description.

Senator ROBERTS: Which protects both parties, employers and employees. Has the small business ombudsman had the opportunity to engage in the development and review of regulation and information guidelines for small business in relation to casual conversion? That's the conversion of casual employees to permanent employees.

Mr Billson : No, we haven't.

Senator ROBERTS: Are you aware of the casual conversion guidelines?

Mr Billson : Vividly so.

Senator ROBERTS: Are they fit for purpose?

Mr Billson : There's some positive response from small businesses that there's now clarity around that. There was some chagrin that other reforms could perhaps have been included in that legislation that weren't, so that's the feedback we've had.

Senator ROBERTS: So are you passing that on?

Mr Billson : To anyone who asks us. We're not shy, Senator. We will pass on our feedback.

Senator ROBERTS: To the Fair Work Commission?

Mr Billson : At this stage we haven't engaged with them on that topic. The last discussion we had with the Fair Work Commission was at an officer level just on things they're doing to streamline their processes to make them more accessible for small business.

Senator ROBERTS: It's the Fair Work Ombudsman that's responsible for the casual conversion guidelines.

Mr Billson : The commissioner sets the rules; the ombudsman makes sure they're being implemented.

Senator ROBERTS: Have you had discussions with the Fair Work Ombudsman?

Mr Billson : Only in terms of the guidance material that they make available, but not on that particular topic. You asked me very specifically about casual conversions.

Senator ROBERTS: Will you be having that?

Mr Billson : I can add that to my list. I think I even chair a federal regulator agency group meeting where we all get together and work out who's doing what.

Senator ROBERTS: So you're the ombudsman's ombudsman?

Mr Billson : I am. I think I'm the passionate but neutral chair amongst powerful regulators.

Senator ROBERTS: Okay. One final question: we've now got the term 'circuit-breaker' instead of lockdown, which to me and others seems to be an attempt to bypass the growing resentment towards lockdowns, and they've belted small business now for about 1¼ years, not for the whole time but intermittently along that time. A taxi driver in Sydney on Friday, when I went home from Canberra, said to me that it has not only belted his business on Friday, the sudden shutdown in Victoria, but it has affected coffee shops, restaurant owners, hotels, motels, a whole swathe of businesses, all with no advance warning.

Mr Billson : I said this in my opening remarks, Senator.

Senator ROBERTS: I'm going to need to go back and read them, aren't I?

Mr Billson : They're not Gettysburg-esque, but they were there. They did point to the fact that that was a circuit-breaker lockdown which created probably some expectation it'd be short, but now there's a discussion it might be longer. My point to the committee was in my view it highlighted the need for greater certainty and predictability for business about what different types of lockdowns would trigger in terms of support and other measures that business could count on, because at the moment there's not a clear menu. There's not a clear set of trigger points where people go, 'Okay we're now having one of those lockdowns,' call it what you will, 'but we know the suite of measures that accompany that.' That would give small businesses good clarity. It would also identify who's expected to do what when these events occur, and that's not just government. At what point does the conversation move to, 'What's the finance sector doing to accommodate these businesses?' All the issues around leasing were all part of it. I'm from Victoria, and to be here in person I didn't go home, because I wouldn't be allowed back. That's the sort of thing we think would be most helpful.

Senator ROBERTS: Just driving home one evening, listening to talkback radio, which in Brisbane sometimes carries the feed from Sydney, there was a Sydneysider saying, 'Okay, we get the $100 voucher for travel to Cairns, stay in Cairns, but why the hell would I go to Cairns and risk two weeks in lockdown afterwards at $3,000 just to save $100?' WA, Queensland and Victoria in particular have been capricious with these lockdowns. Are you getting much resentment from small business on that?

Mr Billson : Yes, absolutely we are. They're infuriated and bewildered by what is sensed to be inconsistencies across jurisdictions, proportionality to responses, why some jurisdictions treat certain events that look to a small business owner's eyes very similar to somewhere else very differently. Those are not surefooted conditions for a business owner to navigate, and that's why some improved predictability about trigger points and what sort of support they could count on would be I think a very positive step as we learn to live with COVID.

Senator ROBERTS: The Chair is giving me the signal to wind up, so I'll just say this.

Mr Billson : I think he's giving me the signal, Senator.

CHAIR: It's a general signal.

Mr Billson : In my general direction?

Senator ROBERTS: Just a final comment: the United Nations World Health Organization, which I happen to think is a dishonest, corrupt and incompetent organisation—

Mr Billson : Can I take that as a comment, Senator?

Senator ROBERTS: Yes, you don't have to give your opinion. Even the World Health Organization has said lockdowns are meant to be used as a last resort, initially only, just to get control of the virus. Does small business look upon the use of lockdowns as an inability of the states to get control of the virus, so the virus is essentially managing the state economy rather than the state managing the virus?

Mr Billson : You're leading me, and I might let that one just go through to the keeper, if that's okay.

CHAIR: I think we need to treat that one as a comment, thank you, Senator Roberts.

Mr Billson : Chair, can I just use that, though, cheekily to flag that the United Nations Micro-, Small and Medium-sized Enterprises Day of recognition is coming up in June, so that would be a great opportunity to say thank you to the small businesses and family enterprises you count on. That would be a good thing coming out of the UN.

CHAIR: Mr Billson, I don't think anyone would be left with any doubt about your passion for the small business sector and your suitability for the role. Thank you very much for appearing for the first time. I'm sure it's not the last. We will see you again in a few months, very likely. Thank you very much for your time, and I wish you all safe travels back to wherever you are heading.