Draft NSW retail leasing laws don’t provide small retailers with enough protection: Experts

The Urban Taskforce has criticised a new NSW Government bill, which is aimed at protecting small retailers’ interests when dealing with shopping centre landlords, for not focusing on the issue of town planning.

The Retail Leases Amendment Bill, which has been opened up for public consultation, calls for tougher laws to protect small businesses from shopping centre landlords, who often squeeze out small retailers in favour of larger ones.

The proposal has been met with criticism from property development industry group the Urban Taskforce, which claims that the problem lies with town planning.

Urban Taskforce chief executive Aaron Gadiel says the retail leases law is constantly being rewritten, but nothing is being done to address the imbalance of power between shopping centre landlords and smaller retailers.

“Town planning laws are the real culprit – that’s the reason that small businesses are in a weak position when they deal with their landlords,” Gadiel says.

“These constant revisions of the Retail Leases Act will have no effect while town planning laws are unreformed.”

Gadiel says a Productivity Commission report, The Market for Retail Tenancy Leases in Australia, details how town planning laws are restricting retail competition.

The Productivity Commission found zoning and planning controls can:

• Limit competition and erode the efficient operation of the market for retail tenancies.
• Give extra negotiating power to incumbent landlords and retail tenants.
• Advantage owners who have control over large amounts of retail space located some distance from competitors and their tenants.
• Disadvantage businesses that wish to gain access to additional space.

According to Gadiel, the Productivity Commission states that planning controls should be relaxed to boost opportunities and more retail space.

“The state government should stop fiddling at the edges and tackle the real cause of the problems,” he says.

However, Peter Strong, executive director of the Council of Small Business of Australia, commends the NSW government on its proposal.

“It’s a real attempt by the NSW government to do something… It’s a step in the right direction,” Strong says.

“I also agree [with the Urban Taskforce] about the impact of town planning. Local councils often redesign whole town centres around the needs of big landlords and people have no choice but to go into those malls to shop.”

Strong says small retailers are suffering as a result of the unfair nature of leasing contracts combined with very poor town planning.

“When anybody does go into development, they should look at the negative impact on existing businesses. If there is a negative impact, those businesses should be compensated for the loss of business by the developer,” he says.

Strong says the proposal is not a response to the growth of online retail, but the result of ongoing complaints from retailers that shopping centre landlords are “destroying communities” by monopolising retail space.

This article first appeared on StartupSmart, Australia’s top site for those starting a business.