Federal Treasurer Jim Chalmers kicked off the first Federal Parliamentary sitting week of 2023 by championing “values-based capitalism”, where private value is derived from the efficient use of regulatory frameworks.
What does that mean for small business? In short: the Labor Government is poised to act on a series of consultations and inquiries it kicked off last year, with the goal of significantly shaping how SMEs defend themselves from unfair business practices, bloated legislation, and rising cyber security threats.
Far from the big-spending, COVID-centric agendas of recent governments, here is a glimpse of what the small business community can expect to see from Labor’s “values-based” approach in the new year.
Merchants and shoppers alike can expect the federal government to level its long-expected buy now, pay later (BNPL) reforms in 2023, after the closure of consultations in December.
Assistant Treasurer and Financial Services Minister Stephen Jones has long cited the need for BNPL providers to be covered by the Credit Act in some capacity, given BNPL providers currently follow an industry-led Code of Practice and avoid many rules leveled on traditional credit providers.
In its consultation paper, the federal government has put forward three options of varying intensity: creating a ‘bespoke’ affordability test under the Credit Act for BNPL consumers to ensure they don’t BN more than they can PL; ‘limited’ regulation under an Australian Credit Licence and custom responsible lending obligations; and full-blown coverage by an Australian Credit Licence, with all the checks that entails.
For its part, the BNPL sector is heavily advocating for its importance to the economy, citing $18.4 billion in economic benefits over the 2022 financial year. Jones is also on the record as saying the Code of Practice has done a decent job thus far, meaning hardcore regulation is perhaps the least likely outcome.
In any case, the rejig will have defined outcomes for small businesses, is considering whether ‘no-surcharge rules’ which may prevent merchants from passing their own BNPL usage fees onto customers are fit for purpose.
The consultation also sought feedback on how well BNPL providers handle refunds and returns which require merchants to remunerate customers.
On a technical level, it is unlikely small businesses who offer the services of a BNPL provider covered by an Australian Credit Licence will need to become an authorised credit representative themselves.
The Federal government has already made headway on its competition reform agenda. Unfair contract terms are now outlawed, giving big businesses less than a year to re-write their agreements with smaller suppliers.
A new Treasury consultation is also investigating the way hotel booking platforms oblige independent hospitality providers to list their best possible prices on their platform, with those agreements challenged by Competition Minister Andrew Leigh.
Less prominent in the flurry of amendments and consultations: Labor’s intention to crack down on ticket scalping, a longtime bugbear for Minister for Employment and Workplace Relations and Minister for the Arts Tony Burke.
Backdropped by U.S. Senate hearings on the way major ticketing companies respond to digital ‘bots’ scalpers use to bulk-buy tickets — and what U.S. President Joe Biden has declared “junk fees” — any crackdown on scalpers will have inevitable implications for performers, promoters, and the small businesses which operate music venues nationwide.
Small businesses in the entertainment space and ticketing firms can expect to hear more detail in 2023.
After the crypto winter comes the crypto crackdown.
While not a small business issue per se, a recent consultation paper on crypto reforms lays out what the federal government sends a clear signal: current legislation does not work for every kind of cryptocurrency, digital asset, and derivative on the market.
At the same time, it states that crypto-backed offerings can exist perilously close to financial services and products which neatly fall into traditional regulatory framework.
“If a ‘crypto asset service’ is provided in respect of crypto assets that are financial products, the service provider would likely be providing a ‘financial service’ and subject to the relevant Australian financial services licence and other provisions of the Corporations Act,” the paper states.
Several high-profile court cases brought by ASIC against Block Earner and Finder Wallet have already challenged the notion that crypto-based financial products exist beyond the realms of old-school regulation.
Those companies intend to contest the allegations put forward by the corporate watchdog. The result of those cases, and the pending consultation, will have a profound impact on the local sector in 2023. Interested parties have until March 3, 2023 to have their say.
With the major corporate cyber-attacks of 2022 still front-of-mind, the small business community can reasonably expect further measures to boost their own resilience in 2023.
It is feasible such support could come through an expansion of the Digital Solutions — Australian Small Business Advisory Services (ASBAS) Program, which offers small businesses affordable, professional advice on how to bolster their cybersecurity efforts, data privacy, and other digital improvements.
The Labor Government funneled $18.6 million into the scheme last year, with Small Business Minister Julie Collins at the time declaring the program “helps businesses to recognise and grasp the opportunities that going online can offer, so they can survive and grow.”
But efforts to build cybersecurity among the SME community won’t rest entirely with the Small Business portfolio. Further announcements from the office of Minister for Cyber Security Clare O’Neil are likely to cross over into the small business realm, as the federal government attempts to ward off sophisticated attacks on businesses of all sizes.
This week saw the start of consultation between Burke and major industry groups on the second batch of the Labor Government’s workplace relations reforms.
Those measures include proposals to embed a new definition of ‘casual’ work in the Fair Work Act; make wage theft a criminal offence at a national level; and develop a new classification providing both flexibility and legislated workplace entitlements to gig economy workers.
Unlike the consultation process which led to the passage of the Secure Jobs, Better Pay Bill in late 2022, the Federal Government has given small business groups a little time to express their views before tabling its first exposure drafts.
While business representatives invited to those discussions are deeply concerned over some headline issues, like the ‘casual’ definition, there is cautious optimism around the Federal Government’s willingness to take feedback on board.
You can read more about that process here.
After years of criticism from restructuring professionals, industry leaders are cautiously optimistic 2023 could be the year Australia starts overhauling its exceedingly complex insolvency laws.
While no small business owner wants to go bust, groups like the Australian Restructuring Insolvency and Turnaround Association (ARITA) say it is too difficult for many entrepreneurs to responsibly and effectively unwind their operations.
A key example is the relatively new ‘simplified’ small business restructuring scheme, which just 82 businesses used in the 18 months after its launch. ARITA claims its trimmed-down flow chart explaining the process still runs over a dozen pages long, and that years of bolted-on amendments make the underlying rules too tricky to follow.
Yet the group is somewhat hopeful the Parliamentary Joint Committee on Corporations and Financial Services inquiry, which heard those complaints in 2022, will take the first arduous steps towards wholesale insolvency reform this year. The Committee will release its report on May 30, 2023.
Senior Business Journalist
Focused on the small business sector, David’s work covers the political, regulatory, and economic issues facing Australian entrepreneurs. Prior to joining SmartCompany, he was a reporter for Business Insider Australia. You can follow him on LinkedIn.
