Federal Opposition leader Tony Abbott has made his first big pitch to SME voters, promising to create a Small Business and Family Enterprise Ombudsman, make the position of small business minister a Cabinet post and extend new unfair contract protections to small businesses.
Abbott, who yesterday addressed the national summit of small business lobby group COSBOA, said the Ombudsman would help promote and protect the interests of small business at all levels of government.
“Small businesses are often wedged between rules for individuals and rules for businesses because effectively they are so often individuals in business,” he told the audience.
“This new ombudsman will be a policy advocate… and will also be able to help small business people be able to resolve disputes with government agencies.”
Abbott’s promises on the ombudsman and the elevation of small business minister to a Cabinet post were welcomed by small business groups, with new COSBOA chief executive Peter Strong throwing his weight behind the idea of “dedicated voices” for small business.
“COSBOA totally supports both these concepts. Tony Abbott showed us that he understands that small businesses are actually people who need a different set of rules than those imposed on big business and need their own policy champions in Canberra.”
Small business advocate Frank Zumbo, who is an associate professor at the University of New South Wales, said the ombudsman could provide an “important bridge” between government and small business.
He also wants to see the role developed, such that the ombudsman could run a dispute resolution services to address disputes between small and large businesses.
“This additional role for the proposed Ombudsman would be an efficient and effective way to consolidate the various dispute resolution functions that currently exist under the several industry codes of conduct under the Trade Practices Act,” he says.
“The proposed Ombudsman would be particularly valuable in providing a “one-stop” approach to small business dealings with the Federal Government.”
More controversial is Abbott’s plan to extend unfair contract provisions to business-to-business contracts under $2 million.
The Government’s unfair contract provisions, which came into force on July 1, was originally designed to protect business-to-business contracts under $2 million, but this was carved out by Small Business Minister after opposition from groups including the Business Council of Australia, the Law Council, the franchise sector and the banking sector.
“It was a promise that the current Government made in opposition and hasn’t delivered upon,” Abbott told reporters.
“It’s very important that small business, which is really indistinguishable from consumers when it comes to its vulnerability at the hands of large business imposing standard form contracts on people, should get this protection.”
While Zumbo described the extension as “long overdue”, the Australian Bankers Association was quick to hit back at the unfair contracts proposal, suggesting that it could further crimp small business access to finance.
“The proposal from the Coalition looks superficially attractive but could end up harming the very small businesses which it’s seeking to protect,” ABA chief Steven Münchenberg says.
“This proposal for further regulation, which creates uncertainty, would need to be taken into account when banks consider lending to small businesses and could end up impacting on credit availability to the sector.”
Franchising Council chief Steve Wright is also unimpressed.
“The concept that this could now apply to any business-to-business contact is just taking us back to the concept of interfering in existing contracts. It might look benign, but it is not,” he says.
“It would be very detrimental to franchising if a franchisee was at liberty to contest his agreement because some items were non-negotiable.
“This won’t fix anything. All it will do is provide a vehicle for arguments and that will be a detriment to business.”
James was the editor and publisher of SmartCompany and LeadingCompany for five years. He is now the Australian Financial Review‘s companies & markets editor, and a former BRW editor.
