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From the Desk of the Executive Director

Ken Phillips is co-founder and Executive Director of Independent Contractors of Australia. He is a published authority on independent contractor issues and directs research on related commercial and trade practices issues. Through his numerous articles in newspapers and think-tank and academic journals, Ken is known for approaching issues from outside normal perspectives and is frequently sought out for media comment.

The Senate's sensible small business stance

Wednesday, September 16, 2015

This is a tale that dispels the myth about a dysfunctional Senate. If anything, my recent experience with the current crop of senators indicates a grouping of real professionals performing diligently in a pressure-cooker environment.

Monday, of course, was an extraordinary day with the successful party room spill against Tony Abbott. What’s not well known is what preceded the spill on Monday morning in the Senate.

We (Independent Contractors Australia) have been campaigning vigorously against the then Abbott Government’s double dealing of small business over the unfair contracts Bill. Robert Gottliebsen had been following this for some time including his exposure of the successful neutering of the Bill by the Franchise Council of Australia, chaired by the 7-Eleven chief executive (The 7-Eleven affair could hit the Coalition at the next election, September 11). (7-Eleven chief executive Warren Wilmot has stood down from the Franchise Council following their worker underpayment scandal.)

The unfair contracts Bill supposedly extends the unfair contract protections currently available to consumers to small businesses. But Abbott’s Small Business Minister Bruce Billson inserted a clause limiting the protections to contracts under $100,000. This is a total victory for the Franchise Council, as no franchise agreement would conceivably be covered.

We had declared our opposition to the Bill in this form asserting it to be a sly con and a breach of the Coalition's election promise.

For several weeks we’ve been approaching Senators putting our case. In a detailed submission, we explained why there should be no contract value limit.

Everything came to a climax on September 14 with the Senate debating the Bill. Family First Senator Bob Day moved to increase the contract limit to $500,000. The Senate, however, voted for the Green's amendment, moving the limit to $300,000. This was supported by Labor and all the independents, including Bob Day.

Staggeringly, Senator Cormann for the government warned the senators that if the limit were increased, the government would reject the Bill in the House of Representatives. The outcome would be no unfair contract protections for small business people.

The vote amending the Bill happened around midday. By 2.30pm, Gottliebsen had written this up (How the ALP put small business in the election spotlight, September 14), saying the government had turned its “back on a million people in the small business community”. Around 4pm the spill was announced. By 9.30pm, Tony Abbott was rejected by his Party.

It’s reasonable to surmise that the Senate’s morning events were a big additional straw that broke Abbott’s prime ministerial camel’s back.

The lesson for me, however, was the performance of the Senators. We spoke to everyone: Greens, Labor and the independents. We were listened to with attention and interest.

Senator Leyonhjelm was conceptually against the Bill. He’s a strong free-market person. But he understood that the Bill codifies the structure of commercial contracts. Senator Day saw both sides: he owns a large business using subbies, but built his business from being a plumbing subbie.
We had constructive discussions with all the independents and/or their advisers including senators Lambie, Lazarus, Madigan, Wang, Muir and Xenophon.

Long discussions with several Labor senators occurred. There was an understanding that these protections available to self-employed people were basic.

Unlike employee protections, these protections for small businesspeople only apply to standard form contracts and don’t go to issues such as price. Nothing will stop anyone entering a ‘bad deal’. That’s the risk of being in business. But the protections do mean that, for example, the price of a contract cannot be changed without both parties agreeing. It’s about ensuring that contracts have structural integrity.

The Greens were equally focused. In fact, its amendment to move the contract protection limit to $300,000 was based on a pragmatic assessment of what the government might accept. We wanted no limit, so we didn’t get what we wanted, but the Senate outcome is a big improvement.

Amazingly, the government rejected this outright. Big business interests must have exerted considerable massive influence over the Abbott Government. The amended Bill has now returned to the House of Representatives. The Turnbull Government has an immediate test before it. Will it side with big business over the Coalition’s small business constituency?

Senators are dealing with a swirling crash of detailed, complex, diverse legislation. What I observed was a government trying to bludgeon the Senate into compliance. I observed Senators acting professionally, prepared to consider clear arguments. Yes, there won’t always be agreement. But thank goodness for a Senate independent of the government. Democracy does work and it can let the ‘little person’ be heard.

 [First published in Business Spectator, September 2015]

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