“Really positive”: Andrew Leigh hailed for competition reforms, as Small Business Ombudsman calls for further action in 2023

Small business groups have praised the Labor government’s recent competition reforms, Australian Small Business and Family Enterprise Ombudsman (ASBFEO) Bruce Billson says, but the SME advocate suggests more could be done to crack down on harmful conduct in 2023.

Representatives of the Australian Chamber of Commerce and Industry joined peak bodies for the retail, food service, and accounting sectors at Thursday’s ASBFEO Policy Forum, which gave attendees the chance to share their views with Assistant Minister for Competition, Charities and Treasury Andrew Leigh.

Attendees saw the outlawing of unfair contract terms, a new Treasury consultation on accommodation sector pricing, and a review of the Payment Times Reporting Scheme as “really positive, strong and welcome” developments, Billson told SmartCompany on Friday.

With the government evidently throwing its weight around on competition issues, attendees discussed even more significant reforms — including the idea of legislation targeting what Billson characterised as the grey area between unfair contract terms and what is already defined as “unconscionable conduct” between businesses.

Leigh and the participants discussed “the line between robust commercial practice you would expect in the cut and thrust of commerce, versus what is an unfair business practice, where dominant parties can exercise their dominance in a way that’s harmful to innovation, to competition, to wealth creation, and, you know, using competition on muscle more than on merit,” he said.

“There was a strong consensus that there’s something needed in between,” the ombudsman added.

Of particular concern were measures that heap risk on the smaller business in a commercial contract, but may exist beyond the scope of the new unfair contract term legislation.

“What is that line between sharp commercial conduct and an unfair business practice?” Billson said.

“There might be a contractual obligation where a big firm is simply passing the risk, and any delays and the carrying costs of equipment and things like that, onto the small business on a very low margin project.

“So it effectively cruels the commercial opportunity for the small business.”

“Lack of focus on competition reforms” a cause for lagging productivity, Leigh says

The federal government is yet to detail any policies addressing that blurred line.

But beyond the roundtable, Leigh has recently expressed his ideological support for big-picture competition reform, and has praised legal overhauls in other jurisdictions which boosted bargaining power for smaller operators.

Speaking to SmartCompany after the announcement of the travel booking platform consultation, Leigh said his focus for 2023 is “really about getting dynamism back into the Australian economy”.

“One of the reasons I think maybe productivity has stagnated over the past decade is a lack of focus on competition reforms,” he added.

Competition reforms were the theme of high-profile lectures Leigh delivered in November, with the third and final address, the Warren Hogan Memorial Lecture at the University of Sydney, highlighting his admiration for anti-trust reforms which broke down American monopolies in the early 1900s.

In that case, he noted how farmers were instrumental in the dismantling of monopolistic trusts in the tobacco, beef, sugar, flour and cotton industries.

“Competition isn’t just about consumers; it’s also about suppliers,” he said. “In the case of US antitrust reforms, farmers were a vital constituency in pressing for reform.”

While those circumstances occurred half a world and more than a century in the past, the parallels between those farmers and Australian small businesses which operate under the shadow of major corporations may give SME leaders some hope for further updates.

“I know all of the groups that were involved with the policy roundtable were extremely appreciative of the opportunity and frankly, delighted by the engagement from Minister Leigh, so we look forward to continuing that in 2023,” Billson said.