Office of the Small Business Commissioner

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1 Office of the Small Business Commissioner

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3 Office of the Small Business Commissioner Overview NSW has a relative advantage as the most populous Australian state and home to the largest concentration of economic infrastructure. NSW must use this comparative advantage to ensure it is the preferred place in which to do business. Over recent years, NSW s share of the nation s GDP has declined. It s time to reverse that decline and build a sustainable future. NSW must continue to reduce its taxes, and appropriately invest those it collects. NSW should be an efficient and productive state that provides opportunities for business to grow. Government has a role to play in supporting economic conditions and the critical infrastructure to ensure NSW remains the business capital of Australia. To ensure future growth, NSW cannot rely solely upon Sydney as a brand with its diverse population, and stable political and social environment as valuable and as important as these fundamentals are. The NSW Government has a critical role to play in attracting and retaining business in NSW by maintaining a competitive tax system, minimising compliance burdens, and running efficient and effective services. Introduction On 10 March 2010, the NSW Business Chamber released its policy blueprint, 10 Big Ideas to Grow NSW. The 10 Big Ideas to Grow NSW emerged from policy symposiums hosted by NSW Business Chamber during 2009 which involved over 500 business leaders, academics, community leaders and government representatives. The 10 Big Ideas cover the performance of Government, taxation, red tape, transport, infrastructure, Commonwealth-State relations, health funding, regional development, local government, the business environment, education and skills. They represent a combination of savings, new spending initiatives and tax cuts, and in aggregate, they improve the Budget position of NSW by at least $670 million over four years. Big Idea 5 of the 10 Big Ideas to Grow NSW calls for the establishment of a Department of Business Growth. Within that Department, NSW Business Chamber calls for the establishment of an Office of the Small Business Commissioner. Further information about the 10 Big Ideas can be found at 10bigideas.com.au 3

4 Purpose The purpose of the Office is operational and strategic but will undertake the following important functions: 1. Dispute Resolution The Office will provide a dispute resolution mechanism for > > business to business disputes; > > disputes between business and government departments; > > disputes between businesses and local councils; > > disputes between landlord/leasee; and > > mediation of franchise disagreements. 2. Independent advice and recommendations to Government The Office of the Small Business Commissioner will provide independent advice and recommendations to Government. The Office will investigate business complaints, review and provide comment on systemic issues; make submissions to relevant inquiries; and make representations to the Minister and Parliament through independently established reporting mechanisms. 3. Referral to appropriate jurisdiction In instances where the Small Business Commissioner does not consider a complaint can be managed in the Office of the Small Business Commissioner, the Commissioner will refer the complaint to a more appropriate jurisdiction. For example, serious breaches of the Trade Practices Act may be referred to the ACCC. The Ombudsman may also be referred matters under certain circumstances. It is noted that a number of industry Codes of Practice require disputing parties to use mediation services but are not explicit in the type of service/system parties must use. The Office of the Small Business Commissioner may provide such services or may refer parties to a more appropriate service. The Office of the Small Business Commissioner The position of the Small Business Commissioner shall be a statutory position. The Office of the Small Business Commissioner shall be a statutory office. The roles and functions of the Office of the Small Business Commissioner and the Small Business Commissioner will also be prescribed by legislation. 4

5 Operations of the Office of the Small Business Commissioner An independent office to be established by the NSW Government, the Office of the Small Business Commissioner will have a number of functions and powers to promote a fair, competitive operating environment for business within NSW. Such functions will include: > > Dispute resolution including the investigation of unfair market and business practices > > Review of government regulation > > Education and support services The Office of the Small Business Commissioner will act impartially in all matters (as an Ombudsman does). Independent commentary As an independent statutory office, the Office of the Small Business Commissioner will be able to provide public commentary on issues affecting small and medium sized businesses and in working with the Small Business Advisory Council (see below) propose legislative and regulatory reform in favour of small business. While small businesses operate in the same commercial, economic and legal environment as larger businesses, policies must allow for the different needs and capacities of smaller enterprises. In contributing to the policy development process, the Commissioner should take a broad approach in considering whether policy issues are relevant to the small business sector. Areas of policy development where the Commissioner could play a role include, but are not limited to: > > Small business access to finance > > Timeliness of government payments > > Fair trading > > Red tape reduction and regulatory reform Red tape reduction and regulatory reform As an independent statutory office, the Office of the Small Business Commissioner will be able to make recommendations to the Minister for red tape reductions and for amendments to regulation in favour of small business. Evidence and other data collected by the Small Business Advisory Council, and the Small Business Commissioner through the mediation, dispute resolutions and other functions, can be provided to the Minister in support of such change. In 10 Big Ideas to Grow NSW, NSW Business Chamber recommends that the Better Regulation Office be relocated from the Department of Premier and Cabinet 5

6 to the proposed Department of Business Growth reporting to the Treasurer. This is to ensure that all resources currently directed towards enhancing small business growth are consolidated and administrative processes streamlined. Mediation and Dispute Resolution Services To support the provision of a competitive and fair operating environment for small and medium services, the Office of the Small Business Commissioner will provide an alternative dispute resolution service. The service will be designed to bring together parties who have contractual and other disputes regarding unfair business behaviour. The aim is for such disputes to be effectively and efficiently resolved without the parties having to report to costly and time-wasting court proceedings. Further, decisions made to resolve the dispute are immediate because a decision of the court is not required. The decision agreed between parties will be for that dispute only, and will not dictate future business relationships. With government subsidised mediation services, parties will be brought together in a non-confrontational setting and have their disputes mediated by expert mediators. Mediators will be professionally recognised and the Office of the Small Business Commissioner will retain a panel of mediators who will be drawn upon to provide such services. Mediation services will be government subsidised and inexpensive to ensure the majority of disputes are mediated and finalised without the need for parties to resort to expensive and drawn out court processes. In Victoria, for example, the major component of the operational budget allocated to the Office of the Small Business Commissioner is for the provision of mediation and dispute resolution services. The additional benefit of this system is that it alleviates the stresses on the Administrative Appeals Tribunal by keeping out those matters, which with the assistance of mediators, are able to be efficiently and effectively managed between parties. For example, in the last six years, the Victorian Small Business Commissioner has mediated 5,500 disputes, and resolved 80% of all matters, in disputes worth approximately $200 million. Education and Support Services The Office of the Small Business Commissioner will be responsible for informing and educating government agencies on the operations of small business. This is particularly relevant in the development of Service Charters (see below). The Office of the Small Business Commissioner will also provide education services to small businesses, which will include > > information about the operations of the Office of the Small Business Commissioner, > > the work of the Department of Business Growth, and > > other services including regulation and compliance, fraud and related matters, privacy and customer data collections. Scope It is envisaged that > > small business will be interpreted by the Commissioner on a case-by-case basis, to ensure that the services of the Office of the Small Business Commissioner are as relevant to as many business as possible. Sole traders would fall within the scope of any definition. > > the Commissioner will determine the extent to which a small business has been the victim of unfair 6

7 Office of the Small Business Commissioner practices or unconscionable behavior to enable complainants to use the services of the Office of the Small Business Commissioner when dealing with business regulation, contractual matters (for example in franchise arrangements) and in tenancy arrangements. Where necessary and appropriate, (for example where there are serious breaches of the Trade Practices Act, or where there are clear examples of misleading and deceptive conduct), matters will be referred to an appropriate jurisdiction, notably the ACCC. The Commissioner may refer other matters to the Ombudsman. > > mediation services will be inexpensive and government subsidised to ensure the majority of disputes are mediated and finalised outside court processes. > > Office of the Small Business Commissioner will retain a panel of appropriately trained mediators and investigators. > > Office of the Small Business Commissioner will be impartial in all matters (as an Ombudsman is) > > Office of the Small Business Commissioner will be hosted by the Department of Business Growth (itself a newly established Department created through the combination of the Department of State and Regional Development; Office of Fair Trading; and the Better Regulation Office). > > Department of Business Growth will provide the administrative and operational support required of the Office of the Small Business Commissioner. Funding the Office of the Small Business Commissioner As a statutory position, the Office of the Small Business Commissioner would receive funding as a line item within the budget of the host agency. The Department of Business Growth, as host of the Office of the Small Business Commissioner, would provide the Office with its corporate services requirements, including IT, human resources, payroll and other shared services requirements. The Department would be responsible for all administration requirements attached to the provision of these services. The operational budget for the Office would be a separate line item over which the host department would have no jurisdiction. Indicatively, it is thought the Office would require initial funding of approximately $3 million, increasing as the operations of the Office increase. Cost to Establish a Department of Business Growth Establish a new Department of Business Growth $5.0m Expand Department of Business Growth $7.5m $10.0m $10.4m $10.8m Establish the Office of the Small Business Commissioner $3.0m $3.0m $3.1m $3.3m Total $15.5m 13.0m $13.5m $14.1m 7

8 Relationship with the Minister As a statutory position, the Small Business Commissioner will have an independent relationship with the Minister for the Department of Business Growth. This is recommended to be the Treasurer, and as a central agency will contribute to the Department being able to drive change and achieve results. Relationship with the Director General of the Department of Business Growth As a statutory position, the Small Business Commissioner will have an independent relationship with the Director General for the Department of Business Growth. On matters of administrative, operational or strategic interest, the two officers would need to work collaboratively. Case study Paying bills on time in Government One area where the Small Business Commissioner could actively advocate on behalf of small businesses would be to encourage the Government to pay its bills on time. This is an issue of significant concern for small businesses in NSW, and has been raised by a number of NSW Business Chamber members. Current Government practice generally requires payment within 30 days, but payments are often late, creating cash flow pressures. Cash flow is critical for small businesses, and with banks tightening lending criteria following the global financial crisis, receiving payments in a timely fashion has become even more vital to the ongoing viability of these businesses. For example, a small business providing goods to the Government Health Sector has been consistently paid late, and is often owed several million dollars in late payments. This is placing increasing pressures on the business. Small businesses dealing with Government Departments are wary about complaining too loudly about their mistreatment for fear of losing future business. The NSW Government should be moving to improve the timeliness of payments to small businesses, and match the Victorian Government s fair payments clause, which has been in effect since 1 July This clause requires government departments to pay small business suppliers under contracts up to the value of $3 million within 30 days, and to pay penalty interest rates on late payments. The Federal Government has recently matched this commitment for contracts up to the value of $1 million. Unfortunately, conditions in NSW appear to be getting worse rather than better, with recent tenders from the Department of Health increasing the payment period from 30 days to 45 days. Such decisions continue to reinforce the perception that NSW is a costly place in which to do business. 8

9 Office of the Small Business Commissioner Small Business Advisory Council As means of providing the Minister with broad-based input and advice on the range of regulation, policy and operational matters impacting on business, the Minister will appoint a Small Business Advisory Council in effect replacing the current Small Business Development Corporation Board. Replicating the Federal Small Business Advisory Committee, the NSW Council will be independent of government and provide advice on the impact of proposed policy changes and regulatory reforms. Chaired by the Small Business Commissioner, members will be chosen by the Minister and include representation from a range of industry groups representing business. It is recommended that the NSW Business Chamber participate on the Small Business Advisory Council. Issues considered by the Small Business Advisory Council will be relevant to the COAG agenda and provide the Minister with advice and information that contributes to effective representation at relevant government councils and at industry forums. The secretariat support for the Small Business Advisory Council will be provided by the Department for Business Growth. Small Business Charters Government agencies whose work involves engagement and interaction with small businesses, whether by contract, tender for services, preferred client or service provider, partner, or other means, will be required to enter into a Service Level Agreement with the relevant small business. This is to ensure relevant departments recognise the importance of supporting small businesses and are committed to excellence in dealing with small businesses. As a useful management tool, a Small Business Charter can assist in the setting of service level standards, performance standards, benchmarks for service delivery, and act as an accountability mechanism. Such standards are envisaged to be included in the Small Business Charters: > > Government tendering practices > > Late payments > > Government response times to inquiries > > Preferential treatment > > Licensing and approvals > > Grants and approvals > > Information and support services > > Communication with small business practices Appointment of the Small Business Commissioner It is recommended that the Small Business Commissioner be a person with relevant industry experience and be considered by industry and government alike to be a person of independence and integrity. The Commissioner must demonstrate a commitment to promoting a competitive and fair operating environment for all NSW small businesses. The selection of the Small Business Commissioner should be through an advertised, competitive, merit based selection process. 9

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11 10bigideas.com.au 11

12 Visit 10bigideas.com.au to find out more 1 Ensure 2 Create 3 Protect 4 End 5 Move taxpayers get better value for money by auditing government services and performance. jobs by cutting employment taxes and red tape. the NSW Budget by fighting for a fairer share of the GST. the blame game in hospitals by handing funding to the Federal Government. economic growth to the centre of State Government decision making by establishing the Department of Business Growth. 6 Encourage 7 Get 8 Take 9 Help 10 growth in regional NSW through funding government and business relocations to regional areas. the politics out of infrastructure by establishing Infrastructure NSW. charge of Sydney traffic by appointing a Transport Tsar. Sydney prepare for the future by creating 10 super councils. Better prepare young people for the workforce by improving the HSC for students not attending university. NSW Business Chamber 140 Arthur Street North Sydney NSW 2060 Locked Bag 938 North Sydney NSW 2059 t > f > e > 10bigideas@nswbc.com.au w > 10bigideas.com.au 10bigideas.com.au REP 156 Call > nswbusinesschamber.com.au