Legal

Small business ombudsman details revealed by federal government

Andrew Sadauskas /

The federal government has released the draft legislation to create an independent Australian Small Business and Family Enterprise Ombudsman, with the power to compel people to attend mediation with fines dropped from the proposed bill.

The creation of a Small Business Ombudsman to better represent SMEs has been a long-standing policy for the Coalition, originally announced long before the 2010 election. It was officially announced as a replacement for the Small Business Commissioner as part of the 2014 federal budget in May last year.

Bruce Billson told SmartCompany the ombudsman is designed to get timely, affordable and effective alternative dispute resolution for small businesses.

“It’s another election commitment that we have delivered. This role recognises that when small businesses have a legal dispute with a big business, they often end up worse off. The legal process is often slow and costly, and can do a lot of harm to small businesses,” Billson says.

“We’ve liaised with states and territories. We don’t want to overlap with what’s out there already out there – we want this to be complementary – and now we’re keen to get people’s feedback about it.”

Under the draft legislation, the ombudsman will act as an advocate for small businesses, a concierge for dispute resolution, including its own limited dispute resolution service, and will contribute to the development of small-business-friendly federal laws.

The ombudsman’s most important role will be as a single point of contact that can refer small businesses with an issue to the appropriate government agency for action, such as the Australian Competition and Consumer Commission, the Commonwealth Ombudsman or a state small business commissioner.

“When you’re dealing with a dispute or a code, navigating the avenues that are open to you can be difficult,” Billson says.

“So the ombudsman will act as a ‘concierge’ so – for example – if you’re in New South Wales and you have a dispute with your landlord, the ombudsman will be able to point you towards the right agency to get that resolved.”

The ombudsman will also provide a limited dispute resolution service on request. However, while a discussion paper issued in May 2010 looked at extending these powers to investigate small business disputes and compel the parties to attend mediation, these powers have not been included in the legislation.

“We thought applying fines was inconsistent with the sort of role we were trying to create,” Billson says.

“Given it’s an alternative dispute resolution process that requires both parties to participate in the first place, it doesn’t make sense to threaten them with fines.”

“That said there is scope if a party withdraws from the alternative dispute resolution process, and that matter ends up in court, for the other party to ask the ombudsman for what happened and to present that in a subsequent court appearance.”

In terms of developing business-friendly laws, the ombudsman’s office will have the power to conduct inquiries into how laws, policies and government practices affect small businesses, and how these might be improved. It will have the power to compel a person to produce information or documents, with at least 10 business days’ notice with a penalty of $5100 for failing to comply.

Areas the ombudsman could investigate include codes of conduct, fair trading provisions, the behaviour of regulators, and the effectiveness of government agency complaints mechanisms.

Once a quarter, the ombudsman would be required to write a report for the Small Business Minister outlining the research it has conducted and inquiries made and details of any laws or policies that are having an adverse effect on small businesses.

The ombudsman will be independent, with the draft legislation explicitly stating he or she must “not engage in any paid work outside the duties of the ombudsman’s office without the Minister’s approval”.

“Within government, there’s a need to engage with small businesses. So this is an avenue for government departments to engage with small businesses by finding out through the ombudsman what’s happening on the ground,” Billson says.

Peter Strong, executive director of the Council of Small Business of Australia, told SmartCompany the draft legislation for the ombudsman fulfils many of the aims he has been campaigning for.

“The big gain is it will be able to change the culture of the public service, so when it puts tenders out, small businesses will have a chance,” Strong says.

However, Strong says the removal of the ability to compel people to attend mediation is an issue COSBOA will address in its response to the draft legislation

“That comes back to the skill of the ombudsman in compelling people to come along to the event. That said, [current Small Business Commissioner] Mark Brennan has very good skills in getting people to appear voluntarily,” Strong says.

Small business owners interested in looking at the draft legislation or commenting can do so through the Treasury website, with submissions open until April 7.

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Andrew Sadauskas

Andrew Sadauskas is a former journalist at SmartCompany and a former editor of TechCompany.

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