Office of the Small Business Commissioner

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OverviewNSW 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.

IntroductionOn 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

Office of the Small Business Commissioner

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PurposeThe 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.

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Operations of the Office of the Small Business CommissionerAn 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

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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.

ScopeIt 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’

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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 CommissionerAs 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.

Office of the Small Business Commissioner

Cost to Establish a Department of Business Growth 2011-12 2012-13 2013-14 2014-15

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

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Relationship with the MinisterAs 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 GrowthAs 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 2007. 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.

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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 ChartersGovernment 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 CommissionerIt 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.

Office of the Small Business Commissioner

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Notes

1110bigideas.com.au

10bigideas.com.au

Call > 13 26 96 nswbusinesschamber.com.au

NSW Business Chamber140 Arthur Street North Sydney NSW 2060

Locked Bag 938 North Sydney NSW 2059

t > 13 26 96 f > 1300 655 277 e > 10bigideas@nswbc.com.au w > 10bigideas.com.au

1 Ensure taxpayers get better value for money by auditing government services and performance.

2 Create jobs by cutting employment taxes and red tape.

3 Protect the NSW Budget by fighting for a fairer share of the GST.

4 End the blame game in hospitals by handing funding to the Federal Government.

5 Move economic growth to the centre of State Government decision making by establishing the Department of Business Growth.

6 Encourage growth in regional NSW through funding government and business relocations to regional areas.

7 Get the politics out of infrastructure by establishing Infrastructure NSW.

8 Take charge of Sydney traffic by appointing a Transport Tsar.

9 Help Sydney prepare for the future by creating 10 super councils.

10 Better prepare young people for the workforce by improving the HSC for students not attending university.

Visit 10bigideas.com.au to find out more

REP

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