In December 2011, Prime Minister Julia Gillard reshuffled her ministry. Naturally, senior Cabinet posts and significant demotions attracted attention. Unnoticed was that small business received a new minister: Senator Mark Arbib.
What do small business ministers do? Typically, nothing. The ministry appears now as a token sop to small business. It doesn’t help that such ministers also have other responsibilities. Senator Arbib is also Assistant Treasurer, Manager of Government Business in the Senate and Minister for Sport. Small business will struggle for attention with this schedule.
The junior Ministry of Small Business was created by the Hawke Labor Government in 1988, with Barry Jones as the incumbent (Jones was also Minister for Science and for Customs). The Coalition had created the position of Shadow Minister for Small Business, following the election of Hawke Labor in March 1983, though there was no ministry to shadow. Naturally, shadow ministers criticised the government for neglecting the small business constituency.
This is an arena in which shadow minister speeches in Parliament often display a greater awareness of small business difficulties.
Here is the Coalition’s Alexander Downer on April 10, 1989: “Another major concern that I have … is the lack of concern in the government and perhaps throughout the community for the concentration of market power in the hands of fewer and larger companies. If the government wants to have in this country an effective capitalist system, it has to have a competitive capitalist system.” Exactly.
Here is Labor’s Joel Fitzgibbon in 19 October, 2006 (in the context of Treasurer Peter Costello moving “Dawson Report” amendments to the Trade Practices Act): “We will still be opposing this bill because it is a flawed bill. It is a flawed bill because, although it gives something to small business, it taketh something away. The Treasurer, for the last 12 months, at least, has been holding a big gun to the head of small business in this country.” Absolutely correct. Intelligence in opposition but, in government, corporate interest emerges organically from the ether to foster inaction.
The period of relative functionality and success of the small business ministry is centred on two parliamentary inquiries and reports from the House Industry Committee – the 1990 Small business in Australia: challenges, problems and opportunities (Beddall Report), and the 1997 Finding a balance: towards fair trading in Australia (Reid Report).
The first inquiry was instigated by Jones in March 1988. Labor’s David Beddall was Chair of the Industry Committee, and he became small business minister in 1990. Beddall was one of the few ministers/shadow ministers who has wanted to serve in the portfolio, and he provided continuity with the second inquiry under Coalition chairmanship. The Coalition’s contemporary shadow minister and then minister after March 1996, Geoff Prosser, was a rare (and apparently successful) businessperson to hold the job. However, his business was shopping centres ownership; he apparently was hostile to the 1997 report of the inquiry that he had initiated and was forced from the ministry in July 1997 because he had continued with direct involvement in his business interests.
Elements of the changes resulting from both inquiries/reports include: research and information publicity as to the nature of the sector; establishment of a franchising code of conduct; Capital Gains Tax relief on capital rollovers; replacement of the tenuous common law availability of unconscionability, with statute law provisions in the Trade Practices Act giving small business the formal rights previously available to consumers; action on retail tenancy legislation and codes to ensure uniform national and minimum standards for retail tenants; additional resources for the Australian Competition & Consumer Commission; enabling of the ACCC to conduct test cases and take representative action on behalf of small business; and employment of small business designated staff within the ACCC.
A committed chairman in Allan Fels saw the ACCC win a handful of significant cases against corporates – Safeway/Woolworths (1996-2003, section 46 of the Trade Practices Act: abuse of market power re bread price competition); National Australia Bank (2000, section 51AA: loan guarantor unconscionability); Coles and Woolworths (2003-05, section 45: restraint of trade against independent liquor outlets). In 2001, the ACCC successfully pursued shopping centre giant Westfield (section 51AC: unconscionability; section 52: misleading and deceptive conduct) on behalf of aggrieved tenants, but it disgracefully accepted a confidential settlement in 2004 “without admissions”.
2003 marked the end of progress. The ACCC lost two decisive cases in ACCC v Berbatis Holdings (s51AA: retail landlord unconscionability) and Boral Besser Masonry v ACCC (section 46: predatory pricing against smaller competitors). Simultaneously, in mid-2003, Treasurer Peter Costello replaced the retiring Fels with Graeme Samuel, whose chairmanship was distinguished by a near comprehensive incomprehension of and indifference towards small business rights.
The franchising code of conduct has not prevented ongoing abuse suffered by franchisees, for lack of adequate enforcement and penalties for franchisor non-compliance. Retail tenancies continue to be a fertile domain of unconscionable practices. And unconscionability and fraud amongst credit and finance service providers has reached epidemic proportions. The corporate sector’s asymmetric power over small business has now been structurally entrenched – legally, procedurally and culturally. Of importance, the Coalition government, in its legislative response to the Reid Report, ignored the Committee’s recommendation to privilege the more inclusive term “unfair conduct”: a term to cover unconscionable, harsh or oppressive conduct.
A succession of small business ministers have remained oblivious to this evolving state of affairs. Following the resignation of Geoff Prosser, Small Business was tacked onto Peter Reith’s Ministry for Workplace Relations. However, he was henceforth fully occupied as Minister for Patrick Stevedores until 2001, and small business was relegated to the background.
Tony Abbott and Ian Macfarlane (2001) came and went overnight. Joe Hockey (2001-04) did nothing, albeit with customary bluster. Fran Bailey (2004-07) was dragooned by Treasurer Costello into using her portfolio to get the small business lobbies to sign up for Costello’s passage of legislation arising from the pro-corporate 2002-03 Dawson Inquiry and Report.
Labor is elected in November 2007. Craig Emerson (2007-10) becomes Small Business Minister. Emerson’s first job was to attempt to have the government repeal Senator Barnaby Joyce’s late 2007 ‘Birdsville’ amendment to section 46 of the Trade Practices Act, aimed at restoring some teeth to the emasculated section. Emerson’s denunciation of the amendment echoed that of the corporate lobby.
Emerson also sat on his hands over the Joint Corporations Committee’s 2009 franchising report, itself a weak report, the inquiry having been established following mounting evidence of a sector in crisis. Emerson chose to listen only to the assertive Franchise Council of Australia, representing franchisors.
Nick Sherry (2010-11) revitalised the information bulletin on the small business sector with the recent Key Statistics: Australian Small Business. But I emailed Minister Sherry in February 2011 regarding ongoing bank predation against small business/farmer customers. I received a reply from the Minister’s office noting that my material had been passed on to another portfolio.
I replied to the Minister’s office in March, noting: “I’m somewhat dismayed that evidence of comprehensive regulatory indifference to legislated responsibilities and subsequent inaction, in an arena of the most fundamental significance to small business viability, results in the conclusion that this matter is of no relevance to the Minister who presides over the Small Business portfolio.”
And there the situation rests. What does the Minister for Small Business do? It’s a mystery. Anything positive that Senator Arbib does for this appallingly neglected sector can only be a step forward.
This article first appeared at The Conversation.
Evan Jones is the honorary associate, Department of Political Economy at University of Sydney.