Government considers creation of new small business tribunal for dispute resolution

The Federal Government is considering setting up a national small business tribunal and creating a small business advocate, in a bid to slice costs for SMEs involved in disputes and speed up resolutions.

The Government is calling for responses to its four key ideas:

• A national information and referral service, which would refer SMEs facing a dispute where to go to get it resolved.
• A national dispute resolution service, which could mediate disputes referred to it by the information and referral service.
• A national small business tribunal, to hear and decide on SME disputes.
• A small business advocate within Government.

In a speech this morning to release the options paper, Small Business Minister Nick Sherry said the national small business tribunal is designed to be a “one-stop shop” for SME disputes and would be backed by Commonwealth legislation.

The tribunal would have the power to investigate disputes, offer conciliation between the parties and review disputes where conciliation does not work.

“The National Small Business Tribunal would be based in a capital city, with the majority of its conciliation work being carried out by telephone,” the Government says in its options paper.

“To encourage utilisation of the NSBT, and recognising that cost is often a factor for small business in deciding to commence dispute resolution processes, the costs of conciliation would be subsidised by the Commonwealth.”

The small business advocate is designed to investigate and advise the Federal Government on SME issues, including dispute resolution.

Peter Strong, executive director of the Council of Small Business Organisations of Australia, welcomed plans for a tribunal to address power imbalances between small and large business, although stressed the devil would be in the detail.

He backed the Victorian Government’s system, which is built around a small business ombudsman.

“It’s been proven in Victoria that when you have someone standing up for small businesses, you get a quicker and better result for businesses. The Victorian model has got a good name and it has power. It allows small businesses to go somewhere to get things sorted out, rather than go to court and invariably lose, if you’re up against, say, a bank,” Strong said.

“The question is, what power would this have at Federal level? I’d be particularly interested to see the power it has over leases, which is a big factor in many disputes.”

Strong also believes that disputes, particularly with landlords, are more commonplace than the Government understands.

Sherry said this morning a Government survey last year found that 20% of SMEs had had a dispute with another business in the previous five years, often about contracting arrangements or payments, and many hadn’t followed through with the issue because they were worried it would be too expensive.

“The survey also revealed many small businesses weren’t aware of the wide range of existing dispute resolution mechanisms,” Sherry said.

“Many surveyed felt their dispute warranted third party involvement, but they steered away from taking action because of the perceived cost,” he said.

“Whatever the end result, I would judge the system a success if it is able to keep those disputes which can be dealt with by low-cost and speedy services – out of the courts. Court proceedings tend to be expensive, time consuming and highly distracting – particularly for very small businesses.”

Shadow Small Business Minister Bruce Billson says it appears the Coalition’s urgings for a small business ombudsman have been adopted by Sherry.

“It’s our idea; unless they make a complete hash of the implementation of it, it’s an idea we’d support. We just wish they’d get on it,” Billson says.

Billson adds that the Government is yet to follow up on its policy of having the Small Business in Cabinet, nor done much to cut red tape for SMEs.