Michelle Rowland: Small business needs practical solutions to confront anti-competitive behaviour

By Michelle Rowland

Small businesses play a unique role in the economy and have helped underpin Australia’s economy growth for the past 25 years. As Labor’s Shadow Minister for Small Business, I want to ensure a practical response to the challenges facing small businesses in Australia.

Over the past year, Labor has provided bipartisan support for small business legislation coming out of the 2015-16 federal budget. To be frank, it was the only part worth supporting. This was the right thing to do.

Yesterday, along with Chris Bowen and Andrew Leigh, I announced a response to the ongoing issues for small businesses when confronting the anti-competitive behaviour by larger firms.

First, we will permit Federal Court judges to waive the liability of litigants in some private competition cases. This means small businesses and their representatives can tackle anti-competitive behaviour without fearing the cost burden of big business legal fees.

When I asked why there were so few private litigation claims from small businesses and their representatives under the Competition and Consumer Act, feedback focused on the potential costs from defendant’s legal teams and the time taken to conclude action.

This move will encourage private litigation on matters of competition. This assists businesses with smaller market shares that feel the pinch of anti-competitive behaviour while also assisting the general public. Prices and the supply of goods and services are all affected by anti-competitive behaviour and more challenges will help mitigate the worst effects.

Second, we will provide the Small Business Ombudsman with additional funding to provide an honest assessment of whether liability is likely to be waived in Federal Court. While this opinion will not be legally binding, the process will assist small businesses and their representatives in the lead up to taking action under the Competition and Consumer Act.

These are practical solutions to difficult issues. The greatest barrier to private litigation under the Competition and Consumer Act is the potential cost. Small businesses and their representatives are often in a “David versus Goliath” struggle given the costs and expertise required for these cases. Labor will have more to say on these matters in the near future.

This policy reflects how I understand small businesses. There are a number of generalisations about small business that hold true. Small business owners work hard, often perform multiple duties and are not after hand-outs but a plan and direction from government to provide certainty and confidence. However, it is also true there are many differences amongst Australia’s small businesses. There are those who are employing and those who are non-employing, spread across every industry and geographically disparate.

Labor’s small business policy will recognise this and focus on how government can practically support owners, operators and employees of small businesses. Can reporting dates be better aligned? Can independent and sub-contractors get their invoices paid on time? These types of questions go to the heart of running a small business.

This stands in contrast to a government who has failed to put forward answers to questions of their own making. For example, the government sat on Professor Ian Harper’s Competition Review and then in its response, failed to decide one way or the other about an effects test. A discussion paper threw up six different options, causing more uncertainty and confusion. We still do not know what is going to happen.

Chris Bowen, Andrew Leigh and myself have been upfront about our concerns over the introduction of an effects test. This is not something that will help small businesses. This has the potential to stifle new investment, causing economic uncertainty for millions of businesses and creating additional costs on each economic transaction.

This is the exact opposite of the policy response we put forward today. Labor has a plan to better encourage private action when anti-competitive behaviour hampers small businesses. Alongside this is funding for the Small Business Ombudsman to assist those seeking to take advantage of this opportunity.

Instead of sitting on proposals and recommendations, this is about getting on with it and supporting small businesses and their representatives.

Michelle Rowland is the Labor member for Greenway and Shadow Minister for Small Business.