Commonwealth of Australia Explanatory Memoranda Commonwealth of Australia Explanatory Memoranda[Index] [Search] [Download] [Bill] [Help]
2013-2014-2015
THE PARLIAMENT OF THE COMMONWEALTH OF AUSTRALIA
HOUSE OF REPRESENTATIVES
AUSTRALIAN SMALL BUSINESS AND FAMILY ENTERPRISE OMBUDSMAN
BILL 2015
AUSTRALIAN SMALL BUSINESS AND FAMILY ENTERPRISE OMBUDSMAN
(CONSEQUENTIAL AND TRANSITIONAL PROVISIONS) BILL 2015
EXPLANATORY MEMORANDUM
(Circulated by the authority of the
Minister for Small Business, the Hon Bruce Billson MP)
Table of contents
Glossary .................................................................................................. 1
General outline and financial impact ....................................................... 3
Chapter 1 Background.................................................................... 7
Chapter 2 Constitutional basis for the Bill ..................................... 13
Chapter 3 Preliminary ................................................................... 19
Chapter 4 Australian Small Business and Family
Enterprise Ombudsman ............................................... 25
Chapter 5 Advocating for small businesses and family
enterprises ................................................................... 29
Chapter 6 Assisting a small business or family enterprise ........... 37
Chapter 7 General requirements .................................................. 43
Chapter 8 Consequential amendments ........................................ 47
Chapter 9 Transitional provisions ................................................. 51
Chapter 10 Regulation impact statement ....................................... 53
Chapter 11 Statement of Compatibility with Human Rights .......... 113
Index ................................................................................................... 115
Glossary
The following abbreviations and acronyms are used throughout this
explanatory memorandum.
Abbreviation Definition
ACCC Australian Competition and Consumer Commission
ADR Alternative dispute resolution
ASBFE Ombudsman Australian Small Business and Family Enterprise
Ombudsman
Bill Australian Small Business and Family Enterprise
Ombudsman Bill 2015
Commissioner Australian Small Business Commissioner
Consequential and Australian Small Business and Family Enterprise
Transitional Provisions Ombudsman (Consequential and Transitional
Bill Provisions) Bill 2015
Constitution Commonwealth of Australia Constitution Act 1900
Department Department of the Treasury
GDP Gross Domestic Product
Minister Minister responsible for small business
MOU Memorandum of understanding
Ombudsman Australian Small Business and Family Enterprise
Ombudsman
RBM Regulatory Burden Measure
RIS Regulation Impact Statement
Secretary Secretary to the Treasury
Small business/es Small business/es and family enterprise/s
1
General outline and financial impact
Australian Small Business and Family Enterprise
Ombudsman
The Australian Small Business and Family Enterprise Ombudsman
Bill 2015 (Bill) addresses the relationship between Commonwealth laws,
and state laws. The Bill, in several places (sections 39, 54 and 78),
indicates that nothing in the Bill allows certain powers under the Bill to be
exercised to the extent that it would impair the capacity of any state to
exercise its constitutional powers.
Date of effect: The Ombudsman will commence operations on a date
to be proclaimed.
Proposal announced: In 2013, the Government announced it would create
a Small Business and Family Enterprise Ombudsman with 'real power':
• 'a Commonwealth-wide advocate for smaller enterprises';
• 'a single entry-point agency to access Federal small business
programmes and support';
• 'a contributor to making Commonwealth laws and
regulations more small business friendly'; and
• 'a concierge for dispute resolution' (including 'its own
mediation service').
The single entry-point initiative will now form part of the Government's
single access point for business information, services and assistance,
which is part of the Government's Digital Transformation Agenda. The
Ombudsman, in the Ombudsman's concierge role, will direct people to
information about accessing Commonwealth small business and family
enterprise programmes and support.
The specific legislative model for this Ombudsman with 'real power'
was announced by the Minister for Small Business (Minister) on
18 August 2014.
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Financial impact: Funding of $8 million over four years was allocated in
the 2014-15 Budget for the creation and ongoing expenses of the
Ombudsman. The expenditure profile is:
2014-15 2015-16 2016-17 2017-18
$2.0m $2.0m $2.0m $2.0m
Human rights implications: This Bill does not raise any human rights
issue. See Statement of Compatibility with Human Rights -- Chapter 11.
Compliance cost impact: The creation of the Ombudsman is expected to
result in net regulatory savings of $0.007 million per year.
Summary of regulation impact statement
Regulation impact on business
The Bill establishes an Ombudsman and specifies the functions and
powers of the Ombudsman. The Ombudsman has both advocacy and
assistance functions.
Impact: The Ombudsman will lead to a net reduction in the regulatory
burdens faced by businesses of $0.007 million per year. Broader net
economic benefits to businesses are estimated to be $18.209 million
per year.
Main points: As part of the advocacy function, the Ombudsman will
undertake research and inquiries into legislation, policies and practices
affecting small businesses and family enterprises. This advocacy function
is supported by powers, under which the Ombudsman can require persons
give evidence at hearings and provide information/documents, for the
purpose of assisting the Ombudsman's research and inquiry activities. The
costs of complying with these requirements are not included under the
Regulatory Burden Measure (RBM) framework.
The economic costs to those who prepare for, and participate in, the
Ombudsman's advocacy-related research and inquiry activities are
estimated to be $0.186 million per year.
The Ombudsman's assistance function will include responding to requests
for assistance by referring requests to the appropriate Commonwealth,
state or territory agency; or, if the request for assistance relates to a matter
within the Ombudsman's remit, recommending how the dispute may be
4
General outline and financial impact
managed -- including recommending an alternative dispute resolution
(ADR) process.
The assistance function is supported by information-gathering powers and
the ability to publicise that an entity has refused to engage in, or has
withdrawn from, a recommended ADR process. This function is expected
to result in fewer disputes being pursued through the Federal Court
system. For these cases, the time taken to apply to court is considered a
regulatory saving and included in the RBM framework.
Broader net economic costs associated with the Ombudsman's assistance
function include staff time and out-of-pocket expenses relating to
participating in an ADR process. Economic savings relate to avoided
court costs, where a dispute was resolved through the Ombudsman's
assistance function rather than through a court. The net economic savings
from the Ombudsman's assistance function is estimated to be $18.395
million per year.
5
Chapter 1
Background
Outline of chapter
1.1 Chapter 1 explains the background to the Australian Small
Business and Family Enterprise Ombudsman Bill 2015 (Bill).
1.2 The Bill establishes the Australian Small Business and Family
Enterprise Ombudsman (Ombudsman), and specifies the powers and
functions of the Ombudsman.
Context of new powers
Background to the Ombudsman
1.3 Small businesses and family enterprises play a large role in the
Australian economy. The Australian Bureau of Statistics (which uses a
small business definition of less than 20 employees) has indicated that
small businesses represent approximately 97 per cent of all Australian
businesses and employ around 4.6 million Australian people. Many small
businesses are also family enterprises, which represent approximately
70 per cent of all Australian businesses.
1.4 Small businesspeople face many challenges as they seek to
expand their businesses. Family enterprises share these challenges, and
face other challenges as well because of the particular nature and
characteristics of family enterprises.
1.5 Small businesses and family enterprises need a strong advocate
who can represent their interests. A strong advocate can help small
businesses and family enterprises by advocating on, for example, red tape,
taxation and other issues and problems that they may face.
1.6 Small businesses and family enterprises are often treated as
though they were big businesses with all resources possessed by big
businesses.
1.7 The Australian Government is committed to a general
deregulation agenda, which will ensure that Commonwealth legislation
and regulations are business friendly and especially small business and
family enterprise friendly.
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1.8 A good regulatory regime can make a difference to the
productivity of businesses, and decisions about when, or whether, a
business should proceed with an investment. A university study in 2012,
found that small businesses in Australia were spending around $28,000
and nearly 500 hours a year working on red-tape and compliance burdens.
1.9 The Treasury estimated in 2014, that regulatory compliance
costs could be as high as five per cent of Gross Domestic Product (GDP).
The Productivity Commission estimated that, by removing inefficient
regulation, savings of up to 1.6 per cent of GDP could be made, with the
benefit to the economy from reducing regulation estimated to be between
$12 billion and $24 billion a year.
1.10 Activities which the Ombudsman may undertake to reduce the
regulatory burden at the Commonwealth level include:
• reducing administrative burdens, for example, by suggesting
simplifications to administrative forms and processes;
• minimising the costs businesses incur in complying with
regulations;
• providing advice on matters affecting the interactions of
small businesses and family enterprises with Commonwealth
agencies;
• conducting investigations into industry sectors, in which
small businesses and family enterprises face particular
problems; and
• making recommendations on practical solutions to reduce
burdensome regulation.
1.11 The Ombudsman represents a positive opportunity to establish a
highly regarded advocate who will act as a conduit for issues that small
businesses and family enterprises face at the Commonwealth level. The
Ombudsman will promote a nationally consistent and coordinated
approach to these issues.
1.12 The Ombudsman will also play a valuable leadership role in
collaborating with the state small business commissioners, other state and
territory officials, and peak industry bodies. The Ombudsman will raise
the concerns of small businesses and family enterprises in interactions
across both the public and private sectors.
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Background
1.13 In this expanded role as a Commonwealth-wide advocate for
small businesses and family enterprises, the Ombudsman will have
information-gathering powers, such as the power to conduct hearings, to
be able to investigate matters and make recommendations to Government.
1.14 The Ombudsman will need to be, and be seen to be, impartial.
The Ombudsman's advocacy and assistance functions will therefore be
entirely separate -- and thus there will be no conflict between the
functions.
1.15 The Ombudsman's assistance function will include responding
to requests for assistance by:
• in the Ombudsman's 'concierge' role, referring requests to
another agency of the Commonwealth, a state or a territory;
• working co-operatively with another agency of the
Commonwealth, a state or a territory to provide assistance;
and
• making recommendations, where the request for assistance
relates to a matter within the Ombudsman's remit, about how
a dispute may be managed -- including making
recommendations that an alternative dispute resolution
(ADR) process be used. For this purpose the Ombudsman
will maintain a published list of ADR providers [Part 4,
subsection 72(1) of the Bill]. The parties in dispute must always
choose their specific ADR provider, or providers, [Part 4,
subsection 73(1) of the Bill], but where the parties in a dispute do
not have their own preferred ADR provider, the Ombudsman
may recommend that they chose 'one or more' ADR
providers from a 'group' of suitable ADR providers listed in
the Ombudsman's recommendation to undertake ADR [Part 4,
paragraph 71(2)(b) of the Bill].
1.16 There is a need for ADR services that are quick, and low-cost to
be accessible by small businesses and family enterprises. Unresolved
disputes can significantly impact the ongoing viability of small businesses
and family enterprises, impairing their capacity to contribute to a
productive and competitive economy. The availability of ADR services
can help preserve business relationships, and avoid unnecessary and
expensive litigation.
1.17 The Ombudsman will have information-gathering powers that
will support the Ombudsman's assistance function, enabling the
Ombudsman to make inquiries and obtain information in relation to
requests for assistance.
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Outline of existing arrangements in the Commonwealth, states and
territories
1.18 The Australian Small Business Commissioner (Commissioner)
commenced operations on 2 January 2013. The Commissioner's role, is
not underpinned by any legislation, and is limited to providing advocacy
and representation for small business interests and concerns to the
Australian Government. The Commissioner has no specific role in relation
to family enterprises.
1.19 At the Commonwealth level, there are existing Commonwealth
Government agencies such as the Commonwealth Ombudsman and the
Australian Competition and Consumer Commission (ACCC), which
provide assistance and information to small businesses on certain matters.
1.20 The roles of the existing state small business commissioners in
New South Wales, Victoria, Western Australia and South Australia also
involve providing assistance and information to small businesses. There
are currently no small business commissioners in Queensland, Tasmania,
the Australian Capital Territory and the Northern Territory. In the states
and territories that do not have a specific small business commissioner, a
range of ADR services are, nevertheless, provided to small businesses.
1.21 In relation to family enterprises, there are no existing agencies at
the Commonwealth, state or territory level that deal specifically with
matters affecting family enterprises.
1.22 The Ombudsman, by working co-operatively with existing
Commonwealth, state and territory agencies, will avoid duplicating the
services of other agencies, and instead complement the services they
provide.
Consultation
1.23 The Government undertook extensive consultations on the
establishment of the Ombudsman. A discussion paper was released to
specific Commonwealth, state and territory officials in January 2014. The
feedback from these officials was considered and taken into account in
preparing the public discussion paper on the Ombudsman which was
released to the public in April 2014. This discussion paper, on the scope
and functions of the Ombudsman, sought public comments to shape the
Ombudsman's role. A series of face-to-face consultations with
stakeholders was held regarding the discussion paper, and 53 submissions
were received.
10
Background
1.24 After considering the stakeholders' comments, the Government
announced, on 18 August 2014, a proposed draft model for the
Ombudsman.
1.25 An exposure draft of the Ombudsman legislation, accompanied
by related explanatory materials, was released on 11 March 2015.
Consultations on this exposure draft included face-to-face meetings and
teleconferences. Consultations continued over several weeks with more
than 40 different stakeholders, and over 40 submissions from stakeholders
were received.
1.26 A wide range of stakeholders participated in the various stages
of the consultation process. These included the Commonwealth
Ombudsman, the four state small business commissioners, various other
ombudsmen, regulators such as the ACCC, community justice centres,
dispute resolution centres, industry associations, private entities and
individuals.
1.27 The Government has taken stakeholders' views and comments
into consideration in developing the draft legislation. Stakeholders'
comments, including the issues raised through the consultation processes,
have been taken into consideration in the final preparation of the Bill.
11
Chapter 2
Constitutional basis for the Bill
Outline of Constitutional basis
2.1 Under the Constitution, the Commonwealth does not have any
specific small business and family enterprise powers. As a result, different
Commonwealth powers support different aspects of the Bill.
2.2 The legislation needs to be linked to specific heads of powers
under the Constitution. Consequently the constitutional connection
relating to the Ombudsman's advocacy function is set out in section 35,
and in section 65 for the assistance function [Part 3, Division 1, section 35 and
Part 4, Division 1, section 65]. These sections of the Australian Small Business
and Family Enterprise Ombudsman Bill 2015 (Bill), plus the
Constitution's nationhood power, provide the necessary connection
between the Ombudsman's functions and the Constitution.
2.3 The Ombudsman's advocacy function relates to 'relevant
legislation, policies and practices' [Part 3, Division 1, section 35]. The
Ombudsman will also provide assistance to small businesses and family
enterprises in relation to a 'relevant action'. [Part 4, Division 1, section 65]
2.4 The Bill also addresses the relationship between Commonwealth
laws and state and territory laws. The Bill specifies that to the extent that
state or territory laws are capable of operating concurrently with this Bill,
it is not intended to exclude or limit the operation of these laws [Part 5,
Division 1, section 79]. The Bill also provides that, in relation to aspects of
the Ombudsman's advocacy and assistance functions, the Bill will not
impair the capacity of a state to exercise its constitutional powers [Part 3
Division 2, section 39, Part 3, Division 3, section 54 and Part 4, Division 4, section 78].
The general policy underlying the Bill further provides that the
Ombudsman, in performing functions under the Bill, must avoid
duplication with Commonwealth, state or territory agencies, and work
co-operatively, as far as possible, with these other agencies. [Part 2,
Division 1, section 16]
2.5 This method of shielding state laws from the operation of the
Bill (and section 109 of the Constitution), provides greater assurance than,
for example, the method adopted in section 7 of the Independent
Contractors Act 2006, where specific state legislation was named as
excluded from the operation of the Independent Contractors Act 2006.
This is because state legislation is constantly being repealed, and other
state legislation enacted, and such changes might not be reflected in
Commonwealth law. State legislation, moreover, is not uniform.
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2.6 The problem of inconsistency among the Commonwealth, state
and territory levels of government will exist as long as there is no
nationally harmonised system. A harmonised system, avoiding duplication
and overlap among the Commonwealth, states and territories, would
represent a step towards a unified framework for small business matters in
Australia. In the absence of a nationally harmonised system of small
business laws, the Bill will address the problem of inconsistency, as far as
possible, within the limits of the Constitution.
Corporations Power
2.7 The Bill applies to 'small businesses' and 'family enterprises'
some of which are entities that the Commonwealth has power to regulate
under its Corporations Power (section 51(xx) of the Constitution), which
gives the Commonwealth the power to make laws with respect to 'foreign
corporations, and trading or financial corporations formed within the
limits of the Commonwealth'. The Ombudsman's activities and functions
extend to situations where constitutional corporations interact with small
businesses or family enterprises, regardless of whether the small
businesses and family enterprises are themselves incorporated. The
Corporations Power of the Constitution supports the provisions of the Bill
that deal with any:
• past, present or proposed policies or practices of
constitutional corporations, to the extent that they affect or
may affect small businesses or family enterprises
[Part 3, Division 1, subsection 35(c)];
• past, present or proposed policies or practices of small
businesses or family enterprises that are constituted as, or
operated by, a constitutional corporation [Part 3, Division 1,
subsection 35(d)];
• action by a constitutional corporation that affects, or may
affect, a small business or family enterprise [Part 4, Division 1,
subsection 65(b)]; and/or
• action by any entity that affects a small business or family
enterprise that is a constitutional corporation.
[Part 4, Division 1, subsection 65(c)]
Example 2.1: Disputes involving a corporation
An unincorporated small business requests assistance from the
Ombudsman relating to a dispute it is having with a corporation in the
same jurisdiction. If the nature of the dispute does not place it within
the remit of another official, then the Ombudsman may deal with the
matter.
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Constitutional basis for the Bill
Example 2.2: Disputes involving a matter dealt with by a state official
A small business retailer is experiencing problems with its retail
tenancy agreement. Retail tenancy agreements are dealt with under
state law, such as the Retail Leases Act 1994 (NSW), the Retail Leases
Act 2003 (Vic), the Retail Shop Leases Act 1994 (Qld), the
Commercial Tenancy (Retail Shops) Agreements Act 1985 (Western
Australia), the Retail and Commercial Leases Act 1995 (South
Australia), the Fair Trading (Code of Practice for Retail Tenancies)
Regulation 1998 (Tasmania), the Leases (Commercial and Retail)
Act 2001 (Australian Capital Territory), and the Business Tenancies
(Fair Dealings) Act (Northern Territory). Such legislation sets out how
retail tenancy disputes in the various jurisdictions are to be dealt with.
A retail tenancy matter brought to the Ombudsman's attention would
therefore be referred by the Ombudsman to the relevant state/territory
mechanism for resolution.
Example 2.3: Disputes involving two unincorporated businesses
Two small businesses, both unincorporated, and both in the one state,
request assistance from the Ombudsman relating to a dispute they are
having with each other. The Constitution does not contain a power to
deal with an unincorporated to unincorporated business dispute in a
state, and so this dispute cannot be dealt with by the Ombudsman.
Trade and Commerce Power
2.8 Section 51(i) of the Constitution gives the Commonwealth the
power to make laws with respect to 'trade and commerce with other
countries, and among the States'. The Trade and Commerce Power of the
Constitution supports the provisions of the Bill that deal with any:
• past, present or proposed policies or practices of any entity,
to the extent that those policies or practices affect, or may
affect, small businesses or family enterprises in the course of
trade or commerce:
- between Australia and places outside Australia; or
- among the states; or
- within a territory, between a state and a territory, or
between 2 Territories. [Part 3, Division 1, subsection 35(e)];
and/or
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• action by any entity that affects, or may affect, a small
business or family enterprise in the course of trade or
commerce:
- between Australia and places outside Australia; or
- among the states; or
- within a territory, between a state and a territory or
between two territories. [Part 4 Division 1, subsection 65(d)]
Example 2.4: Disputes involving an interstate matter
A small business in one state requests assistance from the
Ombudsman, relating to a dispute it is having with another business
located in another state, about the non-delivery of goods. Whether
these businesses are incorporated or not is irrelevant. Being a
matter of interstate trade, the Ombudsman could deal with this
matter.
Territories Power
2.9 The Territories Power allows the Commonwealth to make laws
for the government of any territory (section 122 of the Constitution). The
Territories Power of the Constitution supports the provisions of the Bill
that deal with:
• past, present or proposed legislation, policies or practices of
territory agencies, to the extent that they affect or may affect
small businesses or family enterprises [Part 3, Division 1,
subsection 35(b)];
• past, present or proposed policies or practices of any entity,
to the extent that they affect or may affect small businesses
or family enterprises:
- that are operated by an individual or individuals resident
in a territory; or
- that are, or are operated by, a body corporate or body
corporates, the principal place of business of which is in a
territory; or
- that are located in a territory [Part 3, Division 1,
subsection 35(g)]; and
16
Constitutional basis for the Bill
• an action by or that affects or may affect a small business or
family enterprise:
- that is operated by an individual or individuals resident in
a territory; or
- that is, or is operated by, a body corporate or body
corporates, the principal place of business of which is in a
Territory; or
- that is located in a territory. [Part 4, Division 1,
subsection 65(f)]
Other powers
2.10 The Bill, where an action is by, affects, or may affect a small
business or family enterprise, relies on constitutional powers that deal
with:
• past, present or proposed policies or practices of any entity in
relation to one or more of the following:
- insurance;
- banking;
- telecommunications;
- copyright, patents, designs or trademarks [Part 3, Division 1,
subsection 35(f)];
• to the extent that those policies or practices also affect, or
may affect, small businesses or family enterprises; and/or
• action in relation to one or more of the following:
- insurance;
- banking;
- telecommunications;
- copyright, patents, designs or trademarks. [Part 4, Division 1,
subsection 65(e)]
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2.11 Other Commonwealth powers apply to the sections of the Bill
which give the Ombudsman information-gathering powers, to the extent
that these powers relate to, for example, provisions of the
Crimes Act 1914 or Criminal Code, these powers rely on the
Commonwealth powers supporting those criminal laws.
18
Chapter 3
Preliminary
Outline of chapter
3.1 This chapter sets out the objects of the Bill, when the Bill will
commence, definitions, and a simplified outline of the Bill. It should be
noted that, while the simplified outline is included to assist readers to
understand the substantive provisions of the Bill, the outline is not
intended to be comprehensive. [Part 1, section 3]
Detailed explanation of new law
Object
3.2 The Bill establishes the Australian Small Business and Family
Enterprise Ombudsman with advocacy and assistance functions.
Commencement
3.3 Section 1 (the name of the Australian Small Business and
Family Enterprise Ombudsman Act 2015 [Part 1, section 1]), and Section 2
(the commencement provisions), will both commence on the day the Bill
receives Royal Assent. Sections 3 to 96 of the Act will commence on a
day to be fixed by Proclamation. [Part 1, section 2]
Application
Definitions
3.4 Definitions are included in section 4 of the Bill. [Part 1, section 4]
3.5 The Bill defines 'alternative dispute resolution processes'
broadly as including:
• conferencing; and
• mediation; and
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• neutral evaluation; and
• case appraisal; and
• conciliation; and
• prescribed procedures or services.
3.6 The Ombudsman may recommend that alternative dispute
resolution (ADR) processes be undertaken (section 71), however the
Ombudsman, delegates of the Ombudsman, the Ombudsman's staff, and
consultants engaged for the Ombudsman, will not conduct any alternative
dispute resolution processes [Part 4, Division 3, subsection 73(2)], which will
instead be conducted by alternative dispute resolution providers through
the Ombudsman's outsourced dispute resolution function. It should also
be noted that the Constitution restricts the exercise of Commonwealth
judicial power to the Federal Court system.
Meaning of a small business and family enterprise
3.7 There are many existing definitions of small business used
within government. The recent report of the Productivity Commission on
Regulator Engagement with Small Business warned against governments
imposing a single definition of small business, and stated that 'Policy
makers and regulators are best placed to define a small business in ways
that are practical and appropriate for their regulatory area.'
3.8 In the Bill, a small business is defined as a business with fewer
than 100 employees or revenue under $5 million in the previous financial
year [Part 1, section 5]. Including this definition will provide the
Ombudsman with a clear remit, and provide clarity to the public on the
extent of the Ombudsman's role.
3.9 Family enterprise is an extremely diverse component of the
business sector and can be particularly difficult to define. The report of
the Joint Parliamentary Committee on Family Businesses in Australia
noted that no official definition exists, although organisations have
applied particular definitions at various times for the purpose of gathering
information on the sector. Family enterprises, nevertheless, often have
unique characteristic traits and face unique challenges.
3.10 While it appears from surveys that many family enterprises are
small businesses, there are also medium-sized and large family
enterprises. The Bill focuses on a subset of these businesses and defines a
family enterprise for the purposes of the Ombudsman as one which meets
the definition of small business in the Bill. [Part 1, section 6]
20
Preliminary
Meaning of action
3.11 The definition of 'action' relates to the Ombudsman's assistance
function and the constitutional connection associated with the meaning of
'relevant action', in section 65 of the Bill. As part of its assistance
function, the Ombudsman is to give assistance in relation to relevant
actions. Actions include the following:
• an activity or series of activities;
• a project, development or undertaking;
• making a decision or recommendation;
• formulating a proposal;
• requiring that communications with an entity be in a
particular manner or form;
• an alteration of any of the things, including decisions,
proposals and requirements; and
• failure or refusal to do any of the things mentioned in dot
points above. [Part 1, section 7]
Meaning of agency
3.12 'Agency' of the Commonwealth, a state or a territory is defined
in section 8 and relates to various aspects of the Bill. [Part 1, section 8]
3.13 Firstly, it is used to define the scope of the advocacy and
assistance functions. 'Relevant legislation, policies and practices' (in
respect of the Ombudsman's advocacy function) include past, present or
proposed legislation, policies or practices of a Commonwealth or a
territory agency (subsections 35(a) and (b)) and 'relevant action' (in
respect of the Ombudsman's assistance function) includes an action by an
agency of the Commonwealth that affects, or may affect, a small business
or family enterprise (subsection 65(a)). Secondly, it is used in section 69
to define the circumstances in which the Ombudsman must transfer a
request for assistance to another agency. Thirdly, it is used in section 70 to
define the circumstances in which the Ombudsman may work
co-operatively with another agency to give assistance. Fourthly, the
secrecy provisions refer to certain agencies to which information may be
disclosed (sections 86 and 91).
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3.14 The Bill is intended to cover a wide range of agencies, to ensure
that the functions of the Ombudsman are not duplicating the functions
other Commonwealth, state or territory officials. The term 'agency' is
very broad and includes a department of state or a local government body.
It also includes any other agency, authority or body (whether incorporated
or not) established for a public purpose by or under a law of the
Commonwealth, a state or a territory. Additionally, any entity (whether
incorporated or not) may be prescribed as an agency for the purposes of
the Bill. [Part 1, section 8]
Meaning of confidential information
3.15 The definition of confidential information is in section 9 of the
Bill. [Part 1, section 9]
3.16 Aspects of the Ombudsman's functions under the Bill involve
the use of confidential information. Provisions in the Bill seek to protect
confidential information by, for example, requiring the Ombudsman to
delete any confidential information before publishing advice to the
Minister as the result of a review [Part 3 Division 6 section 63]. The definition
in section 9 involves a subjective test of what constitutes confidential
information. Information is 'confidential' if the decision maker (the
person required or permitted to table, publish or otherwise make publicly
available the information) is satisfied that:
• the disclosure of the information would cause undue distress
or embarrassment to the person;
• the information is commercial-in-confidence; or
• the disclosure of the information would be contrary to the
public interest.
3.17 A decision maker may be satisfied that the information is
commercial-in-confidence, under subsection 9(2). Matters to be taken into
account by the decision maker are: that the information could
unreasonably affect the person or a business or action related to the person
in an adverse manner; the information is not in the public domain; the
information is not required to be disclosed under another law; and, the
information is not readily discoverable. [Part 1, subsection 9(2)]
3.18 The Ombudsman's ability to make information publicly
available is an important part of having an Ombudsman with real power,
however, this objective has been balanced in the Bill with the need to
ensure that confidential information is protected.
22
Preliminary
Extension to Territories
3.19 The Bill will bind the Crown [Part 1, section 10] and will extend to
every external Territory, including: Norfolk Island, the Territory of the
Cocos (Keeling) Islands, and the Territory of Christmas Island. [Part 1,
section 11]
23
Chapter 4
Australian Small Business and Family
Enterprise Ombudsman
Outline of chapter
4.1 This chapter explains: the establishment and functions
(including advocacy and assistance functions) of the Ombudsman [Part 2,
Division 1, sections 12 to 15]. This Chapter also sets out the general policy
guidelines underpinning the performance of the Ombudsman's functions;
and sets out the terms and conditions of appointment of the Ombudsman
(and acting Ombudsman), the Ombudsman's powers of delegation,
staffing matters and other governance requirements.
Detailed explanation of new law
The Ombudsman's functions under the Bill
4.2 The Ombudsman has an advocacy function and an assistance
function.
4.3 Under the advocacy function, the Ombudsman:
• undertakes research and inquiries into legislation, policies
and practices affecting small businesses;
• reports and gives advice to the Minister on those matters;
• contributes to inquiries by others into those matters;
• contributes to developing national strategies on those
matters;
• reviews proposals relating to those matters and advises the
Minister on them; and
• promotes best practice in dealing with small businesses.
4.4 Under the assistance function, the Ombudsman responds to
requests for assistance by an operator of a small business or family
enterprise. The Ombudsman will not duplicate the operations of other
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agencies and so must transfer a request for assistance to another
Commonwealth, state or territory, if that other agency could deal with the
request in a more effective and convenient manner. The Ombudsman may
also work co-operatively with other agencies of the Commonwealth, the
states and the territories if it is more convenient and effective to do so.
4.5 If the request for assistance is more conveniently and effectively
dealt with by the Ombudsman, the Ombudsman may recommend that an
alternative dispute resolution (ADR) process be undertaken. If an entity
does not undertake that process, or withdraws from that process, the
Ombudsman may publish that fact. The Ombudsman may keep a list of
ADR providers, to assist small businesses and family enterprises in
accessing ADR.
4.6 To assist the Ombudsman in carrying out the Ombudsman's
functions, the Ombudsman has information gathering powers. Where the
Minister directs the Ombudsman to inquire into a matter, this includes the
power to conduct, and take evidence in, hearings.
4.7 The functions of the Ombudsman as set out under the Bill
extend, as much as possible, the scope of the Government's commitment.
They are intended to be flexible and allow the Ombudsman the use of a
range of working methods in the performance of these functions [Part 2,
Division 1, section 17]. The Ombudsman also has the power to do all things
necessary or convenient to be done for or in connection with the
performance of its functions. [Part 2, Division 1, section 18]
4.8 The Ombudsman may delegate, by written instrument, the
powers and functions of the Ombudsman to a Senior Executive Service, or
an Australian Public Service employee of the Department. [Part 2,
Division 1, section 19]
4.9 The Minister may, by legislative instrument give written
directions to the Ombudsman, but only in relation to general matters.
[Part 2, Division 1, section 20]
General policy guidelines
4.10 To achieve the Government's election commitment to create an
Ombudsman with 'real power' and in light of the deregulation agenda, the
general policy guidelines in section 16 of the Bill, set out the main focus
of the Bill which is for the Ombudsman to work co-operatively with
existing Commonwealth, state and territory agencies in performing its
functions, and avoid duplication with the operations of such agencies.
This general policy is highlighted throughout the Bill and supports all of
the functions of the Ombudsman. [Part 2, Division 1, section 16]
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Australian Small Business and Family Enterprise Ombudsman
Reporting requirements
4.11 To comply with section 46 of the Public Governance,
Performance and Accountability Act 2013, an annual report must be
prepared by the Department and given to the Minister. The annual report
must comply with the content requirements listed in the section 23 of the
Bill. [Part 2, Division 1, section 23]
4.12 The Ombudsman must also prepare specified reports which
relate to the Ombudsman's functions, if directed by the Minister. [Part 2,
Division 1, section 21]
Terms and conditions of appointment
4.13 An Ombudsman is to be appointed by the Governor-General and
will hold office on a full-time basis for a period not exceeding five years,
and is eligible (if otherwise qualified) for re appointment. [Part 2, Division 2,
section 24]
4.14 Before the Governor-General appoints the Ombudsman, the
Minister must be satisfied that the appointee has demonstrated suitable
qualifications or experience, and is of good character for the position.
[Part 2, Division 2, subsection 24(2)]
4.15 The Minister will be responsible for appointing an acting
Ombudsman to undertake the activities of the Ombudsman during the
illness or absence of the Ombudsman, or during a vacancy pending
permanent appointment of an Ombudsman by the Governor-General. The
acting Ombudsman has all the same functions as the Ombudsman. [Part 2,
Division 2, section 32]
4.16 The Bill provides that the Ombudsman be paid such
remuneration as is determined by the Remuneration Tribunal, and paid
such allowances as are prescribed by legislative instrument [Part 2,
Division 2, section 25]. The Ombudsman will also have the recreation leave
entitlements as are determined by the Remuneration Tribunal.
[Part 2, Division 2, section 26]
4.17 The Ombudsman may not, without the Minister's approval,
undertake work outside the duties of the office of the Ombudsman
[Part 2 Division 2, section 27]. The Ombudsman must also disclose to the
Minister, all relevant personal interests relating to the functions of the
Ombudsman. [Part 2, Division 2, section 29]
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4.18 The Minister may terminate the appointment of the Ombudsman
for 'misbehaviour', or if the Ombudsman is unable to perform his or her
duties [Part 2, Division 2, section 30]. Other circumstances under which the
Minister may terminate the Ombudsman's appointment include if the
Ombudsman:
• becomes bankrupt; or
• takes steps to take the benefit of any law for the relief of
bankrupt or insolvent debtors; or
• compounds with one or more of his or her creditors; or
• makes an assignment of his or her remuneration for the
benefit of one or more of his or her creditors. [Part 2, Division 2,
subsection 30(2)]
4.19 If the Ombudsman wishes to resign, the Ombudsman must do so
in writing to the Minister. [Part 2, Division 2, section 28]
4.20 The Ombudsman will report directly to the Minister. As a
departmental official, the Ombudsman would be subject to requirements
under the Public Governance, Performance and Accountability Act 2013.
[Part 2, Division 1, section 22]
4.21 Consistent with the Government's smaller government agenda,
the Ombudsman will receive corporate system support and staffing from
the Department. Use of the Department's staff and other departmental
corporate structures will allow for full and proper functioning of the
Ombudsman's office, including its advocacy and assistance functions.
[Part 2, Division 3, section 33]
4.22 The Ombudsman may also engage consultants, subject to
available resources, to deliver specific and specialised services. [Part 2,
Division 3, section 34]
28
Chapter 5
Advocating for small businesses and
family enterprises
Outline of chapter
5.1 This chapter explains Part 3 of the Bill which relates to the
Ombudsman's advocacy function.
Constitutional connection
5.2 Part 3 Division 1 sets out the connections linking the
Ombudsman's advocacy function to the Constitution (see Chapter 2
above, regarding the constitutional basis for the Bill). [Part 3, Division 1,
section 35]
Ombudsman's own initiative inquiries
5.3 Section 36 of the Bill provides that the Ombudsman may
conduct research or make inquiries in relation to relevant legislation,
policies and practices [Part 3, Division 2, section 36]. The Ombudsman will be
able to assess where legislation, policies and practices may be improved to
benefit small businesses and family enterprises.
Providing information and documents
5.4 Under section 37 of the Bill, a person may be required by notice
to provide information or documents to the Ombudsman which are
relevant to the Ombudsman's own initiative research or inquiries. The
notice will be in writing and must allow 'at least 10 business days' for the
notice to be complied with (this provision is modelled on subsection 48(2)
in the Productivity Commission Act 1998). The penalty for not complying
with a notice is 30 penalty units (a penalty unit is a financial penalty
defined in section 4AA of the Crimes Act 1914; note that the penalty for
corporations may be up to five times higher than that for a 'natural
person' under section 4B of the Crimes Act 1914). No penalty applies
where the person does not have the required information or documents, or
is unable to obtain the information or documents despite taking 'all
reasonable steps' to obtain them [Part 3, Division 2, section 37]. The
Ombudsman would not impose any penalty, rather the imposition of a
penalty would be a decision of a court.
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Documents produced in relation to research or inquiry
5.5 The Ombudsman may take possession of, and make copies of, or
take extracts from, documents. The Ombudsman may also keep
documents, but only for so long as is necessary for the research or inquiry.
The Ombudsman must also allow the documents to be inspected at all
reasonable times by people who are entitled to inspect them.
[Part 3, Division 2, section 38]
Limitation on powers
5.6 Nothing in Part 3 Division 2 (research and inquiries on the
Ombudsman's own initiative) of the Bill allows a power to be exercised to
the detriment of a state being able to exercise its constitutional powers.
[Part 3, Division 2, section 39]
Reports to the Minister
5.7 The reporting that will be required of the Ombudsman, both
quarterly and ad hoc, is designed to ensure that the Minister receives
regular information about the Ombudsman's work. The quarterly
reporting requirement mirrors that in other legislation, such as section 60J
of the Competition and Consumer Act 2010. Quarterly reports are required
to be provided within 20 business days after the end of each quarter. The
Ombudsman may include recommendations to the Minister in relation to
any matter included in the Ombudsman's reports.
[Part 3, Division 2, section 40]
Minister may publish Ombudsman's report
5.8 The Minister may publish a report, or any part of a report,
received under section 40 (this is similar to section 18 of the Productivity
Commission Act 1998). If such publication would adversely affect the
interests of any person, the Minister must issue a directive to the
Ombudsman to notify that person, and give that person a reasonable
period of up to 30 days to make representations about the release of the
information. Such a directive is not a legislative instrument. The Bill will
give the Minister the power to 'delete any information or
recommendation' from a report before it is published, if the information is
likely to adversely affect the interests of any person, and the Minister
believes it is 'in the public interest' to delete the information or
recommendation. The Minister must also delete any confidential
information prior to publication. Decisions taken by the Minister 'in the
public interest' are subject to review by the Administrative Appeals
Tribunal under section 92 of the Bill. [Part 3, Division 2, section 41]
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Assisting a small businesses or family enterprise
Inquiries on referral from the Minister
5.9 Part 3 Division 3 of the Bill provides the Minister to refer
inquiries to the Ombudsman in relation to legislation, policies and
practices that come within the constitutional reach of the Ombudsman,
and affect small businesses and family enterprises.
[Part 3, Division 3, Subdivision A section 42]
5.10 The powers granted to the Minister under subsections 42(2) to
(4) are modelled on section 11 of the Productivity Commission Act 1998.
These powers include the ability to: require the Ombudsman to hold
hearings; specify a period in which the Ombudsman must provide a report
to the Minister on the inquiry; require the Ombudsman make 'a draft
report available to the public during an inquiry'; and require the
Ombudsman to make recommendations. [Part 3, Division 3, Subdivision A,
subsections 42(2) to 42(4)]
5.11 The Ombudsman must comply with any requirement imposed
by the Minister under subsection 42(2) [Part 3, Division 3, Subdivision A,
subsection 42(3)]. The Minister may withdraw or amend a referral at any
time before receiving the report from the Ombudsman
[Part 3, Division 3, Subdivision A, subsection 42(4)]. This latter provision could be
used, for example, in the event that the Minister receives new information
that the issue being investigated is no longer of concern.
5.12 When writing a report on a matter referred by the Minister, the
Ombudsman has the ability to make recommendations in the report related
to any matter relevant to the matter referred. [Part 3, Division 3, Subdivision A,
subsection 42(5)]
Example 5.1: Inquiry on referral from the Minister
The Minister becomes aware of a significant, national issue affecting
small businesses and family enterprises. This issue relates to the
policies and practices of corporations that affect small business and
family enterprises, and therefore come within the constitutional reach
of the Ombudsman (see 35(c) of the Bill). The Minister decides that he
needs advice on this issue, and refers the matter to the Ombudsman for
inquiry (section 42 of the Bill).
Notices of inquiries and hearings
5.13 'As soon as practicable' the Ombudsman must give notice that
an inquiry is to be held, by way of an advertisement 'published in a
newspaper circulating' in each state and territory
[Part 3, Division 3, Subdivision B, section 43]. This provision is modelled on
section 13 of the Productivity Commission Act 1998. The Ombudsman
must provide reasonable notice of the intention to hold a hearing, the
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subject of the hearing, and the time and place of the hearing. Such notices
must also be published in a newspaper circulating in each state and
territory [Part 3, Division 3, Subdivision C, section 45]. These requirements are
modelled on section 14 of the Productivity Commission Act 1998.
Details of hearings
5.14 The Ombudsman may be required to hold hearings by the
Minister, where the Minister has referred a matter to the Ombudsman for
inquiry. [Part 3, Division 3, Subdivision A, paragraph 42(2)(a);
Part 3, Division 3, Subdivision C, section 44]
Procedure at hearings
5.15 Hearings will be held in public, except if the Ombudsman
'reasonably believes' that it is 'in the public interest' to hold a hearing in
private [Part 3, Division 3, Subdivision C, section 46]. This requirement is
modelled on subsections 15(1) and (2) of the Productivity Commission
Act 1998.
Providing information and documents
5.16 Under section 47 of the Bill, a person may be required by notice
to provide information or documents to the Ombudsman which are
relevant to inquiries referred by the Minister to the Ombudsman. The
notice will be in writing and must allow 'at least 10 business days' for the
notice to be complied with. The penalty for not complying with a notice is
30 penalty units. No penalty applies where the person does not have the
required information or documents, or is unable to obtain the information
or documents despite taking 'all reasonable steps' to obtain them.
[Part 3, Division 3, section 47]
Attendance at a hearing
5.17 The Ombudsman may summon a person in writing to appear at
a hearing to give evidence and to produce documents. A penalty of
30 penalty units may apply in the event that a person fails to comply.
[Part 3, Division 3, Subdivision C, section 48]
5.18 A person who appears as a witness at a hearing must not refuse
to answer a question as required by the Ombudsman or produce a
document required by the summons. A penalty of 30 penalty units may
apply in the event that a person fails to comply. No penalty applies if the
person does not have the required information or document, and the
person has taken 'all reasonable steps' to obtain the required information
and document. [Part 3, Division 3, Subdivision C, section 49]
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Assisting a small businesses or family enterprise
Documents produced in relation to inquiry
5.19 The Ombudsman may take possession of, and make copies of, or
take extracts from, documents for an inquiry. The Ombudsman may keep
the documents for as long as is necessary for the inquiry. The
Ombudsman must also allow the documents to be inspected at all
reasonable times by people who are entitled to inspect them. [Part 3,
Division 3, section 50]
Allowances to witnesses
5.20 A person summoned by the Ombudsman to attend a hearing is
entitled to be paid by the Commonwealth such allowances and expenses
as are prescribed. [Part 3, Division 3, Subdivision C, section 51]
Restrictions on publication of evidence
5.21 The Ombudsman may give directions prohibiting or restricting
the publication of evidence provided in connection with a hearing. A
penalty of 30 penalty units may apply in the event that a person
contravenes the directions. [Part 3, Division 3, Subdivision C, section 52]
Written statements etc. to be made public
5.22 The Ombudsman must make available to the public, in any way
considered appropriate, written evidence or document provided in
connection with an inquiry. The Ombudsman must delete any confidential
information before making the evidence or document publicly available.
[Part 3, Division 3, Subdivision C, section 53]
Limitation on powers
5.23 Nothing in Part 3, Division 3, Subdivision C (hearings), of the
Bill allows a power to be exercised to the detriment of a state being able
to exercise its constitutional powers.
[Part 3, Division 3, Subdivision C, section 54]
Report of inquiry
5.24 The Ombudsman is required to prepare a written report for the
Minister, on a matter referred by the Minister to the Ombudsman for
inquiry, unless the referral is withdrawn.
[Part 3, Division 3, Subdivision D, section 55]
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5.25 These reports must be tabled in each House of Parliament
'within 25 sitting days' (a provision modelled on section 12 of the
Productivity Commission Act 1998). If a report 'would be likely to
adversely affect the interests of any person', the Minister, before tabling
the report, must direct the Ombudsman to notify that person and give
them a reasonable period (not exceeding 30 days) to respond
[Part 3, Division 3, Subdivision D, subsection 56(2)]. A direction under
subsection 56(2), if made in writing, is not a legislative instrument
[Part 3, Division 3, Subdivision D, subsection 56(5)].
5.26 Before the Minister may delete any information or opinion from
the report, if the information or opinion would be likely to adversely
affect the interests of any person, and the Minister reasonably believes
that it is in the public interest to delete the information or opinion [Part 3,
Division 3, Subdivision D, subsection 56(3)]. The Minister's decision to delete
the information or opinion must take into account any representations
made by the person [Part 3, Division 3, Subdivision D ,subsection 56(4)].
Decisions taken under subparagraph 56(3)(a)(ii) are subject to appeal to
the Administrative Appeals Tribunal under section 92 of the Bill. The
Minister must also delete any confidential information from the report
[Part 3, Division 3, Subdivision D, subsection 56(3)].
Providing advice to the Minister
5.27 Part 3 Division 4 allows the Minister to refer certain matters to
the Ombudsman for advice. The Minister's referral may specify that the
advice is to be in writing, the time period the advice is to be provided
within, and any matter the Ombudsman is to have regard to when
preparing the advice. The Ombudsman must comply with such
requirements. [Part 3, Division 4, section 57]
5.28 The Minister may publish the advice given by the Ombudsman,
in any way considered appropriate. If such publication would adversely
affect the interests of any person, the Minister must issue a directive to the
Ombudsman to notify that person, and give that person a reasonable
period of up to 30 days to make representations about the release of the
information. Such a directive is not a legislative instrument. The Bill will
give the Minister the power to 'delete any information or
recommendation' from a report before it is published, if the information is
likely to adversely affect the interests of any person, and the Minister
believes it is 'in the public interest' to delete the information or
recommendation. The Minister must also delete any confidential
information prior to publication. Decisions taken by the Minister 'in the
public interest' are subject to review by the Administrative Appeals
Tribunal under section 92 of the Bill. [Part 3, Division 4, section 58]
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Assisting a small businesses or family enterprise
National strategies
5.29 The Ombudsman must work co-operatively, as far as is possible,
with appropriate agencies to develop national strategies in relation to
legislation, policies and practices that affect, or may affect, small
businesses or family enterprises. [Part 3, Division 5, section 59]
5.30 In developing these strategies, the Ombudsman may provide
secretariat or research services to joint Commonwealth, state and territory
bodies formed for the purpose of developing the national strategies.
[Part 3, Division 5, section 60]
Other advocacy functions
Contributing to inquiries into relevant legislation, policies and practices
5.31 One of the Ombudsman's functions will be to contribute to
inquiries into legislation, policies and practices, within the Ombudsman's
constitutional reach, which affect small businesses and family enterprises.
[Part 3, Division 6, section 61]
Reviewing proposals relating to relevant legislation, policies and
practices
5.32 In 2014 the former Australian Small Business Commissioner
produced a report entitled: ASIO building -- the costs of poor contracting
practices. The Ombudsman will expand on this work, and on the
Ombudsman's own initiative, or on referral from the Minister, review
proposals relating to relevant legislation, policies and practices. Referrals
from the Minister may specify, among other things, deadlines for reviews
to be undertaken and advice to be provided, and any matters the
Ombudsman must consider while carrying out reviews or giving advice.
The Ombudsman must comply with these Ministerial directions.
[Part 3, Division 6, section 62]
Minister may publish advice given as a result of a review
5.33 The Minister may publish the advice given by the Ombudsman
under section 62, in any way considered appropriate. If such publication
would adversely affect the interests of any person, the Minister must issue
a directive to the Ombudsman to notify that person, and give that person a
reasonable period of up to 30 days to make representations about the
release of the information. Such a directive is not a legislative instrument.
The Bill will give the Minister the power to 'delete any information or
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recommendation' from a report before it is published, if the information is
likely to adversely affect the interests of any person, and the Minister
believes it is 'in the public interest' to delete the information or
recommendation. The Minister must also delete any confidential
information prior to publication. Decisions taken by the Minister 'in the
public interest' are subject to review by the Administrative Appeals
Tribunal under section 92 of the Bill. [Part 3, Division 6, section 63]
Promoting best practice
5.34 The Ombudsman may, on the Ombudsman's own initiative, take
steps to promote best practice in interactions between small businesses
and family enterprises, and entities within the remit of the Commonwealth
Constitution. [Part 3, Division 6, section 64]
36
Chapter 6
Assisting a small business or family
enterprise
Outline of chapter
6.1 This chapter explains Part 4 of the Bill which relates to the
Ombudsman's assistance function.
Constitutional connection
6.2 Part 4 Division 1 sets out the connections linking the
Ombudsman's assistance function to the Constitution (see Chapter 2
above, regarding the constitutional basis for the Bill). [Part 4, Division 1,
section 65]
Responding to requests for assistance
6.3 Any person may request assistance from the Ombudsman in
relation to a 'relevant action' (defined by section 65 of the Bill). Requests
may be made orally or in writing. If the request is made orally to the
Ombudsman, the Ombudsman may reduce the request to writing; or at any
time require the person who made the request to reduce the request to
writing. A request for assistance in relation to a relevant action made to
the Ombudsman in writing, or reduced to writing, is a 'formal request'.
[Part 4, Division 2, section 66]
6.4 In certain circumstances the Ombudsman will not be authorised
to deal with a request for assistance, such as when the request for
assistance relates to an action taken by a Minister of the Commonwealth,
a state or a territory; or an action taken by an agency of a state or a
territory. Where the Ombudsman does not deal with a request, the
Ombudsman must give the person who made the request, a notice in
writing setting out the reasons. [Part 4, Division 2, section 67]
6.5 Upon receiving a request for assistance, the Ombudsman:
• may decide not to provide assistance [Part 4, Division 2,
section 68];
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• must transfer the dispute to the appropriate agency [Part 4,
Division 2, section 69];
• in certain circumstances, may work co-operatively with
another Commonwealth, state or territory agency [Part 4,
Division 2, section 70]; or
• may recommend an alternative dispute resolution (ADR)
process. [Part 4, Division 3, section 71]
6.6 The Ombudsman may decide not to provide assistance because,
for example, the Ombudsman 'reasonably believes' that the request for
assistance is frivolous or vexatious. Requests for assistance can also be
declined on the basis of, for example, the request being made more than
12 months after the applicant became aware of the relevant issue, or if the
person does not have a sufficient interest in the issue. Where the
Ombudsman makes such a decision, the Ombudsman must give the
person who made the request, a notice in writing setting out the reasons.
[Part 4, Division 2, section 68]
6.7 The Ombudsman must transfer a request (or an aspect of a
request), for assistance, to another agency, Commonwealth, state or
territory, where the Ombudsman 'reasonably believes' that the request
could have been made to the other agency, and the request could be more
'conveniently or effectively' dealt with by that other agency. The other
agency must have the legal power to deal with the request. The
Ombudsman must also consult with the other agency before transferring
the request. Examples of such other agencies include, but are not limited
to, the Commonwealth Ombudsman and the state small business
commissioners. When transferring a request, the Ombudsman must give
the other agency relevant information and documents. The Ombudsman
must also give the person who made the request, a notice concerning the
transfer. [Part 4, Division 2, section 69]
6.8 The Ombudsman may work co-operatively with other agencies,
Commonwealth, state, or territory to provide assistance to small
businesses and family enterprises. Additional governance arrangements,
for example memoranda of understanding (MOUs), may underpin this
process. As part of working co-operatively with other agencies, the
Ombudsman may transfer aspects of requests to those other agencies
which, when transferred are taken to have been made under the laws
granting those other agencies the power to deal with the aspects of the
requests. [Part 4, Division 2, section 70]
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Assisting a small business or family enterprise
6.9 The requirement to transfer requests for assistance to relevant
agencies, forms part of the Ombudsman's 'concierge' function. Once
transferred, the requests become the sole responsibility of the agencies to
which they have been transferred. Requests for assistance which are not
transferred to other agencies, may be, in some cases, referred by the
Ombudsman to the Ombudsman's own outsourced alternative dispute
resolution service. [Part 4, Division 3, section 71]
Example 6.1: Circumstance where the Ombudsman would not
provide assistance
A small business seeks assistance from the Ombudsman regarding a
corporation that allegedly delayed providing services, thus causing the
small business to lose customers. The Ombudsman informed the small
business that the appropriate entity to deal with this dispute is a
particular agency. The small business approached this agency, but was
dissatisfied with the result and so returns to the Ombudsman. The
Ombudsman would in these circumstances decline to deal with the
matter because the agency is the correct entity to deal with it. The
Ombudsman cannot function as a reviewer of other officials' decisions.
Example 6.2: Transferring a request to a state small business
commissioner
A small business (whether incorporated or not is irrelevant) in Western
Australia seeks assistance from the Ombudsman about what it
perceives as unfair market practices. Under Western Australia's Small
Business Development Corporation Act 1983, the Small Business
Commissioner for Western Australia investigates complaints about
unfair market practices affecting small businesses, and provides
assistance to attempt to resolve those complaints. The Ombudsman
therefore consults the Western Australian Small Business
Commissioner and, as soon as is reasonably practicable, transfers the
request for assistance to that Commissioner, along with any documents
gathered in relation to the complaint. The Ombudsman also, as soon as
is reasonably practicable, gives the person who made the request,
notice that the request, has been transferred to the Western Australian
Small Business Commissioner.
6.10 If the Ombudsman is approached to give assistance in a dispute,
and the Ombudsman does not transfer a request to another agency, the
Ombudsman may make recommendations on how the dispute may be
managed. Recommendations by the Ombudsman may involve referring
the party, in writing, to ADR. These written notices must include a
warning to the parties that if they choose not to undertake, or to withdraw
from, the recommended ADR process, the Ombudsman may publish this
fact [Part 4, Division 3, section 71]. In connection with this, the Ombudsman
will publish a list of qualified ADR providers, from which the parties may
choose an appropriate ADR provider. [Part 4, Division 3, section 72]
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6.11 An ADR process recommended by the Ombudsman must not be
conducted by: the Ombudsman, delegates of the Ombudsman, the
Ombudsman's staff, or consultants engaged for the Ombudsman. This is
because the Ombudsman must be seen to be impartial, and therefore the
Ombudsman's advocacy and assistance functions must be entirely
separate. The 'parties to the dispute' must choose the person who
conducts the ADR process. [Part 4, Division 3, section 73]
Example 6.3: The Ombudsman recommends ADR
A small business based in one state, is in dispute with a business in
another state, over the suitability of services it has been provided with.
If no Commonwealth agency could deal with this dispute, and since it
involves interstate trade and commerce, it would be within the
Ombudsman's remit, regardless of whether the businesses are
incorporated. The Ombudsman makes inquiries, and decides that the
matter is not a vexatious one, and would benefit from an ADR process.
The businesses in dispute do not have their own preferred ADR
provider, therefore the Ombudsman may recommend that they choose
'one or more' ADR providers from a 'group' of suitable ADR
providers listed in the Ombudsman's recommendation to undertake
ADR (paragraph 71(2)(b) of the Bill). This 'group' presumably would
be a subset of the published list, of ADR providers, maintained by the
Ombudsman (subsection 72(1) of the Bill). The parties in dispute must
always choose the specific ADR provider, or providers, that they wish
to assist with their dispute (subsection 73(1)).
Publishing failure to participate in an alternative dispute resolution
process
6.12 The Ombudsman may publicise, in any way that the
Ombudsman thinks appropriate, that an entity has refused to engage in
an ADR process recommended by the Ombudsman, or has withdrawn
from such a process [Part 4, Division 3, section 74]. A decision under
subsection 74(1) to publicise that a party to a dispute has refused to
engage in, or has withdrawn from, an ADR process is an administrative
decision, which can be reviewed by the Administrative Appeals Tribunal
(section 92 of the Bill).
Example 6.4: Publishing the failure to participate
The Ombudsman has recommended, by written notice, that a small
business, in Coolangatta, Queensland, participate in the Ombudsman's
own outsourced ADR service, to resolve a dispute with a business
located in adjacent Tweed Heads, NSW, over the late delivery of
supplies (it is irrelevant whether these businesses are incorporated).
This matter involves interstate commerce, and thus may come under
the jurisdiction of the Ombudsman -- if it does not come under the
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Assisting a small business or family enterprise
jurisdiction of another Commonwealth agency. The Ombudsman's
written notice informs the businesses that if they do not participate in
the recommended ADR process, or if they withdraw from the process,
then the Ombudsman may publish that fact. One of the businesses
refuses to participate in the recommended ADR, and so the
Ombudsman publishes that fact.
Gathering information about requests for assistance
6.13 In relation to some requests for assistance, the Ombudsman may
make inquiries, for example, to determine whether the requests would fall
within the remit of the Ombudsman or more 'conveniently or effectively'
be dealt with by another agency. [Part 4, Division 4, section 75]
6.14 A person may be required by notice to provide information or
documents to the Ombudsman which are relevant to inquiries about
requests for assistance. The notice will be in writing and must allow 'at
least 10 business days' for the notice to be complied with. The penalty for
not complying with a notice is 30 penalty units. No penalty applies where
the person does not have the required information or documents, or is
unable to obtain the information or documents despite taking 'all
reasonable steps' to obtain them. [Part 4, Division 4, section 76]
6.15 The Ombudsman may take possession of, and make copies of, or
take extracts from, documents. The Ombudsman may also keep
documents, but only for so long as is necessary for the inquiry. The
Ombudsman must also allow the documents to be inspected at all
reasonable times by people who are entitled to inspect them.
[Part 4, Division 4, section 77]
Limitation on powers
6.16 Nothing in Part 4 Division 4 of the Bill (dealing with assisting a
small business or family enterprise) allows a power to be exercised to the
detriment of a state being able to exercise its constitutional powers.
[Part 4, Division 4, section 78]
41
Chapter 7
General requirements
Outline of chapter
7.1 This chapter explains Part 5 of the Bill, which outlines the
general requirements in the Bill, including provisions related to the
disclosure of protected information, and the review of certain decisions
that may be taken under the Bill.
Concurrent operation of state law
7.2 The Bill, when operational, will not limit any state or territory
law where, such law can operate concurrently with the Australian Small
Business and Family Enterprise Ombudsman Act 2015.
[Part 5, Division 1, section 79]
Secrecy
7.3 Protected information is defined as information relating to the
affairs of a small business or family enterprise, disclosed to, or obtained
by, a 'person assisting' a small business or family enterprise.
[Part 5, Division 2, section 80]
7.4 A person assisting a small business or family enterprise is
defined as:
• the Ombudsman;
• a delegate of the Ombudsman;
• a person assisting the Ombudsman under section 33 of the
Bill (staff of the Ombudsman);
• a person engaged as a consultant under section 34
(consultants engaged to assist the Ombudsman);
• a person providing an alternative dispute resolution process
in connection with a dispute in relation to a relevant action.
[Part 5, Division 2, section 81]
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7.5 Unauthorised disclosure, or use, of protected information by a
person assisting small business or family enterprise carries a penalty of
imprisonment for two years, or 120 penalty units. The intention is that
protected information should be handled appropriately. No penalty applies
where disclosure of the protected information is authorised by a law of the
Commonwealth, a state or a territory. Also, except for the purpose of
giving effect to provisions of this Bill, a person assisting a small business
or family enterprise is not required to produce documents for, or disclose
information to, 'a court or tribunal'. [Part 5, Division 2, section 82]
7.6 A person assisting a small business or family enterprise may
disclose or use protected information if the disclosure or use is for the
purposes of this Bill or a legislative instrument under this Bill
[Part 5, Division 2, section 83]. Similarly, the Ombudsman, the Ombudsman's
delegate, and a person assisting the Ombudsman, may disclose
information to the Minister and the Secretary (and someone authorised in
writing by the Secretary), unless it relates to a request for assistance in
relation to a dispute with the Minister/Secretary's Department.
[Part 5, Division 2, sections 84 and 85]
7.7 The Ombudsman may disclose protected information to certain
agencies, bodies, and persons, such as the Commonwealth Ombudsman.
A penalty of imprisonment for two years, or a fine to the value of 120
penalty units, applies to a person in a professional disciplinary body who
discloses, or uses, the information provided by the Ombudsman without
the Ombudsman's consent, unless the disclosure or use is related to taking
disciplinary action. [Part 5, Division 2, section 86]
7.8 Disclosure may be made in certain circumstances, such as with
the consent of the person to whose affairs the information relates
[Part 5, Division 2, section 87]; if the person assisting a small business or
family enterprise reasonably believes that disclosure is necessary to
prevent a threat to life or health [Part 5, Division 2, section 88]; or if the
protected information is already publicly available.
[Part 5, Division 2, section 89]
7.9 A person assisting small business may disclose or use
summaries of protected information or statistics derived from protected
information that are not likely to identify a person.
[Part 5, Division 2, section 90]
7.10 The Ombudsman may disclose protected information if the
Ombudsman reasonably believes that it is necessary for the purposes of
law enforcement or national security. A penalty of imprisonment for two
years, or 120 penalty units, applies to persons, to whom information is
disclosed, who then disclose, or use, the information provided by the
Ombudsman without the Ombudsman's consent, unless the disclosure or
use related to law enforcement or national security purposes.
[Part 5, Division 2, section 91]
44
General requirements
Review of decisions
7.11 Section 92 of the Bill allows parties to appeal decisions by the
Ombudsman to the Administrative Appeals Tribunal:
• that information is not to be treated as confidential
information;
• that it is not in the public interest to delete information, a
recommendation or an opinion from a report or an advice,
before the report or advice is tabled or published; and
• to publicise that a party to a dispute has refused to engage in,
or has withdrawn from, an ADR process.
[Part 5, Division 4, section 92)]
Example 7.1: When a decision could go to the Administrative Appeals
Tribunal
A business has refused to participate in an ADR process recommended
by the Ombudsman, and the Ombudsman intends to publish this fact
under subsection 74(1) of the Bill. The business has a court action
underway, in relation to a different matter with another party. The
business would not like this other party to know that it is in another
dispute. The business may therefore chose to appeal the Ombudsman's
decision to publish to the Administrative Appeals Tribunal.
Other matters
Privileges not waived
7.12 The privileges of protection against self-incrimination and legal
professional privilege will be maintained under the Bill.
[Part 5, Division 4, section 93]
Provision of other Acts in relation to information and documents
7.13 Nothing in the Bill will affect the operation of any other law of
the Commonwealth to the extent that the other law limits the use or
disclosure of information or a document. [Part 5, Division 4, section 94]
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Review of assistance function
7.14 To evaluate the Ombudsman's assistance function, section 95
requires a review of the assistance function, by 30 June 2017 (such a
review is consistent with review provisions in other legislation, such as:
section 151CN, Competition and Consumer Act 2010). After the initial
review, further reviews of the assistance function must be conducted at
intervals of not more than four years. Reviews must consider the:
• the kinds of assistance requested during the review period;
• whether the assistance given was convenient and effective for
the small business and family enterprise operators who
requested the assistance;
• whether amendment of the Australian Small Business and
Family Enterprise Act 2015 is needed to more conveniently
and effectively assist small businesses and family enterprises.
7.15 Reviews may additionally consider other matters. After each
review, a written report must be given to the Minister, who must lay it
before each House of Parliament. [Part 5, Division 4, section 95]
Legislative instrument
7.16 The Minister may, by legislative instrument, make rules
prescribing matters required or permitted by the Bill to be prescribed by
the rules; or necessary or convenient to be prescribed for carrying out or
giving effect to the Bill. [Part 5, Division 4, section 96]
46
Chapter 8
Consequential amendments
Outline of chapter
8.1 This chapter explains the consequential legislative amendments
related to the Australian Small Business and Family Enterprise
Ombudsman Bill 2015 (Bill).
8.2 References in this chapter to the 'Consequential and Transitional
Provisions Bill' are references to the Australian Small Business and
Family Enterprise Ombudsman (Consequential and Transitional
Provisions) Bill 2015. References to 'the Bill' are references to the main
Australian Small Business and Family Enterprise Bill 2015.
8.3 References to 'ASBFE Ombudsman' are used in this chapter to
distinguish the Australian Small Business and Family Enterprise
Ombudsman ('ASBFE Ombudsman') from the existing Commonwealth
Ombudsman, created under the Ombudsman Act 1976.
Summary of new law
8.4 Under the Bill (section 16) the ASBFE Ombudsman will avoid
duplication and overlap with other agencies, including in relation to the
ASBFE Ombudsman's assistance function. The ASBFE Ombudsman
therefore must work co-operatively with other agencies to deal with
requests for assistance. To facilitate this, and allow the ASBFE
Ombudsman to successfully perform the assistance function,
consequential legislative amendments are necessary to enable the transfer
of matters from the Commonwealth Ombudsman to the ASBFE
Ombudsman.
Detailed explanation of new law
8.5 The Commonwealth Ombudsman is an independent statutory
office which has a range of functions under the Ombudsman Act 1976.
The Commonwealth Ombudsman can, for example, investigate the
administrative actions of government officials and agencies, either on
receipt of a complaint, or on the Commonwealth Ombudsman's own
initiative.
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8.6 The ASBFE Ombudsman will also be created as a statutory
office. Under the Bill, the ASBFE Ombudsman will have the power to, for
example, deal with relevant actions involving an agency of the
Commonwealth that affects, or may affect, a small business or family
enterprise. There will thus be an overlap in jurisdiction between the
Commonwealth Ombudsman and the ASBFE Ombudsman.
8.7 The Consequential and Transitional Provisions Bill will amend
the Ombudsman Act 1976, to enable the Commonwealth Ombudsman to
transfer complaints to the ASBFE Ombudsman. The Consequential and
Transitional Provisions Bill will allow the Commonwealth Ombudsman to
transfer a complaint to the ASBFE Ombudsman where:
• the complaint could have been made to the ASBFE
Ombudsman, and
• the complaint could have been 'more conveniently or
effectively' dealt with by the ASBFE Ombudsman.
[Schedule 1, item 1]
8.8 The ASBFE Ombudsman must also have the power to deal with
the complaint under the Bill. The Commonwealth Ombudsman has the
discretion whether or not to transfer a complaint. [Schedule 1, item 1]
8.9 In order to make a decision relating to a complaint, the
Commonwealth Ombudsman must first consult with the ASBFE
Ombudsman. This will ensure that both ombudsmen work co-operatively,
and that complaints will be dealt with by the ombudsman that can 'more
conveniently or effectively' deal with them. Once a decision has been
made to transfer a complaint, the Commonwealth Ombudsman must
transfer the complaint to the ASBFE Ombudsman 'as soon as is
reasonable practicable'. [Schedule 1, item 1]
8.10 To facilitate the provision of information, the Commonwealth
Ombudsman must give the ASBFE Ombudsman any information or
documents relating to the complaint, to enable the ASBFE Ombudsman to
deal with the complaint. Written notice must also be given by the
Commonwealth Ombudsman to the complainant, 'as soon as is reasonably
practicable', regarding the transfer of the complaint to the ASBFE
Ombudsman. [Schedule 1, item 1]
8.11 The wording of the amendment is based on similar provisions in
the Ombudsman Act 1976 (for example, section 6A). Whether an aspect of
a request for assistance must be transferred will depend on the
'conveniently or effectively' test, which would apply to both ombudsmen
and the parties involved in the complaint. [Schedule 1, item 1]
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Consequential amendments
8.12 The proposed subsection 6E(4), that will be inserted into the
Ombudsman Act 1976, will operate so that a complaint made to the
Commonwealth Ombudsman and then transferred to the ASBFE
Ombudsman, will be deemed to be a request for assistance under the
Australian Small Business and Family Enterprise Ombudsman Act 2015,
made on the date that the complaint was transferred to the ASBFE
Ombudsman. [Schedule 1, item 1]
8.13 The proposed subsection 6E(5), that will be inserted into the
Ombudsman Act 1976, deems a complaint which has been transferred
under the Ombudsman Act 1976, to be a 'formal request' for assistance for
the purposes of the Australian Small Business and Family Enterprise
Ombudsman Act 2015 ('formal request' is defined in subsection 66(5) of
the Australian Small Business and Family Enterprise Ombudsman Bill
2015). Because the transferred complaint is defined as a 'formal request',
section 23, and subsections 67(3), 68(2), 69(6), and 70(4) of the Bill,
which relate to the ASBFE Ombudsman's functions, apply to the
transferred complaint. [Schedule 1, item 1]
8.14 These consequential amendments will commence immediately
after the commencement of sections 3 to 96 of the Bill. [Section 2]
8.15 The consequential amendments take into account changes
resulting from measures in the Tax and Superannuation Laws Amendment
(2014 Measures No. 70) Act 2015, which transferred certain tax
investigation and complaint handling functions from the Commonwealth
Ombudsman to the Inspector-General of Taxation.
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Chapter 9
Transitional provisions
Outline of chapter
9.1 This chapter explains the transitional arrangements that will
apply under the Australian Small Business and Family Enterprise
Ombudsman (Consequential and Transitional Provisions) Bill 2015
(Consequential and Transitional Provisions Bill), specifically in relation to
the disclosure, collection and use of information and documents held by
the Australian Small Business Commissioner (Commissioner).
Summary of new law
9.2 The transitional arrangements allow relevant work of the
Australian Small Business Commissioner (Commissioner), which is
ongoing at the time of the creation of the Australian Small Business and
Family Enterprise Ombudsman (Ombudsman), to be transferred to the
Ombudsman for completion under the Ombudsman's advocacy and
assistance functions.
Detailed explanation of new law
9.3 The Commissioner commenced operation on 2 January 2013.
Since that time, documents and information have been obtained by the
Commissioner in the course of performing its role and duties as
Commissioner. Where work is ongoing, it is appropriate that relevant
documents and information be passed to the Ombudsman -- so that there
is a continuation and progression of the work.
9.4 Schedule 2 of the Consequential and Transitional Provisions Bill
allows for this by providing that the Commissioner may disclose to the
Ombudsman relevant information and documents collected by the
Commissioner for the purposes of the Ombudsman's advocacy and
assistance functions. [Schedule 2, item 1]
9.5 The Ombudsman may receive and use the relevant information
or documents only for the purposes of performing the Ombudsman's
functions under the Australian Small Business and Family Enterprise
Ombudsman Bill 2015 (Bill). There are also protections in the Bill in
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relation to, for example, the use of confidential information (see definition
of 'confidential information' in section 9 of the Bill), information which is
subject to legal professional privilege (section 93 of the Bill), and
protected information (see definition in section 80 of the Bill).
9.6 The transitional provisions in Schedule 2 of the Consequential
and Transitional Provisions Bill commence on the day that the
Consequential and Transitional Provisions Bill receives Royal Assent.
52
Regulation impact statement
Outline of chapter
10.1 The following Regulation Impact Statement (RIS) including
Attachments A and B was published by the Office of Best Practice
Regulation and is located on their website at http://ris.dpmc.gov.au/.l.
Background
10.2 The establishment of the Ombudsman is an election
commitment. The Regulation Impact Statement (RIS) considers the likely
regulatory impact on businesses of different ways of implementing this
initiative.
10.3 The RIS addresses seven questions outlined in the Australian
Government Guide to Regulation.
The establishment of the Australian Small Business and Family
Enterprise Ombudsman
10.4 The Coalition's Policy for Small Business1 (August 2013)
outlined a commitment to create a Small Business and Family Enterprise
Ombudsman.
10.5 On 18 August 2014, following a period of public consultation,
the Government announced its chosen model for the scope of the role --
to be titled The Australian Small Business and Family Enterprise
Ombudsman (the Ombudsman)2. An early-assessment RIS was developed
to support the Government's decision.
1 Available at www.nationals.org.au/Portals/0/2013/policy/Small%20Business.pdf, p 9.
2 The Hon Bruce Billson MP, media release Small Business Assistance to be Strengthened,
issued 18 August 2014.
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10.6 The Ombudsman will be a:
• Commonwealth-wide advocate for small businesses and
family enterprises;
• Concierge for dispute resolution and provide its own dispute
resolution service; and
• Contributor to the development of small business friendly
Commonwealth laws and regulations.
10.7 The Ombudsman will also seamlessly link with the
Government's single business service to help small businesses easily find
out about other Government services and programmes, including general
business advice.
10.8 Funding of $8 million over four years was allocated in the
2014-15 Budget to transform the existing Office of the Australian Small
Business Commissioner into a Small Business and Family Enterprise
Ombudsman.
10.9 On 11 March 2015, Treasury released the exposure draft of the
Australian Small Business and Family Enterprise Ombudsman Bill for
public consultation. This final-assessment RIS has been developed to
support the Government's decision to introduce the legislation into
Parliament. Further detail on the consultation processes undertaken to
develop this initiative is outlined under RIS Question 5: Consultation
Plan.
RIS Question 1: What is the problem being addressed?
10.10 Small businesses make a substantial contribution to employment
and production in Australia's economy. There are more than 2 million
actively trading small businesses. As a group, they account for over
97 per cent of all businesses, employ around 4.6 million Australians
(or about 43 per cent of private sector non-financial employment) and
contribute more than 33 per cent of private sector production as measured
by industry value added.
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Regulation Impact Statement
10.11 The Government has stated that building a strong and confident
small business community is an important part of its commitment to
delivering a productive and competitive economy.3
10.12 The Coalition's Policy for Small Business4 announced an
election commitment in August 2013 to create a Small Business and
Family Enterprise Ombudsman. The Australian Small Business and
Family Enterprise Ombudsman (the Ombudsman) will be a:
• Commonwealth-wide advocate for small businesses and
family enterprises;
• Concierge for dispute resolution and provide its own service;
and
• Contributor to the development of small business friendly
Commonwealth laws and regulations.
10.13 The role of the Ombudsman will be complementary to, and
avoid overlap with, the roles and responsibilities of other ombudsmen, the
state small business commissioners and the services provided by state and
territory governments where there are no small business commissioners.
The Australian Small Business Commissioner
10.14 The existing Australian Small Business Commissioner has been
operating since 2 January 2013. The appointment is not supported by
legislated powers. The Australian Small Business Commissioner reports
to the Minister for Small Business and operates on a whole of Australian
Government basis.
10.15 The Australian Small Business Commissioner provides
advocacy and representation of small business interests and concerns to
the Australian Government. The Australian Small Business Commissioner
also provides information and assistance to small businesses, including
referrals to existing dispute resolution services and practical help in
discerning and dealing with core issues in disputes. The non-statutory
basis of the Australian Small Business Commissioner means that the role
has limited independence, credibility and effectiveness in facilitating
small business access to justice through alternative dispute resolution
services.
3 The Hon Bruce Billson MP, 2014, The Small Business and Family Enterprise Ombudsman
-- Ministerial Statement, www.treasury.gov.au/~/media/Treasury/Policy%20Topics/
Business/Small%20Business/Family%20Enterprise%20Ombudsman/Downloads/PDF/State
mentAug2014.ashx, accessed 22 April 2015.
4 Available at www.nationals.org.au/Portals/0/2013/policy/Small%20Business.pdf, p 9.
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State small business commissioners
10.16 The governments of New South Wales, Victoria, Western
Australia and South Australia have established small business
commissioners. The Australian Small Business Commissioner works
collaboratively with the state small business commissioners to address
current and emerging small business issues affecting multiple
jurisdictions.
10.17 All four state small business commissioners are independent
statutory officers. They all have a role in receiving and investigating
complaints and providing dispute resolution services, although the nature
and scope of their individual roles and powers vary. Some commissioners
also oversee state based legislation relating to retail tenancy and fair
trading.
States and territories with no small business commissioners
10.18 There are currently no small business commissioners in
Queensland, Tasmania, the Australian Capital Territory and the Northern
Territory. In these jurisdictions, the respective governments perform
similar functions as the state small business commissioners through
various agencies and departments. Small business assistance is delivered
through a variety of means such as information portals, support lines and
dispute resolution services through civil and small claims tribunals, fair
trading offices, conflict resolution services and the court system. The
Australian Small Business Commissioner also works collaboratively with
these agencies to address small business issues.
Existing ombudsmen
10.19 There are a range of ombudsmen which assist individuals and
businesses to resolve disputes with government agencies or businesses.
General parliamentary ombudsmen, such as the Commonwealth
Ombudsman, investigate complaints concerning the conduct and decision
making of government agencies while specialised government
ombudsmen operate in particular policy areas, for example the Fair Work
Ombudsman. Industry ombudsmen oversee the conduct of firms in a
particular industry, including telecommunications, electricity and gas, and
financial services.
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Regulation Impact Statement
The Australian Small Business and Family Enterprise Ombudsman
10.20 The Ombudsman will extend and build on the activities of the
Australian Small Business Commissioner to create a more purposeful,
empowered and effective role. Statutory backing for the Ombudsman will
help reinforce the Ombudsman's impartiality and equip it with the
necessary tools to effectively receive and deal with small business
concerns and disputes.
10.21 Specifically, the Ombudsman initiative addresses the following
problems that limit the ongoing productivity and competitiveness of small
businesses:
• Small businesses incur proportionally higher compliance
costs than larger businesses.
• It can be confusing for small businesses to navigate
appropriate access to justice avenues for addressing and
resolving disputes.
• Small businesses can be deterred from seeking advice on a
dispute because they perceive that the costs are too high.
• There is no formal framework for a small business to access
alternative dispute resolution processes at the
Commonwealth level.
10.22 Central to these problems are the unique characteristics of small
businesses which influence the way they run their business and their
capacity to deal with issues as they arise. The majority of all businesses in
Australia, 60.7 per cent, do not employ staff. This means that most small
business owners are also managers and are required to be in a position to
take decisions across all aspects of their business. A further 27.2 per cent
of all businesses only employ between one and four people.
10.23 The Australian Small Business and Family Enterprise
Ombudsman Bill (Bill) will establish the Ombudsman position and
specify the powers and functions of the role. The Bill outlines the
Ombudsman's role under two key functions: advocacy and assistance.
Advocacy function
10.24 The aim of the advocacy function is to make it easier for small
businesses to have their views heard by the Government and corporations.
A key challenge for policy makers remains engaging with small
businesses to gain their input on how regulations and policies may impact
them. Time-poor business owners are unlikely to actively engage with
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public service officials and there is no one representative industry group
that reaches the entire small business community. This makes it difficult
for government agencies to get practical insights and evidence on the
impact of existing regulations and regulator activity on the small business
community.
10.25 Under the advocacy function, the Ombudsman will:
• undertake research and inquiries into legislation, policies and
practices affecting small businesses and family enterprises;
• report and give advice to the Minister for Small Business on
those matters;
• contribute to inquiries by others into those matters;
• contribute to developing national strategies on those matters;
or
• review proposals relating to those matters and advise the
Minister for Small Business on them; and promote best
practice in dealing with small businesses and family
enterprises.
10.26 The Ombudsman's advocacy function will be supported by
information gathering powers. The Ombudsman can also undertake
research and inquiries into matter impacting small businesses, including
the power to conduct, and take evidence in, hearings.
10.27 Governments across Australia have put in place various
institutions and processes to ensure impacts on small business are
considered and the views of small business are explicitly taken into
account in the development of regulations. For example, some
jurisdictions, including the Australian Government, have regulatory
impact assessment processes for all new policy proposals which must
assess the likely compliance cost on businesses. Some governments have
established separate small business focussed units or advisory bodies that
assist agencies to determine the impacts of policy proposals on small
business (for example, the Western Australian Small Business
Development Corporation). The Western Australian, New South Wales,
Victorian and South Australian governments have established small
business commissioner positions with a capacity to undertake advocacy
work and contribute to the design of regulations affecting small
businesses.5
5 Productivity Commission, 2013, Regulator engagement with small business, pp 87 -- 88.
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Regulation Impact Statement
Assistance function
10.28 Under the assistance function, the Ombudsman will respond to
requests for assistance by an operator of a small business or family
enterprise. The aim is to facilitate a quick and cost-effective resolution
that enables the commercial relationship to be maintained and get people
back to the business of running their business.
10.29 A range of dispute resolution mechanisms exist for small
businesses to resolve business-to-business disputes. In addition to state
and territory legal avenues there are industry ombudsmen, state-based
small business commissioners; sector specific codes of conduct, industry
organisations and private dispute resolution services. There is also a range
of low-cost options available to businesses to resolve disputes that do not
involve expensive and prolonged litigation through the courts.
10.30 Alternative dispute resolution (ADR) mechanisms include a
range of negotiation based methods that enable parties to prevent or
manage their own disputes. These can include services such as: the
provision of information and education to small businesses to help parties
avoid disputes; early stage guided resolution; investigation; conciliation
(making no determinations); assisted negotiation and mediation.
10.31 A small business may be aware that it has an issue, but may not
have an appreciation of the nature and extent of the issue, or how to
address it. Small businesses owners are time-poor and are unlikely to have
the expertise themselves, or the skilled staff, to progress the issue,
particularly as disputes tend to be ad-hoc and not part of 'business as
usual' activities. As a result, small business operators may not be aware of
the value, range and efficacy of dispute resolution services available. In
some cases, they may perceive that the costs of resolving a dispute are too
high and are deterred from seeking resolution of the issue.
10.32 Stakeholder feedback is that small businesses often do not seek
support to help address a dispute until the business relationship has broken
down, making it difficult for parties to begin or continue discussions on
the matter. Dispute resolution services can assist to bridge this divide to
help provide a pathway for parties to reach an agreement and move
forward.
10.33 A discussion paper, Resolution of small business disputes,
released by the former Department of Innovation, Industry, Science and
Research (DIISR) noted that stakeholders considered that low dispute
management skills and a lack of awareness of available dispute resolution
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services meant that small businesses faced an increased risk of business
failure.6 It suggested that improving the capacity of small businesses to
address disputes may empower them to effectively deal with disputes at
an early stage and avoid the escalation of disputes.
10.34 The independence of the Ombudsman will provide small
businesses with comfort and confidence to seek advice on concerns and
disputes. The Ombudsman's concierge function will support parties to
understand their options to address their concerns. The Ombudsman will
not duplicate the operations of other agencies. Depending on the nature of
the request, the Ombudsman may transfer a request for assistance to
another Commonwealth, state or territory agency or work co-operatively
with other agencies to address the request.
10.35 If appropriate, the Ombudsman may recommend that parties to a
dispute take part in an ADR process through its own service, on a user
pays basis. The Ombudsman's own ADR service will address gaps in the
current range of alternative dispute resolution services available to small
businesses at the Commonwealth-level. The scope of this service is also
limited by the Commonwealth's constitutional powers. It will only cover
small business disputes that relate to Commonwealth Government
agencies, international trade or interstate trade.
10.36 If an entity does not undertake a recommended alternative
dispute resolution process, or withdraws from that process, the
Ombudsman may publish that fact.
Gap in alternative dispute resolution services for small businesses
10.37 Currently, there is no formal framework for a small business to
access ADR processes at the Commonwealth level. There is no safety net
if a small business has an issue that falls outside the jurisdiction of
existing complaints bodies. Some bodies are not equipped to provide
meaningful referrals to another agency or offer an alternative dispute
resolution process, leaving small businesses to spend more time in search
of support. This leads to suboptimal outcomes where small business
issues, complaints and requests for advice often go unaddressed.
10.38 For example, in 2014, the Australian Competition and Consumer
Commission received 912 small business complaints which it did not
consider raised Australian Consumer Law or competition issues.7 These
6 DIISR, 2011, Resolution of small business disputes -- options paper, p 4.
7 Australian Competition and Consumer Commission, 2014, Small business in focus
(July-December 2014), p 2.
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figures do not include small business complaints which the Australian
Competition and Consumer Commission immediately assessed were not
within their remit. This suggests that the total number of small business
complaints to the Australian Competition and Consumer Commission
were greater than those officially recorded.
10.39 There are a number of low cost dispute resolution alternatives
available. However, the level of public understanding of these services,
and their ability to reduce the level of unmet legal need through a low cost
alternative, is low. The Productivity Commission has highlighted that
ombudsmen and other low cost and informal dispute resolution services
can provide an alternative to address this unmet demand, but that the
services tend not to be visible to those who might require a low cost
alternative to formal legal representation.8
RIS Question 2: Why is government action needed?
Small businesses face barriers to adequately address and resolve
disputes
10.40 The objectives of Government intervention are to provide
information and facilitate small business access to avenues for dispute
resolution.
10.41 Disputes are damaging and costly for small businesses. A
significant part of the problem for small businesses to access justice
arrangements is the cost of finding information on how they can address
their dispute.
10.42 Small business operators are often both unaware of the value or
the potential benefits to themselves from seeking and accessing business
advisory services to improve their capability to run their business (for
example, business management skills). This lack of information about the
quality and value of advice means that small businesses are less willing to
pay to access private providers of advisory services.[7]
10.43 Small businesses often have limited time, resources and
financial capacity to search for and locate low-cost advice that is relevant
to their business operations. The transaction costs of searching and
8 Productivity Commission, 2014, Access to justice arrangements, p 11. [7] Department of
Innovation, Industry, Science and Research, 2011, Small Business Advisory Services
(SBAS) Review Report, (not publically released).
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locating information are high for small businesses due to the
owner-operator management structure that is common in the sector.
Small businesses often do not have the resources to maintain internal
accountants and solicitors and usually have to seek advice from external
sources. Small businesses find it difficult to judge the value and quality of
advice, particularly legal advice, and may be deterred from approaching a
private provider to discuss their issue.
10.44 Government is well placed to bridge the information gap for
small businesses. The Government is seen as an independent broker
without a commercial interest in providing advice so can act as an
informed intermediary to help small business operators understand the
various dispute resolution mechanisms that are available so they can deal
with their disputes in a better informed manner.
Ability of the Government to address this issue
10.45 The governments of New South Wales, Victoria, South
Australia and Western Australia have sought to address these information
gaps by establishing small business commissioner positions with statutory
powers relating to general small business disputes. These positions also
have varying powers to address other matters such as retail tenancy (all
four states) and farm debt mediation (Victoria only). The Productivity
Commission found that the intervention of small business commissioners
(or equivalent organisations) has been successful in reducing the cost,
time and stress associated with resolving small business disputes. They
can provide an important dispute resolution option in those jurisdictions
that lack a significant civil tribunal.9
10.46 The Australian Government has demonstrated experience in
facilitating businesses to assess and resolve issues and disputes. The
Government currently facilitates dispute resolution services for businesses
operating under the franchising, horticulture, produce and grocery, and
petroleum (oilcode) industry codes of conduct. These services are
delivered through a single contract with an external service provider.
Small businesses incur proportionally higher regulatory compliance
costs than larger businesses
10.47 The objective of Government intervention is to minimise
unnecessary compliance burdens on small business.
9 Productivity Commission, 2014, Access to justice arrangements, p 301.
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10.48 Unnecessary compliance burdens create a barrier for small
businesses productivity and growth. Small businesses are time and
resource poor. Trying to find information on their compliance
requirements and meeting these requirements divert their time and
resources away from running their business.
10.49 As a regulator, the Australian Government has a clear role in
ensuring that regulations are appropriate and are achieving the desired
outcomes in an efficient way. Both the design and delivery of regulations
are important considerations. In designing regulation, policy officers must
ensure impacts on small business are considered and the views of small
business taken into account.
Ability of the Government to address this issue
10.50 The small business community is diverse and fragmented which
can make it difficult to engage. The Government utilises a number of tools
and engagement strategies to reach small business to capture their views
on proposed policies. Discussions with industry associations and
representative groups are useful intermediaries to engage with but still
have limited reach given that many small businesses are members an
industry body.
10.51 The Productivity Commission draft report, Regulator
Engagement with Small Business, identified that the way regulations are
implemented is often as important to small business and to compliance
outcomes as the content of the regulations themselves.10 For businesses,
good engagement with a regulator is generally associated with an
educative and facilitative regulatory approach, rather than a combative
approach. The report highlighted that the time spent by businesses
understanding regulations can be substantially reduced, and the likelihood
of regulators' activities delivering good outcomes increased, when
regulator communication is effective, and advice and guidance are
accessible.
10.52 The Australian Small Business Commissioner's current
advocacy role is constrained as it does not have legislated backing to
undertake enquiries and reviews into issues negatively affecting the small
business community. For example, if a number of businesses are raising
similar concerns or complaints, the Australian Small Business
Commissioner does not have the authority to obtain information (such as
through stakeholder meetings and requests for data) to understand the
drivers behind particular issues of concern. This limits the ability of the
10 Productivity Commission, 2013, Regulator Engagement with Small Business, pp 4-5.
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Australian Small Business Commissioner to gather and analyse
on-the-ground evidence of issues (such as burdensome regulation) and
advise the Minister and relevant agencies.
RIS Question 3: Policy options under consideration
10.53 A detailed comparison of the functions and powers of policy
options 1-3 are outlined at Appendix B.
Option 1: Status quo
10.54 The status quo would be to retain the existing Australian Small
Business Commissioner position. The Australian Small Business
Commissioner is a non-statutory position. Key functions of the Australian
Small Business Commissioner are to:
• advocate and represent small business interests and concerns
to the Australian Government;
• provide information and assistance to small businesses,
including referral to dispute resolution services; and
• work with government to promote a consistent and
coordinated approach to small business matters.
10.55 This option would also not meet the Government's election
commitment to establish the Australian Small Business and Family
Enterprise Ombudsman.
10.56 Stakeholder consultation supported the establishment of an
Ombudsman role that is supported by legislated powers. Broad powers
were generally recommended for the Ombudsman to investigate, mediate,
enforce or refer a dispute to the appropriate agency. The majority of
stakeholders were supportive of the Ombudsman as an advocate of small
business interests and concerns, particularly to the Government.
Option 2: Establish a Small Business and Family Enterprise Ombudsman
with stronger powers (preferred)
10.57 The establishment of the Ombudsman was a 2013 small
business election commitment. The Government committed to extend and
enhance the activities of the existing Australian Small Business
Commissioner to create the Ombudsman. Funding of $8 million over four
years was allocated in the 2014-15 Budget to deliver this initiative.
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10.58 Following ongoing consultation with the small business
community, the Government has confirmed strong support for the
Australian Small Business and Family Enterprise Ombudsman.
10.59 The Government has committed to introducing legislation that
will provide for the Ombudsman to:
• be an impartial and independent position that can give small
business the advice they need;
• help Government policy makers better understand the needs
of small business; and
• be equipped with the tools to effectively receive and deal
with small business concerns and disputes.
10.60 Consistent with the Australian Government Guide to Regulation,
Government decisions about the scope and powers of the Ombudsman's
functions were informed by a RIS. An early-assessment RIS was prepared
to support the Government's decision on the scope of the Ombudsman's
powers and functions. The Government announced its decision in August
2014. This final assessment RIS has been prepared for the Government's
consideration of the Australian Small Business and Family Enterprise
Ombudsman Bill (Bill) prior to introduction into Parliament.
10.61 Under the proposed legislation, the functions of the Ombudsman
are to:
• advocate for small businesses and family enterprises in
relation to relevant legislation, policies and practices
(advocacy function);
• give assistance in relation to relevant actions if requested to
do so (assistance function); and
• perform any other function conferred on the Ombudsman by
any Act or legislative instrument.
10.62 The legislation provides flexibility for the Ombudsman to
perform the functions of the role in any way that he or she sees fit, in the
most convenient and effective way possible, as long as there is no
duplication of functions performed by Commonwealth, state or territory
agencies. The Ombudsman will also work co-operatively with
Commonwealth, state and territory and comply with all other
Commonwealth laws.
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10.63 In considering the chosen model for the Ombudsman, the
Government considered that dispute related queries are best handled by
the Ombudsman and queries on general business advice, grants and
support are best handled by the Department of Industry's single business
service (www.business.gov.au, 13 28 46). Governance arrangements will
be in place to ensure that the Ombudsman and the single business service
work co-operatively to provide a user-friendly service to ensure small
businesses receive the right assistance.
10.64 Detail on the powers and functions of the Ombudsman outlined
in the Bill, including stakeholder views are outlined below.
Summary of powers in the Bill
Advocacy function
10.65 Under the advocacy function, the Ombudsman will have the
power to conduct inquiries into the effect of relevant laws, policies and
practices on small businesses, and make recommendations for how these
might be improved.
10.66 Inquiries may be under the Ombudsman's initiative or at the
direction of the Minister for Small Business. In conducting an inquiry, the
Ombudsman can require a person to produce information or documents,
with at least 10 business days' notice. Non-compliance with a request
carries a financial penalty of 30 penalty units.
10.67 Under an inquiry undertaken at the direction of the Minister for
Small Business, the Ombudsman can choose to hold formal hearings, with
at least 10 business days' notice. The Ombudsman may summon a person
to appear at a hearing to give evidence and produce documents. Failure to
attend a hearing, refusal to answer questions or produce documents, or
publication of evidence from a hearing against the Ombudsman's
direction carries a financial penalty of 30 penalty units.
Assistance function
10.68 The Ombudsman can provide assistance to a small business or
family enterprise where action by an entity with a constitutional
connection affects or may affect a small business or family enterprise.
Such entities include:
• Commonwealth and Territory agencies;
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• Constitutional corporations11;
• Any entity engaged in international trade or commerce;
• Any entity engaged in trade or commerce among the States,
within a Territory, between Territories or between a State and
a Territory;
• Any entity in relation to insurance, banking,
telecommunications, copyright, patents, designs or
trademarks; and
• Any entity that is operated by those living in or is located in a
Territory.
10.69 On receiving a request for assistance, the Ombudsman may take
the following actions:
• Refer the dispute to the appropriate agency;
• Recommend an alternative dispute resolution mechanism; or
• Decide not to provide assistance.
10.70 Under the assistance function, the Ombudsman may publicise a
matter or a person's name where a party to a dispute has refused to engage
in an alternative dispute resolution process recommended by the
Ombudsman.
10.71 In deciding how to handle a request for assistance, the
Ombudsman may make inquiries. As part of these inquiries, the
Ombudsman can require a person to provide, with at least 10 business
days' notice, specified information and documents. Failure to comply with
the notice carries a penalty of 30 penalty units.
Specific provisions in the Bill in detail
Appointment and staff
10.72 The Ombudsman will be appointed by the Governor-General for
a five-year term, and may be reappointed. The Ombudsman will be
supported by an Office of the Ombudsman, including staff employed
under the Public Service Act 1999, plus consultants as needed. These staff
and consultants will work on inquiries and hearings, as well as supporting
the Ombudsman in researching and providing advice to the Minister for
Small Business.
11 Defined as a corporation to which s51(xx) of the Australian Constitution applies, or a body
corporate that is incorporated in a territory
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10.73 These powers are similar to other statutory positions.
Stakeholders did not raise concerns with these arrangements.
Small business and family enterprise definitions
10.74 The Bill defines small businesses as those with fewer than
100 employees, or having revenue of $5 million in the previous
financial year.
10.75 The small business definition is closely linked to that of family
enterprises. The Bill defines a family enterprise as small business operated
as a family business. The 2013 Parliamentary Joint Committee on
Corporations and Financial Services inquiry into Family Business in
Australia found that most, but not all, family businesses were small
businesses. It is also assumed that larger family businesses are better
equipped to manage disputes than their smaller counterparts.
Stakeholder feedback
10.76 Stakeholders were generally supportive of the broad definition,
but some raised concerns that the definition in the Bill is inconsistent with
existing, widely adopted definitions and could result in confusion. Some
stakeholders were concerned that some organisations have narrower
definitions of a small business, and that they would reject referrals from
the Ombudsman on that basis, leaving many businesses without an avenue
for support.
10.77 The Government has chosen to use an inclusive definition of
small business. Common definitions, such as those used by the Australian
Bureau of Statistics and Australian Taxation Office were considered too
restrictive and would limit the scope of regulation and legislation the
Ombudsman could review. The definition of small businesses applies only
to the services and activities of the Ombudsman. It does not apply to other
state or territory Acts.
Advocacy
10.78 The Ombudsman will be an independent advocate that can
represent small business interests at the national level. In practice, this
will mean that the Ombudsman has the power to conduct inquiries into the
effect of relevant laws, policies and practices on small businesses, and
how these might be improved. Inquiries can be made on the basis of the
Ombudsman's own motion or referral from the Minister.
10.79 When conducting an inquiry, the Ombudsman may hold formal,
public hearings. The Ombudsman may require a person to appear at a
hearing; and/or require a person to provide information and
documentation. Non-compliance with a request carries a financial penalty
of 30 penalty units.
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10.80 The Ombudsman will regularly report to the Minister for Small
Business on his/her activities and small business concerns, including a
quarterly report to the Minister outlining the research conducted and
inquiries made during the year. In addition, the Ombudsman may, at any
time, provide the reports to the Minister outlining the findings and any
related recommendations from his/her own-motion research and inquiries.
The Minister may release these reports publicly. Before doing so, the
Minister needs to take into account whether information in the report
would negatively impact the interests of a business or individual. When
the Minister has referred a matter to the Ombudsman for inquiry, the
Ombudsman must produce a report on the inquiry, which the Minister
must table in Parliament.
10.81 As a national advocate, it is expected that the Ombudsman will
represent small business interests on relevant government boards and
councils. The Ombudsman will also collaborate with state and territory
small business commissioners and officials, and provide a single point of
authority on systemic issues that warrant a coherent, coordinated national
voice to government at all levels.
Stakeholder feedback
10.82 The majority of stakeholders were supportive of the
Ombudsman as an advocate of small business interests and concerns,
particularly to the Government. Key concerns raised related to privacy;
the scope of the inquiry powers; and the potential conflict between the
Ombudsman's advocacy and dispute resolution role.
10.83 Stakeholders considered that the Ombudsman should be able to
receive concerns in confidence to encourage parties to openly bring
forward issues for advocacy. Some raised concerns that the Ombudsman's
information gathering powers were broad and information collected under
them would still be subject to Freedom of Information provisions, which
could see the release of commercial in confidence material. Stakeholders
emphasised the importance of keeping commercial in confidence
information out of the public domain. To address these concerns, the Bill
includes provisions to protect information that is commercial in
confidence or subject to legal professional privilege. For example, the Bill
provides for the Minister to direct the Ombudsman to notify relevant
stakeholders about the intention to publish a report and give them
sufficient time (up to 30 days) to put forward any concerns or objections.
The Bill also requires confidential information to be deleted from the
report prior to publication. This will ensure that private or commercially
sensitive information is not cast into the public domain where it may
cause undue embarrassment or disclose trade secrets. Information
obtained by the Ombudsman will remain subject to Freedom of
Information provisions.
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10.84 Some stakeholders were concerned at the extent of the
Ombudsman's powers to conduct inquiries and wanted to ensure that they
did not undertake 'fishing expeditions' into particular industries, as
opposed to acting on genuine concerns raised by small businesses. Broad
powers under the advocacy function are important to ensure that the
Ombudsman is equipped to advocate on behalf of small business and meet
the Government's election commitment. The legislative provisions are
appropriate given the role needs to be designed for any individual to
occupy it. However, in practice, the discretion and judgement of the
appointee will determine how these powers are used.
10.85 Some stakeholders were concerned about the level of oversight
and power granted to the Minister to prevent publication of information
and to direct the Ombudsman to conduct an inquiry, arguing that it calls
into question the Ombudsman's independence and allows the Ombudsman
to be politicised. The reporting structure proposed for the Ombudsman is
consistent with the arrangements for state-based commissioners, who also
report to their respective State Ministers.
10.86 There was some stakeholder concern on the need for the
Ombudsman to be independent in its dispute resolution which may
conflict with the advocacy function. Based on these concerns and advice
from the Attorney-General's Department, the advocacy role will be
functionally separate to the broader activities of the Ombudsman to dispel
any perceptions that the Ombudsman unduly favours one set of interests
in the conduct of its dispute resolution activities.
Concierge for dispute resolution
10.87 Unresolved disputes and conflicts can significantly impact the
performance of a small business. Given the large number of small
businesses that have experienced a dispute, but generally lack the
resources to resolve it, the Ombudsman will act as a 'concierge' for
dispute resolution and provide his/her own (limited) dispute resolution
service, assisting small businesses on request. The objective of the
Ombudsman's dispute resolution service is to facilitate both parties to
reach an agreed position on the issue at hand and allow small businesses
to shift their focus back to running their business as quickly as possible.
10.88 All small business complaints and enquiries received by the
Ombudsman will go through an initial assistance and referral phase. On
receiving a request for assistance in a dispute, the Ombudsman may take
the following actions:
• decide not to provide assistance;
• refer the dispute to the appropriate agency; or
• recommend an alternative dispute resolution process.
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Not providing assistance
10.89 The Ombudsman may decide not to provide assistance on a
matter brought forward by a small business. Requests can be declined on
the basis of, for example, the request being made more than 12 months
after the applicant became aware of the action, or the request not being
made in good faith. Requests can also be declined if the person does not
have a sufficient interest in the issue; that is, they are too far removed
from the issue.
10.90 Some stakeholders raised concerns that the Ombudsman would
have the power to reopen decisions that had been taken by other bodies
and as such would allow dissatisfied parties to 'forum shop' when they
did not like an outcome. The Bill is designed to prevent forum shopping,
as the Ombudsman cannot act outside his/her jurisdiction or deal with a
request that has already had action taken by a court or Government
Agency.
Referrals
10.91 A key role of the Ombudsman will be to help small businesses
understand what mechanisms are available to them to address a dispute.
10.92 There are a number of existing mechanisms in place for small
businesses to address complaints and disputes. For example, the
state-based small business commissioners provide a range of alternative
dispute resolution services. In the states and territories without small
business commissioners the respective governments perform similar
functions through various agencies and departments. Small business
assistance is delivered through a variety of means such as information
portals, support lines and dispute resolution services through civil and
small claims tribunals, fair trading offices, conflict resolution services and
the court system. There is also a range of government and industry
ombudsman, as well as private mediation providers.
10.93 When a small business complaint or dispute comes through, the
Ombudsman's default position will be to determine whether or not the
issue would be more appropriately addressed under other access to justice
arrangements, such as those listed above. The Ombudsman may also
provide immediate information on what options a small business has to
resolve the dispute or actions it should pursue first through existing
complaints its frameworks. For example, a small business in dispute with
a Commonwealth Government agency will be encouraged to pursue their
complaint through the agency's internal complaints process in the first
instance before escalating the issue through the Ombudsman.
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10.94 Businesses that use ADR mechanisms referred by the
Ombudsman would need to pay for these services.
Stakeholder feedback
10.95 Stakeholders emphasised that the Ombudsman's dispute
resolution activities should not duplicate existing services. The guiding
policy principle under the Ombudsman is to avoid duplicating functions of
Commonwealth, state or territory agencies. The Bill includes key clauses
stating that the Ombudsman must refer requests to an appropriate agency
or organisation for further action when that agency is able to deal with the
request more conveniently or effectively or that agency has the legal
authority to deal with the request. The Ombudsman may also work
co-operatively with other agencies to provide assistance. Examples of
these agencies or organisations could include (but are not limited to) the
Australian Competition and Consumer Commission, the Commonwealth
Ombudsman, or state-based small business commissioners, as appropriate.
In order to ensure a smooth process for the person making the request, the
Ombudsman must consult with that agency before transferring the request,
and must share all information and documents with them.
10.96 Several stakeholders who already offer services to small
businesses thought that the Ombudsman is given too much discretion
when determining referrals, and that the service provision agency should
be able to decide whether a matter falls in their jurisdiction or not (or at
least give consent whether to accept a matter or not). Some agencies
suggested specific receiving agencies be listed in the Bill. Additional
governance arrangements, such as memoranda of understanding (MOUs)
or an exchange of letters with other agencies will underpin the referral
process and identify the types of matters which would be dealt by the
respective agencies. This approach is considered to be more appropriate
than listing specific agencies as the names and jurisdictions of agencies
can change over time and would not provide flexibility as new agencies
are formed in the future.
10.97 These requirements are intended to see disputes resolved in the
most appropriate manner by the most appropriate body, whilst causing as
little administrative inconvenience to the small business in question as
possible.
10.98 It is expected that a large proportion of inquires received by the
Ombudsman will be referred to existing agencies given the limitations on
the Ombudsman's own ADR service (discussed below). In most cases, it
is expected that providing timely information at this early stage helps to
resolve the issue and eliminate the necessity to escalate into a formal ADR
process. Initial advice and referrals activities will be undertaken at no
financial cost to small businesses or family enterprises.
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Ombudsman's own ADR service
10.99 If appropriate, the Ombudsman may recommend that parties to a
dispute take part in an ADR process through its own service, on a user
pays basis. ADR processes can include conferencing, mediation, neutral
evaluation, case appraisal, conciliation, prescribed procedures/ services.
10.100 The Ombudsman's own dispute resolution service will address
gaps in the current range of alternative dispute resolution services
available to small businesses at the Commonwealth-level. The scope of
this service is also limited by the Commonwealth's constitutional powers.
It will only cover small business disputes that relate to Commonwealth
Government agencies, international trade or interstate trade.
10.101 Should the parties choose not to undertake, or to withdraw from,
the recommended ADR process, the Ombudsman can make this
knowledge public. This provision provides strong incentives for parties to
consider carefully their approach to the Ombudsman, but also to take
seriously his/her recommendations. The Ombudsman's dispute resolution
function is also supported by powers to require a person to provide
information or documentation. A financial penalty (30 penalty units) may
apply for non-compliance.
Stakeholder feedback
10.102 Stakeholder views on the extent of the Ombudsman's ADR role
were mixed. Whilst many stakeholders supported the 'name and shame'
provisions, some were concerned that it was too heavy-handed and will be
difficult for the Ombudsman's office to track. On the other hand, some
stakeholders called for stronger, determinative powers. Feedback from
dispute resolution providers emphasised that mediation is more likely to
be successful if both parties are willing to engage and participate in the
process. In finalising the Bill, the 'name and shame' powers were
considered to provide the right balance to encourage parties to participate
in the process, but no so punitive that small businesses would be
discouraged to approach the Ombudsman.
10.103 To maintain impartiality, the Ombudsman cannot undertake
ADR personally, and ADR mediators must be chosen by parties to the
dispute. This ensures that the Ombudsman's advice remains impartial, but
also that the Ombudsman's assistance work does not bias his/her
advocacy work. In practice, this means that the Ombudsman will make
use of a panel of specialist ADR providers for parties to choose from to
progress their dispute. Some stakeholders were supportive of an
outsourced arrangement; the state-based commissioners generally manage
a panel of mediators.
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10.104 The 2014 policy discussion paper for the Ombudsman sought
stakeholder views on whether the Ombudsman's ADR service should
extend to the mandatory industry codes of conduct established under the
Competition and Consumer Act 2010. Given the need for the
Ombudsman's advocacy and dispute resolution roles to be to separate, it is
not appropriate for the Ombudsman to be appointed as the mediation
adviser for these codes.
Title
10.105 Several stakeholders expressed a preference to retain the
existing title of 'Commissioner' due to its brand recognition and
consistency with state-based commissioners. The Government considers
that the 'Ombudsman' title reflects the expanded functions and powers of
the position and emphasises the independence of the role. Recognising the
need for an Ombudsman to be impartial, the Office of the Ombudsman
will be structured so that there is a clear separation between its dispute
resolution and advocacy functions. This will allow the Ombudsman to
speak to the Government about issues facing smaller businesses, but also
provide an independent dispute resolution service that helps businesses
get the help they need.
Appeals
10.106 Stakeholders raised the question of how the Ombudsman's
decisions can be appealed. The Bill states that decisions taken by the
Ombudsman can be appealed by application to the Administrative
Appeals Tribunal.
Option 3: Establish the Australian Small Business and Family Enterprise
Ombudsman with limited powers
10.107 This option involves establishing the Australian Small Business
and Family Enterprise Ombudsman under legislation with the same four
functions as listed under option 2. Under this option however the
Ombudsman would have more limited powers than that proposed under
option 2.
10.108 Under option 3, the key powers that have a regulatory impact on
small business under option 2 would be removed. Specifically, the:
• ability to require information from parties in dispute (and
associated financial penalties).
• ability to require parties to attend hearings (and associated
financial penalties).
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• ability to publicise the names or parties that do not
participate, or withdraw from, a recommended ADR process.
10.109 These powers support the dispute resolution and advocacy
functions of the Ombudsman. This will mean that the Ombudsman's
dispute resolution services are entirely voluntary.
10.110 Under option 3, the position will still be provided with a
legislated framework in providing advocacy and dispute resolution
services and to undertake enquiries into issues affecting small businesses.
10.111 This option would provide for a statutory, independent
Ombudsman to be established. Legislation would clearly outline the key
functions of the role and also allow the Ombudsman to provide its own
ADR service, addressing the gaps in the current range of alternative
dispute resolution services available to small businesses. The
Ombudsman's dispute resolution roles will also address information gaps
small businesses face in understanding what justice mechanisms are
available to them to address a complaint or dispute.
10.112 This option would partially address stakeholder support for the
establishment of a statutory Ombudsman to advocate small business
concerns and provide dispute resolution support. This option would meet
the Government's election commitment to establish the role with 'real
teeth'.
10.113 This lighter touch approach would not achieve the same
outcomes for small businesses as the model proposed under option 2. The
Ombudsman's advocacy role would be dampened as he or she would not
be able to incentivise parties to co-operate on research and inquiries
projects, thus limiting his or her ability to fully identify and analyse
issues. This will make it difficult for the Ombudsman to provide
meaningful recommendations to Government on how to improve
regulations, laws, processes and practices that are adversely impacting
small businesses.
RIS Question 4: What is the net benefit of each option?
Option 1: Status quo
10.114 This option is not preferred. It will not deliver on the
Government's commitment to establish the Ombudsman.
10.115 A wide range of Commonwealth, state and territory government
agencies provide avenues for access to justice which can be complex for
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small business to understand and navigate. Currently, there is no formal
framework for access to alternative dispute resolution processes at the
Commonwealth level. There is no safety net if issues fall outside the
regulatory reach of agencies, which are not equipped to provide
meaningful referrals. This leads to suboptimal outcomes as small business
issues, complaints and requests for advice may go unaddressed.
10.116 The Australian Small Business Commissioner was established
without legislation or a comprehensive operating framework, which has
precluded it from having a role in assisting small businesses to access
justice arrangements, beyond referring businesses to an existing,
appropriate service. If a business raises a matter with the Office of the
Australian Small Business Commissioner, the Office provides a triage
service by undertaking preliminary discussions to determine the most
appropriate course of action, and where appropriate, refer the business to
other existing dispute resolution services or other complaint bodies. The
Australian Small Business Commissioner does not have authority to
provide assistance beyond this triage role, thus limiting its ability to
facilitate appropriate access to justice for small business.
10.117 The Australian Small Business Commissioner's current
advocacy role is constrained in its ability to undertake enquiries and
research into issues negatively affecting the small business community.
For example, if a number of businesses are raising similar concerns or
complaints, the Australian Small Business Commissioner does not have
the authority to obtain information to understand the drivers behind
particular issues of concern. This limits the ability of the Australian Small
Business Commissioner to gather and analyse on-the-ground evidence of
issues (such as burdensome regulation) and advise the Minister and
relevant Government agencies where appropriate.
10.118 As the Australian Small Business Commissioner is not
supported by powers, it is not considered to impose a regulatory cost
on businesses. The costs to Government of this role relate to the
operating costs for the Office of the Australian Small Business
Commissioner. Funding of $8.3 million over four years was provided
in the 2012-13 Budget to establish the Office of the Australian Small
Business Commissioner.
Option 2: Establish a Small Business and Family Enterprise Ombudsman
with real power (preferred)
10.119 This option is preferred as it provides the greatest net benefit.
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10.120 A strong and confident small business community is central to
the Government's commitment to delivering a productive and competitive
economy. The Ombudsman will help contribute to this commitment by:
• helping small businesses resolve disputes early, in turn
improving business productivity, preserving business
relationships and avoiding expensive litigation;
• improving engagement between the Government and the
small business sector to ensure that small business interests
are at the centre of policy and programme design and
business interaction; and
• streamlining access to Government assistance and support to
reduce complexity and save time.
10.121 Granting of statutory powers will allow the Ombudsman to more
effectively contribute to the Government's understanding of small
business interests and the impact that Government actions have on small
businesses. This will support the Government's broader deregulation
agenda, and help achieve benefits for small businesses by gathering and
providing on-the-ground evidence and practical solutions to policy makers
and regulators.
10.122 The costs and benefits of each of the Ombudsman's key
functions have been quantified using the framework outlined in The
Australian Government Guide to Regulation. Regulatory costs to business,
community organisations and/or individuals are quantified using the
Regulatory Burden Measurement (RBM) framework. This framework
includes consideration of administrative costs, substantive compliance
costs and delay costs. Broader economic costs have also been quantified
and detailed below.
Quantitative costs: advocacy
10.123 The Bill provides for Ombudsman to conduct research and
inquiries into the effect of relevant laws, policies and practices on small
businesses, and how these might be improved. For example, the
Ombudsman may help monitor and report on the efficacy of industry
codes of conduct and fair trading provisions, the behaviour of regulators
in undertaking compliance activities, and responsiveness and effectiveness
of agency complaints mechanisms.
10.124 The Ombudsman can undertake research and inquiries through
informal stakeholder meetings and interview or data analysis. The Bill
also provides for the Ombudsman to conduct formal hearings and
provides information gathering powers.
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10.125 It is expected that these powers would be seldom exercised and
most parties would participate voluntarily. In general, business
compliance costs relating to activities that small businesses would already
be engaging in, or engaging in on a voluntary basis, such as participating
in voluntary hearings or inquiries, are not included in the RBM. However
there is an economic cost to those organisations assisting the Ombudsman
with such activities. Costs could include time taken to prepare for and
participate in hearings or informal stakeholder consultations and
interviews. These economic costs are quantified below.
10.126 The Ombudsman's advocacy powers are similar to the
Productivity Commission. The Productivity Commission incurs publishes
the costs of undertaking inquiries, including holding public hearings, in its
annual reports. In consultations, the Productivity Commission noted for a
large inquiry it incurs costs of around $2 million to run. For example, its
inquiry into Childcare and Early Childhood Learning (11 month inquiry,
final report to Government in October 2014) cost $2.3 million.
10.127 The resourcing of the Ombudsman ($2 million per annum) will
necessarily limit the scope and scale of its inquiries, particularly through
holding hearings. It is therefore assumed the Ombudsman's power to hold
hearings will not be exercised for all advocacy projects.
10.128 In estimating the costs for the Ombudsman's advocacy function,
it is assumed that the Ombudsman's resourcing would support:
• 1 significant research and inquiry project involving public
hearings every four years.
• 1.5 smaller scale research and inquiry projects each year
involving desktop research, stakeholder interviews, data
analysis and call for submissions (or 6 over 4 years).
Public hearing based projects
10.129 The costs of these projects is modelled off the Productivity
Commission's report Australia's Automotive Manufacturing Industry
which was released in August 2014. The cost to the Productivity
Commission to hold this inquiry was $1.1 million.
10.130 The inquiry was held over five months, involved visits to 46
parties and hearings held over five days. It is assumed that parties would
attend the hearing in the nearest capital city. The Productivity
Commission estimates that up to 15 parties appear each day with each
party appearing for 45 minutes on average.
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10.131 It is assumed that each party would involve four staff in this
process -- A general manager, senior manager and a junior professional
staff member. The hourly cost of this staff time is outlined in the
Table 10.1 below.
Table 10.1: Estimated hourly staff costs
Position Average weekly Hourly rate
pay (assuming 40 hour week)
General-Manager (GM) 2573.6 64.3
Senior Manager (SM) 2113.8 52.8
Professional (P) 1548.2 38.7
Source: ABS, 2015, Employee Earnings and Hours, Australia, May 2014, cat no. 6306.0.
10.132 The cost per party of participating in a hearing process is
outlined in Table 10.2 and 10.3 below. It assumes a total of 75 parties
(5 hearings x 15 parties per day) attending hearings and an additional
46 parties involved in separate meetings (face to face at their premises or
via telephone).
10.133 The subject matter of enquiries will be on systemic issues facing
small businesses, such as the impacts of particular laws and regulations. It
is not expected that the nature of these hearings will require legal advice,
however some businesses may choose to seek such advice if compelled to
provide documentation or evidence at a hearing. The costs assume that
businesses will seek legal advice at a cost of $150012. As evidence and
transcripts at hearings are made public, it is assumed that a party will
invest greater preparation and follow-up time in participating in hearings
compared to one-on-one consultations.
12 Consultations indicate that legal cost quotes are often provided on a project/ task basis
rather than an hourly rate. $1500 was considered an average cost.
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Table 10.2: Estimated cost of participating in hearings
No. of Hours at No. staff Travel Preparation Preparation Preparation Legal Cost per Total costs
parties hearing per party time and follow-ups and follow-ups and follow-ups costs party ($)
per party (hours) (G) (S) (P) ($) ($)
75 0.75 3 1.5 8 15 25 1,5400 4,126 309,433
Table 10.3: Estimated cost of participating in consultations
No. of parties Hours in Preparation and Preparation and Preparation and Cost per party Total costs
interview follow-ups (G) follow-ups (S) follow-ups (P) ($) ($)
46 1.0 4 8 15 1,417 65,163
Table 10.4: Estimated time required per in-depth inquiry of the Ombudsman
Parties No. of Preparation Preparation Preparation No. of Hours No. of Hours Cost per Total costs
parties and and and phone per meetings per party ($)
follow-ups follow-ups follow-ups calls phone meeting ($)
(GM) (SM) (P) call
Primary 3 25 30 35 5 2 5 3 8,446 25,337
Secondary 5 15 20 25 3 2 3 3 5,328 26,640
Other 8 3 5 8 0 0 1 3 1,235 9,876
Total 61,854
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10.134 The cost to business of participating in a hearing-based inquiry
is $374,596. If one hearing-based inquiry is conducted every four years,
this would average $93,649 per year.
Interview/submission based projects
10.135 The Australian Small Business Commissioner's report ASIO
building: the costs of poor contracting practices has been used as a model
for these costs.
10.136 For the purposes of estimating the economic cost, parties
involved in the Ombudsman's inquiries have been categorised as primary,
secondary or other stakeholders. It is assumed the Office of the
Ombudsman could conduct both an interactive engagement with these
stakeholders through meetings and phone conferences. It may also openly
call for submissions from organisations on a voluntary basis.
10.137 On average, each party is assumed to involve three staff (general
manager, senior manager, junior professional) in the process. The costs of
these staff the same as those outlined in Table 10.1.
10.138 The average time spent assisting with the inquiry is outlined in
the Table 10.3. It assumed that all four staff will participate in meetings,
phone interviews and undertake preparatory work.
10.139 Undertaking taking 1.5 Interview/ submission based projects
per year, the estimated cost to business is estimated to be $92,780.
Quantitative costs: dispute resolution
10.140 The Ombudsman's dispute resolution function will be supported
by legislated powers to refer matters to appropriate, existing agencies;
require parties to provide information in relation to a dispute; refer matters
to its own ADR service; and publicise name of parties not willing to
participate in a recommended ADR process.
10.141 It is not expected that the Ombudsman would regularly exercise
its powers to incentivise parties to participate in mediation. However
parties participating in the Ombudsman's own ADR service will bear
economic costs (in staffing resources and out of pocket expenses).
10.142 The costs borne by parties depend on how the issue is dealt with
by the Ombudsman. All small business complaints and enquiries received
by the Ombudsman will go through an initial assistance and referral
phase. On receiving a request for assistance in a dispute, the Ombudsman
may decide not to provide assistance; refer the dispute to the appropriate
agency; or recommend an alternative dispute resolution process.
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10.143 Appendix C depicts the process of how a case is managed and
escalated through the office of the Ombudsman. It also includes estimates
on the number of cases that are expected to be dealt with by the
Ombudsman each year. Assumptions underlying these figures are detailed
below.
Incoming enquiries
10.144 As an estimate for demand for dispute resolution, Treasury has
sought figures from existing Commonwealth and national complaints
bodies to identify the number of complaints each agency received in the
last financial year from small businesses that fell outside their jurisdiction.
The Ombudsman is expected to fill this gap so small businesses can have
their complaints heard. Treasury has used these figures as a proxy for the
expected volume of small business disputes that may be brought forward
to the Ombudsman each year.
10.145 Treasury assumes that the level of disputation will not increase
above the status quo as the estimated demand is based on the existing
number of enquiries that come through to, but not within the jurisdiction
of, existing complaints frameworks.
Initial advice and referrals
10.146 Requests for assistance from small businesses are expected to
initially be triaged through an information line service, similar to the
Australian Small Business Commissioner's Information Line. This initial
inquiry stage will involve talking through the issues with the business and
suggesting informal and formal actions they could take to progress to the
dispute.
10.147 Not all incoming enquiries will fall within the Ombudsman's
jurisdiction and therefore be escalated to its own ADR service. Further,
the Bill requires the Ombudsman to transfer a request for assistance to
another Commonwealth, state or territory agency, if that agency could
deal with the request and it would be more effective and convenient for
that agency to do so.
10.148 It is difficult to estimate the number of matters that will fall
within the jurisdiction of the Ombudsman's own ADR service (small
business disputes relating to Commonwealth agencies, interstate trade and
international trade) and where an ADR process would be appropriate. The
complaints data obtained from Commonwealth complaints agencies does
not capture sufficient information to identify whether matters fall within
these categories. Given the narrow range of disputes that can be handled
by the Ombudsman's own ADR service, it is assumed 75 per cent of
inquiries would be either be dealt with through initial advice or referred to
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other existing services. The remaining 25 per cent would be within scope
of the Ombudsman's own ADR service and for which an ADR service is
considered an appropriate course of action.
10.149 Given that small business and family enterprises can approach
the Ombudsman voluntarily (it is not anticipated that there will be any
application forms to receive information and advice), there is no
regulatory cost for businesses at this stage.
Own ADR service
10.150 If a dispute falls under the Ombudsman's jurisdiction, the
Ombudsman may recommend parties participate in an ADR process. ADR
(as defined in the Bill) can include early stage guided resolution;
investigation; conciliation (making no determinations); assisted
negotiation and mediation. To ensure impartiality, the Ombudsman's own
ADR service will be delivered through an outsourced arrangement.
10.151 The type of ADR process will impact the cost to businesses of
participating. For example, state-based small business commissioners
generally offer a pre-mediation service at no charge. This lighter touch
approach can be conducive to resolving a dispute without the necessity to
progress into formal mediation processes. It can involve case manager's
separately approaching parties to a dispute to gather and clarify factual
information on the matter.
Light touch
10.152 It is assumed that the proportion of cases that would go through
a lighter touch ADR service reflects the number of inquiries that are
received by the state-based small business commissioners that go through
their pre-mediation service. On average, this is estimated to be 13 per
cent.
10.153 Advice from case managers within the offices of the state-based
small business commissioners and the Australian Small Business
Commissioner is that the most common process the Ombudsman may take
to approach the respondent is via a letter. The Ombudsman would bring
the issue to the respondent's attention and seek their views and feedback.
This process may continue through a number of exchanges.
10.154 The cost to business in this phase is the time taken by a
respondent to reply to the Ombudsman. For each case, costs are calculated
assuming:
• The responding party must reply to an average of two letters
from the Ombudsman.
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• A general manager will spend 1.5 hours considering a
response to each letter.
• A senior manager in the organisation will spend 3 hours
considering a response to each letter.
• A junior team member (professional) will spend 6 hours
considering a response to each letter.
10.155 Feedback from consultations is that larger businesses may
allocate greater staffing hours than a small business. The staff costs above
are assumed to be an average per party as it is difficult to estimate the
business size of parties to disputes that will come through. Further, the
complexity of a dispute will also influence the time a business takes to
engage in this process.
10.156 Costs have been applied to both parties to the dispute (applicant
and the respondent). While the respondent is being compelled to respond,
the applicant will also need to provide information and respond to letters
in order to progress the dispute.
Table 10.5: Cost per party of light touch ADR process
Staff -- Hours per Numbers Total staff Total staff cost
position/role letter of letters hours ($)
General Manager 1.5 2 3 193
Senior Manager 3 2 6 317
Professional 6 2 12 464
TOTAL 975
10.157 The total cost of a lighter touch ADR process for two parties is
assumed to be $1949 ($975 each).
Mediation
10.158 It is assumed that the remaining proportion of cases (87 per cent)
will go through a more involved ADR process such as mediation.
10.159 Costs borne by parties to a dispute includes the time to prepare
for and participate in a mediation session. There may also be
out-of-pocket expenses including travel, room hire and the cost of the
mediator. These costs will be shared evenly by both parties. Consultation
with dispute resolution providers indicate that businesses may also seek
external legal advice and may also have legal representation during the
mediation session. Key cost assumptions are listed below.
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10.160 Out of pocket expenses per party:
• Average travel costs for attending mediation: $178 (average
travel cost to attend a VCAT hearing).13 Stakeholders
highlighted that mediation sessions are generally held in
person and at a location convenient to both parties. It is
expected that the Ombudsman will have access to providers
located across metropolitan and regional areas.
• Room hire: $450 (split between both parties).14
• Cost of mediator: $275 per hour (full cost to be shared
between both parties).15
• Average length of mediation session is 6 hours (based on
stakeholder consultations). On average the mediator will put
1 hour of preparation time per hour of mediation.
• Legal advice: $2700 -- assuming all parties seek legal advice
prior to mediation ($1500 based on stakeholder
consultations) and 50 per cent of stakeholders have a lawyer
present during mediation (0.5 x 6 hours x $400/hours)16.
10.161 Tables 10.6 and 10.7 outline the total out of pocket expenses
and staff costs per party to participate in a mediation session. Stakeholder
feedback is that the number of representatives that attend mediation varies
greatly from 1 representative per party to up to 10 (not common).
Feedback is that on average 3 representatives may attend, including a
senior manager as parties are expected to be in a position to make a
decision on any agreements coming out of the mediation.
13 Victorian Small Business Commissioner, 2013, The costs of participating in
business-to-business disputes at the Victorian Civil and Administration Tribunal (VCAT).
14 Based on full day room hire for mediation room with one breakout room,
https://www.disputescentre.com.au/Facilities/Room-Rates, accessed 17 April 2015.
15 Based on hourly cost of mediation under the Office of the Franchising Mediation Adviser.
16 Consultations indicated that not all parties will have a lawyer present or have sought legal
advice before participating in mediation. Consultations indicate average legal cost per hour
would be approximately $400.
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Table 10.6: Mediation out-of-pocket expenses per party
No. of Hours in Mediator Room Shared Travel Legal Total
mediator mediation preparation hire costs per ($) advice expenses
(per time (hours) ($) party($) ($) per
hour) party($)
275 6 6 450 2,100 178 2,700 4,978
Table 10.7: Mediation staff costs per party
Staff -- Hours in Preparation Total staff Total staff
position/role mediation (hours) hours cost ($)
General Manager 6 6 12 772
Senior Manager 6 20 26 1,374
Professional 6 30 36 1,393
TOTAL 3,539
Qualitative costs
10.162 Some stakeholders highlighted concerns that small businesses
may be confused about the role and remit of the Ombudsman. For
example, a small business may be unsure of whether they should approach
the Ombudsman, a state-based small business commissioner, or an
industry ombudsman to seek advice on a dispute. Industry bodies echoed
that that it will be equally important that they understand the extent of the
Ombudsman's services. It is difficult to anticipate whether such confusion
will be a significant concern. This risk will be mitigated through a
targeted communications and engagement strategy, particularly in the first
12 months of operation, to educate the community (small businesses,
industry organisations and other ADR providers) about the Ombudsman's
role and powers.
10.163 It is not anticipated that businesses will bear significant costs
from misunderstanding the role of the Ombudsman. The aim of the
Ombudsman's to facilitate a quick and cost-effective resolution. As noted
earlier, often businesses will not pursue a dispute as they are not aware of
what avenues are available to them to resolve the matter. If a small
business contacts the Ombudsman with a request for assistance, the
Ombudsman will help small businesses understand their options to
address the matter and facilitate a seamless referral to the most
appropriate support agency. Such referral processes will be facilitated
through governance arrangements, such as MoUs, with existing
Commonwealth, state and territory bodies.
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10.164 Small business disputes with Commonwealth Government
agencies can be directed through the Ombudsman's own ADR service.
This could result in more small businesses pursuing disputes with their
dealings with Government agencies. Some businesses may have otherwise
left a dispute unaddressed if pursing a complaint with a larger
Government agency was perceived as difficult. It is hard to estimate the
possible change in the volume of such disputes, particularly as parties
would still be encouraged to pursue disputes though existing internal
complaints processes in the first instance. It is anticipated that as an
advocate, the Ombudsman would also play a role in helping officials
understand how to improve small business engagement and avoid disputes
in the future.
Quantitative benefits
Dispute resolution
10.165 The Ombudsman's own ADR service (pre-mediation and formal
mediation) is intended to offer businesses an alternative process to address
a dispute compared with more formal court and tribunal proceedings. It
does not preclude participants from seeking concurrent assistance from
other sources.
10.166 There is a regulatory saving to small businesses accessing the
Ombudsman's own ADR service rather than proceeding to court. It is
assumed that a proportion of the matters that are within the scope of the
Ombudsman's own ADR service (small business disputes relating to
Commonwealth Government agencies, international trade and interstate
trade) would have been pursued through the Federal Court system. This
would result in fewer cases being taken through the courts, resulting in a
minor regulatory saving from time taken to apply to the Federal Court.
10.167 The following assumptions have been made to calculate these
costs:
• Time taken to complete Federal Court application form: 1
hour
• Staff costs of a General Manager level staff member to
compete form: $64.3 per hour.
• A third of cases resolved through the Ombudsman's own
ADR service would have otherwise been pursued through the
courts.
10.168 It is expected that this would result in a regulatory savings of
$7,021.64 per year. These avoided costs have been included in the RBM.
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Own ADR process
10.169 There will be a broader economic saving to businesses that have
been able to resolve disputes through the Ombudsman's own ADR service
rather than pursuing it through the courts. The following assumptions
have been made to quantify these economic savings.
• One third of the matters proceeding through the
Ombudsman's ADR service would have otherwise been
pursued through a Commonwealth jurisdiction court.
• Only parties reaching an agreement through the ADR process
would have avoided these costs (if still unresolved, parties
may choose to escalate the matter through the courts).
• The average out-of-pocket costs of litigation through the
Federal Court is $111,120 for the applicant and $99,805 for
the respondent.17 Stakeholder feedback was that initial proxy
of state Supreme Court costs (around $50,000) was too low.
Examples of typical legal costs provided were include court
fees ($5,000); discovery ($35,000); Barrister briefing
($20,000), trial cost per day ($10,000).
• Staff costs are (at least) twice those of participating in
mediation per party. Litigation processes are estimated to
take up to 6 months compared to 8-12 weeks for mediation.
This equates to $7,079 per party.
• A third of cases resolved through the Ombudsman's own
ADR service would have otherwise been pursued through the
courts.
10.170 The avoided court costs per resolved case is estimated to be
$225,083.
10.171 The net economic benefit of this initiative is outlined in
the Table 10.8 below. The net regulatory burden is outlined in
Table 10.9 below.
17 Attorney-General's Department (Access to Justice Taskforce), 2009, A strategic framework
for access to justice in the Federal Civil Justice system, p 41,
http://www.ag.gov.au/LegalSystem/Documents/A%20Strategic%20Framework%20for%20
Access%20to%20Justice%20in%20the%20Federal%20Civil%20Justice%20System.pdf,
accessed 17 April 2015. Mean professional fees and disbursements for the Federal Court.
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Table 10.8: Summary of economic costs and savings per year
Number of Cost per
Total Economic costs cases (#) case ($) Total ($)
Advocacy 186,429
Dispute Resolution (Light Touch) 53 1949 103,697
Dispute Resolution (Mediation) 356 17035 6,065,219
Total cost 6,355,346
Total Federal Court costs avoided 109 225083 -24,564,028
Net economic benefit -18,208,682
Table 10.9:Regulatory burden and cost offset estimate table
Average annual regulatory costs (from business as usual)
Change in Business Community Individuals Total change in
costs Organisations cost
($million)
Total, by -0.007 -0.007
sector
Cost offset Business Community Individuals Total, by source
($ million) organisations
Agency
Are all new costs offset?
Yes, costs are offset No, costs are not offset
Deregulatory--no offsets required
Total (Change in costs - Cost offset) ($million) = -$0.007
Qualitative benefits
Advocacy
10.172 The benefits to small business from the Ombudsman's advocacy
role are difficult to quantify, however there are a wide range of qualitative
benefits.
10.173 By receiving concerns and complaints from small businesses,
the Ombudsman will be well positioned to identify emerging or existing
issues that are affecting small businesses nationally. As a voice for small
businesses, the Ombudsman will advise Government policy makers on
how proposed policies and regulations will, and are, impacting small
businesses. For example, the Ombudsman may help monitor and report on
the efficacy of industry codes of conduct and fair trading provisions, the
behaviour of regulators in undertaking compliance activities, and
responsiveness and effectiveness of agency complaints mechanisms.
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10.174 Economic savings to businesses will be in the form of time and
costs saved from a reduced compliance burden resulting from the
Ombudsman identifying where improvements to legislation, regulation or
practices can reduce the regulatory burden on small business. These
savings are difficult to quantify.
10.175 By granting the Ombudsman statutory independence, the
Government can provide the role with a credible base from which to
advocate the fair treatment of small business within government and the
community more broadly. It will further allow the Ombudsman to receive,
consider and report on small business issues and complaints in a truly
independent manner.
10.176 The Ombudsman will also be an advocate amongst the business
community by encouraging the fair treatment of small businesses, best
commercial practice between all businesses, improved management
practices within small businesses, and forward planning to address known
smaller family enterprise issues such as succession planning. This could
help improve the operating environment for all businesses, and may also
help alleviate the incidence of business to business disputes through the
adoption of best practice principles by businesses of all sizes.
10.177 To dispel perceptions that the Ombudsman unduly favours one
set of interests in the conduct of its dispute resolution activities, the
Ombudsman's advocacy functions will be separate from the functions
concerned with dispute resolution. This will be achieved through the use
of a panel of specialist alternative dispute resolution providers, and by
requiring any specialists employed directly by the Ombudsman to be
functionally separate to the broader activities of the Ombudsman.
10.178 Similar to the Ombudsman's dispute resolution function, the
Ombudsman's advocacy function is expected to have positive impacts on
the behaviour of businesses. Anecdotal feedback from the Australian
Small Business Commissioner has highlighted that some businesses,
particularly larger businesses, have welcomed the Commissioner raising
practices of concern to their attention. This has enabled them to review
their practices and revise their practices so they are more small business
friendly.
Dispute resolution
10.179 As a concierge for dispute resolution, the Ombudsman will help
address the information gap small businesses face in understanding what
justice mechanisms are available to them to address a complaint or
dispute. By providing information, advice, and direct referrals, small
business will be able to make more informed decisions about how they
want to pursue their complaint. This process will also save them time they
would have otherwise spent researching information on dispute resolution
processes and reaching an appropriate complaints body.
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Regulation Impact Statement
10.180 Importantly, as a first step, when a small business brings an
issue to the Ombudsman, the Ombudsman will ask fundamental questions
about the nature of the dispute. This could include whether the small
business has a contract in place, or whether the small business has
discussed the issue directly with the other party. This process in itself can
help small businesses understand their own actions in managing disputes
and how they can improve their own business practices such as contract
management and managing business relationships.
10.181 The Ombudsman's own ADR service will also address gaps in
the current range of alternative dispute resolution services available to
small businesses. Research and preliminary stakeholder consultation on
the dispute resolution services and complaints bodies available to small
businesses at the Commonwealth level indicates that the Ombudsman
would be an appropriate body to deal with a range of small business
disputes.
10.182 While the Ombudsman will have powers to require parties to
attend mediation, it is intended that where possible, the Ombudsman will
seek to resolve disputes through initial information and referrals and
pre-mediation activities. Providing support and advice to businesses on
how they can address their dispute can lead to improved business
practices as business owners learn from their experience and avoid
disputes in the future.
10.183 There will be cases where the respondent in a dispute does not
wish to participate in mediation. The power to require parties to attend
mediation may be a cost to business, but this will ensure that a genuine
alternative to the courts is available. This will boost small business
confidence in their dealings with other businesses; particularly larger ones
where there would otherwise be a considerable power imbalance were a
dispute to arise. It also provides a mechanism for ensuring that businesses
are not forced to close due to unresolved disputes and, further, in many
cases, allows for productive business relationships to continue.
Benefits associated with the Ombudsman's powers
10.184 It is anticipated that the Ombudsman' dispute resolution role,
and the associated powers will have a positive impact on the behaviour of
small and large businesses and improve the efficient operation of the
market more generally. It is plausible that some businesses may become
more risk adverse or reluctant to do business with small businesses as a
result of the introduction of the Ombudsman's dispute resolution function.
This is considered a very small risk as the Ombudsman's dispute
resolution functions are not intended or designed to replace the existing
recourse businesses have to pursue issues through the courts and tribunals.
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10.185 Further, ADR processes are designed as a low-cost, timely way
for parties to address a dispute and facilitate a shared agreement on how to
move forward. The estimated out-of-pocket and staff expenses are
relatively low and are not expected to be passed on to consumers through
the price of goods and services offered by businesses.
10.186 The Ombudsman will send enquiries to existing services (that is,
maintaining the status quo) and will have a narrow scope of disputes to
address through its own service. Generally, the Ombudsman will not
publicly report on the individual parties that access the Ombudsman
services, or the nature of their dispute. Therefore small businesses will not
be reluctant to pursue the dispute for fear of retribution or being seen as
being difficult to deal with.
10.187 A key objective of the Ombudsman's dispute resolution services
is to facilitate parties to a dispute to voice their side of the story and come
to an agreed position. That is why the Ombudsman will not have
determinative powers. This is supported by discussions with the Western
Australian Small Business Commissioner who considers that when
offering alternative dispute resolution services, co-operation is more likely
without such powers.
10.188 The Ombudsman's power to name unco-operative parties is
intended to incentivise all parties to a dispute (businesses of all sizes and
government agencies) to participate in the Ombudsman's dispute
resolution processes. The reputation of organisations that are publicly
named are expected to be adversely affected, which could potentially lead
to lost business, however this is difficult to quantify. It is also difficult at
this stage to estimate the number of businesses that might be affected,
however it is intended that the Ombudsman would exercise this power
sparingly.
10.189 It is expected that small businesses that access alternative
dispute resolution services will build their knowledge of the dispute
resolution mechanisms available to them, and improve their own
processes and practices to avoid similar disputes in the future. For larger
businesses, working through a dispute, or having the Ombudsman raise a
practice of concern to small businesses, may help them identify how they
can improve their own practices to be more small business friendly.
10.190 It is not anticipated that this function will have an adverse
consequence on consumers. The dispute resolution services offered by the
Ombudsman will be low-cost. In aggregate, it is important to note that the
broad benefits of an effective civil justice system are significant. As the
Productivity Commission has stated:
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'a well-functioning civil justice system serves more than just private interests
-- it promotes social order, and communicates and reinforces civic values and
norms. A well-functioning system also gives people the confidence to enter
into business relationships, to enter into contracts, and to invest. This, in turn,
contributes to Australia's economic performance.18'
10.191 The Ombudsman's role in providing dispute resolution services
will contribute towards the effective functioning of Australia's civil
justice system. This includes the economic benefits and associated
behavioural changes that can arise from improved business and consumer
confidence in establishing and maintaining business relationships.
Option 3: Establish a Small Business and Family Enterprise Ombudsman
with more limited powers
10.192 The powers of the Ombudsman under this option are not
expected to have a regulatory cost on businesses as participation in the
Ombudsman's services would be voluntary given the Ombudsman has no
power to require parties to provide information or attend mediation. This
option is not preferred as it does not provide an effective response to the
problems outlined in Chapter 2.
10.193 Establishing a statutorily appointed Small Business and Family
Enterprise Ombudsman with a range of powers and with a formal
framework to provide a range of alternative dispute resolution processes
does go some way toward addressing the problems outlined in Chapter 2.
The Ombudsman will still be able to provide information and advice to
small businesses on what mechanisms are available to them to resolve a
dispute.
10.194 The powers to require parties to attend mediation (by imposing a
penalty for failure to attend mediation) are used as an incentive for parties
to formally discuss disputes in a clear, accessible framework. This process
seeks to resolve disputes early, helping to preserve the business
relationship and avoid the high costs of court proceedings.
10.195 Under this option, the Ombudsman will not be as effective in
facilitating the resolution of disputes. The intention of the Ombudsman is
to facilitate the most appropriate commercial outcome for both parties in a
dispute. To achieve this, both parties must be willing to fully engage with
this process and provide all the information and facts about the issue at
hand. Facilitating a resolution will be difficult if the Ombudsman is not
18 Productivity Commission 2014, Access to Justice Arrangements, Draft Report Overview,
Canberra, pg. 7
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able to incentivise parties (particularly where there is a power imbalance
between the parties) to participate in discussions about the issue at hand
and to ensure that all parties are making decisions based on the same
information.
10.196 The Western Australia Small Business Commissioner has
advised that, in the last two years of providing alternative dispute
resolution processes by the Western Australia Small Business
Development Corporation, there has been a small number of instances
where stronger mechanisms to engender greater participation from parties
would have been helpful and improved outcomes to disputes. A balance
needs to be struck between influencing parties to voluntarily participate in
resolving disputes and ensuring that there are consequences for parties
that refuse to provide information in reasonable timeframes or participate
in dispute resolution in a meaningful way. These behaviours are
invariably detrimental to small business owners who have insufficient
resources to utilise the judicial system. Without appropriate powers to
mitigate the impact of these behaviours, the Ombudsman would be less
likely to contribute to the effective functioning of the civil justice system,
and the broader benefits that may arise when this system functions well.
10.197 This feedback is supported by the experience of the Victorian
Small Business Commissioner. The Small Business Commissioner
Act 2003 (Vic) does not provide the Victorian Small Business
Commissioner an explicit power to require businesses to provide
information in relation to a dispute. In 2013-14, 51.7 per cent19 of
respondent parties to general business dispute applications (as opposed to
applications specifically relating to its other dispute resolution functions
such as retail and farm mediation) refused to engage with the Office of the
Victorian Small Business Commissioner. Including all dispute
applications, this response rate is better, with around 20 per cent
respondents which refused to engage with the Office. Applying this rate to
the Ombudsman's ADR service under this option, at a minimum, half of
the cases dealt with in the pre-mediation phase would not be resolved.
This would subsequently reduce the number of cases proceeding through
to mediation. Without the ability to incentivise parties to discuss the issue,
the Ombudsman's ability to resolve disputes at an early stage is limited.
19 Victorian Small Business Commissioner, 2013, Annual Report 2013-14, p 21.
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Regulation Impact Statement
RIS Question 5: Consultation
10.198 Treasury has undertaken two interactive formal public
consultation processes, in addition to ongoing stakeholder discussions, on
the scope and powers of the Ombudsman.
• A policy discussion paper on the broad scope and powers of
the Ombudsman role (May 2014);
• Exposure draft legislation establishing the role and
specifying the functions and powers of the Ombudsman
(March-April 2015).
Policy discussion paper
10.199 Preliminary discussions were held in February 2014 with the
Australian Small Business Commissioner, the Australian Competition
and Consumer Commission, the Commonwealth Ombudsman, the
four state-based small business commissioners, and state and territory
government officials to seek their high level views on the scope of the
functions of the Ombudsman.
10.200 Feedback from the preliminary consultations was used to
develop a discussion paper on the nature and scope of the four key
responsibilities of the Ombudsman outlined in the Government's
election commitment and how to best provide the Ombudsman with
appropriate powers to deliver benefits to Australian small businesses.
On 30 April 2014, the Minister for Small Business released the
discussion paper inviting interested stakeholders to put forward their
views on the role.
10.201 Recognising that many stakeholders, particularly small
businesses, are time-poor, interested parties were invited to provide views
on issues raised in the discussion paper in one of two ways. A formal
written submission could be provided, or a brief comment could be
submitted through an online form on the Treasury website. The paper was
also published on the Business Consultation Website available through
business.gov.au.
10.202 Submissions on the discussion paper closed on 23 May 2014;
53 submissions were received. These submissions, along with a summary
of the issues raised, were published on the Treasury website.
10.203 Treasury officials also conducted a series of detailed,
one-on-one, meetings with 30 targeted stakeholders in early May to
discuss their view directly. Meetings were held in Canberra, Sydney,
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Melbourne and via teleconference. These stakeholders are listed in
Appendix A. Treasury also engaged with its portfolio agencies to engage
with existing small business consultative mechanisms, including the
Australian Competition and Consumer Commission's Small Business
Consultative Committee.
Exposure draft legislation
10.204 Following the discussion paper consultations, on 18 August
2015, the Government announced20 its chosen model for the scope of the
Ombudsman's functions, confirming the Ombudsman would be a:
• Commonwealth-wide advocate for small businesses and
family enterprises;
• Concierge for dispute resolution service; and
• Contributor to the development of small business friendly
Commonwealth laws and regulations.
10.205 The Ombudsman would also link with the Government's single
business service to help small businesses easily find out about other
Government services and programmes, including general business advice.
10.206 Draft legislation, detailing specific powers for the role, was
subsequently developed. Treasury conducted a public consultation process
on the exposure draft of the Australian Small Business and Family
Enterprise Ombudsman Bill (Bill) between 11 March and 7 April 2015.
Similar to the engagement mechanisms used during the policy discussion
paper consultation process, the Treasury invited written submissions from
stakeholders on the provisions in the Bill. Treasury received 44 written
submissions and held face to face meetings and teleconferences with
43 organisations.
10.207 Submissions unanimously supported the establishment of the
Ombudsman. Comments touched on both specific provisions in the
legislation and broader implementation and operational issues. Concerns
extended to the definition of small business; the advocacy function;
referral mechanisms of disputes and scope of the Ombudsman's own
dispute advice; the definition of agency; the Ombudsman title; and
governance arrangements.
20 The Hon Bruce Billson MP, Media Release, Small Business Assistance to be Strengthened,
issued 18 August 2014. Available at:
http://bfb.ministers.treasury.gov.au/media-release/045-2014/.
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10.208 Stakeholder feedback from the policy discussion paper and
exposure draft legislation consultation processes through this process has
been incorporated under discussion on policy options.
RIS Question 6: What is the best option from those you have
considered
10.209 The preferred option is that the Government establish the
Ombudsman in accordance with Option 2 as outlined under RIS
Question 3. This option provides a net economic benefit of $18,208,682
per annum.
10.210 A thorough review and consultation process has resulted in a
number of suggestions of how to best implement the Government's
election commitment to transform the Australian Small Business
Commissioner into the Australian Small Business and Family Enterprise
Ombudsman.
10.211 The proposed functions and powers outlines in the Bill will
improve the operating environment for small business; reduce
unnecessary compliance burdens; and assist small business and family
enterprises to resolve disputes early, helping to preserve the business
relationship and avoid the high costs of court proceedings.
10.212 Stakeholders supported the establishment of a statutory position
with powers to equip the Ombudsman to achieve genuine outcomes for
small businesses. Stakeholders also supported the Ombudsman to
advocate small business concerns to the Government and provide dispute
resolution support.
RIS Question 7: How will you implement and evaluate your
chosen option?
Implementation
10.213 The Australian Small Business and Family Enterprise
Ombudsman Bill will establish the Ombudsman role. An exposure draft of
this legislation was released for public consultation between 11 March and
7 April 2015. Feedback on the exposure draft has been taken into account
in finalising the Bill. The office of the Ombudsman will commence
operations on proclamation of the Act. It is expected that this will take
place in the second half of 2015.
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10.214 The Office of Ombudsman will build on the existing Office of
the Australian Small Business Commissioner. Sufficient accommodation
(based in Canberra) is available within the existing Office of the
Commissioner to provide for the expanded activities. Work has
commenced on developing new branding and marketing for the new role.
A communications strategy, particularly in the first year of operation, will
be developed to actively engage with stakeholders to build awareness and
understanding of the scope of the role. The existing Australian Small
Business Commissioner Information Line, delivered through the
Department of Industry and Science's single business service will be
revised to meet the requirements for the Ombudsman.
10.215 The Office of the Commissioner does not provide an ADR
service. As the Ombudsman's ADR service must be at arm's-length, the
office will manage a procurement process to develop an outsourced
provider arrangement. This office of the Ombudsman will be able to build
on the Dispute Assist tool developed by the Australian Small Business
Commissioner to help small businesses identify what existing ADR
providers they could approach for support. The Office will also develop
MoUs with existing service providers to ensure smooth referral of matters.
Evaluation
10.216 The Bill includes provisions for the Ombudsman's functions to
be formally reviewed at regular intervals. The review must consider:
• the kinds of assistance requested during the period being
reviewed;
• whether the assistance given was convenient and effective for
the operators of small businesses and family enterprises who
requested assistance;
• whether amendment of the Act is needed to more
conveniently and effectively assist the operators of small
businesses and family enterprises.
10.217 The Minister must appoint a suitably qualified person to conduct
the review. This person must have sufficient independence from the
Ombudsman, the Minister and the Department to conduct the review
impartially.
10.218 The Bill states that the first review must be completed, and a
written report given to the Minister, no later than 30 June 2017.
Subsequent reviews must be conducted every four years. A copy of the
review must be tabled in Parliament.
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Appendix A
Consultation on April 2014 Small Business and Family Enterprise
Ombudsman Discussion Paper
Table 10.10: Organisations which provided a submission
Accord Group
Australasian Association of Convenience Stores
Australia Marketing Pty Ltd
Australian and New Zealand Ombudsman Association
Australian Automotive Dealer Association
Australian Bankers' Association Inc.
Australian Chamber of Commerce and Industry
Australian Chamber of Fruit and Vegetable Industries Limited
Australian Finance Conference
Australian Motor Industry Federation
Australian Newsagents' Federation
Australian Sporting Goods Association Inc.
Business Enterprise Centres of Australia
Business SA
Combined Small Business Alliance of WA
Commonwealth Ombudsman
Council of Small Business of Australia
CPA Australia
Dwyer Lawyers
Energy and Water Ombudsman (Victoria)
Financial Ombudsman Service
Franchise Council of Australia
Franchwise
Housing Industry Association
Independent Contractors Australia
Institute of Public Accountants
Insurance Council of Australia
International Ombudsman Institute
Intuit Inc.
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Table 10.10: Organisations which provided a submission (continued)
Law Council of Australia
Law Society of New South Wales
LEADR
Mazzarol, Professor Tim
National Farmers' Federation
Negocio Resolutions
News Corp Australia
NSW Business Chamber
NSW Small Business Commissioner
Pallet Loss Prevention Pty Ltd
Public Transport Ombudsman
RD Williams Pty Ltd
Restaurant & Catering Industry Association
Small Business Association of Australia
South Australian Small Business Commissioner
Tasmanian Department of State Growth (formerly Department of Economic Development,
Tourism and Arts)
Telecommunications Industry Ombudsman
Tolling Customer Ombudsman
Victorian Department of State Development, Business and Innovation
Victorian Ombudsman
Victorian Small Business Commissioner
WA Small Business Development Corporation
Table 10.11: Organisations which participated in targeted meetings
Organisation
Attorney General's Department
Australasian Association of Convenience Stores
Australian and New Zealand Ombudsman Association
Australian Chamber of Commerce and Industry
Australian Motor Industry Federation
Australian Newsagents' Federation
Australian Retailers Association
Business Council of Australia
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Table 10.11: Organisations which participated in targeted meetings (continued)
Organisation
Business Enterprise Centres Australia
Carix
COSBOA
CPA Australia
Department of Agriculture
Department of Tourism, Major Events, Small Business and the Commonwealth Games
(QLD)
Family Business Australia
Financial Ombudsman Service
FINH
Franchise Council of Australia
Independent Contractors Australia
Institute of Public Accountants
LEADR
NSW Small Business Commissioner
Post Office Agents Association Limited
Restaurant and Catering Industry Association
Shopping Centre Council of Australia
Small Business Association of Australia
Small Enterprise Association of Australia and New Zealand
SME Association of Australia
Telecommunications Industry Ombudsman
The Accord Group
Consultation on exposure draft legislation
Table 10.12: Formal submissions
1 ACT Civil and Administrative Tribunal
2 Astroglide Pty Ltd (CONFIDENTIAL SUBMISSION)
3 Australian and New Zealand Ombudsman Association
4 Australian Automotive Dealer Association Ltd
5 Australian Bankers Association Inc
6 Australian Dairy Farmers
7 Australian Finance Conference Ltd
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Table 10.12: Formal submissions (continued)
8 Australian Motor Industry Federation
9 Australian National Retailers Association
10 Australian Securities and Investments Commission (ASIC)
11 Australian Taxation Office (CONFIDENTIAL SUBMISSION)
12 Australian Women's Chamber of Commerce and Industry
13 AUSVEG
14 Customs and Border Protection
15 Deloitte Private Pty Ltd
16 Department of Finance
Department of Foreign Affairs and Trade (Trade, Investment and Economic Diplomacy
17
Division)
18 Department of Infrastructure and Regional Development
19 Energy & Water Ombudsman NSW
20 Fair Work Ombudsman
21 Financial Ombudsman Service
22 Franchise Council of Australia
23 Insurance Council of Australia
24 Intuit Australia
25 Kirit Ruparelia
26 Law Council of Australia (SME Committee)
27 Ufuomanefe Levy (Nefe's Family Daycare)
28 LEADER and IAMA
29 Mediator Standards Board
30 Motor Trades Association Queensland
31 Mr Hamilton Dwight Walker
32 National Farmers Federation
33 NSW Small Business Commissioner
Queensland Department of Tourism, Major Events, Small Business and the
34
Commonwealth Games
35 Queensland Energy and Water Ombudsman
36 Restaurant and Catering Australia
37 Shopping Centre Council of Australia
38 South Australia Chamber of Commerce and Industry
39 South Australia Small Business Commissioner
40 Telecommunications Industry Ombudsman (TIO)
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Table 10.12: Formal submissions (continued)
41 Victorian Energy and Water Ombudsman
42 Victorian Small Business Commissioner
43 WA Small Business Commissioner
44 Winemakers Federation of Australia
Table 10.13: Face to face and teleconference consultations
Meeting location/
Organisation
teleconference
1 Australasian Association of Convenience Stores Teleconference
2 Australia and New Zealand Ombudsman Association /
Melbourne
Telecommunications Industry Ombudsman
3 Australian Bankers' Association Ltd Sydney
4 Australian Capital Territory Economic Directorate Canberra
5 Australian Chamber of Fruit and Vegetable Industries Brisbane
6 Australian Competition and Consumer Commission Teleconference
7 Australian Food and Grocery Council Teleconference
8 Australian Retailers' Association Sydney
9 Australian Women's Chamber of Commerce and Industry Teleconference
10 Business Enterprise Centres Australia Teleconference
11 CPA Australia Melbourne
12 Family Business Australia Melbourne
13 Financial Ombudsman Service Teleconference
14 Franchise Council of Australia Melbourne
15 Fully Integrated Family Business (FINH) Pty Ltd Teleconference
16 Independent Contractors Australia Teleconference
17 Inspector General of Taxation Sydney
18 Institute of Public Accountants Melbourne
19 LEADR -- Association of Dispute Resolvers Sydney
20 National Farmers Federation Canberra
21 National Measurement Institute Sydney
22 National Retail Association Teleconference
23 New South Wales Business Chamber Sydney
24 New South Wales Ombudsman Teleconference
25 New South Wales Small Business Commissioner Sydney
26 Northern Territory Department of Business Teleconference
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Table 10.13: Face to face and teleconference consultations (continued)
27 Office of Parliamentary Counsel; Department of the Prime
Minister and Cabinet; Office of the Commonwealth
Canberra
Ombudsman; Office of the Australian Small Business
Commissioner (joint meeting)
28 Post Office Agents Association Ltd Teleconference
29 Queensland Chamber of Commerce and Industry Brisbane
30 Queensland Department of Tourism, Major Events, Small
Brisbane
Business and the Commonwealth Games
31 Restaurant and Catering Industry Association Teleconference
32 Shopping Centre Council of Australia Sydney
33 Small Business Association Australia Teleconference
34 Small Enterprise Association of Australia and New Zealand Sydney
35 South Australian Department for Manufacturing, Innovation,
Teleconference
Trade, Resources and Energy
36 South Australian Small Business Commissioner Teleconference
37 Tasmanian Department of Economic Development Teleconference
38 Victorian Department of State Development, Business and
Innovation and Victorian Small Business Commissioner (joint Melbourne
meeting)
39 Victorian Employers' Chamber of Commerce and Industry Melbourne
40 Victorian Farmers' Federation Melbourne
41 Victorian Ombudsman Melbourne
42 Victorian Small Business Commissioner Melbourne
43 West Australian Small Business Commissioner Teleconference
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Appendix B
Activities and Activities and powers for status quo, option 2, option 3
Function Status quo Option 2 -- Australian Small Business and Option 3 -- Australian Small Business
Family Enterprise Ombudsman (the and Family Enterprise Ombudsman --
(Australian Small Business
Ombudsman) -- heavier powers lighter powers
Commissioner)
Commonwealth- Activities Activities Activities
wide advocate Advocate and represent Undertake research and inquiries into As per option 2.
for small small business and family legislation, policies and practices affecting
businesses and enterprise interests and small businesses and family enterprises;
family concerns to the Australian Powers and responsibilities to be legislated
enterprises Report and gives advice to the Minister on
Government both at the those matters; As per option 2 except for the following
Minister's request and on powers that would not be provided:
own initiative. Contribute to inquiries by others into those
matters; Ability to require information from parties
Make representations on (as a penalty there would be an option to
behalf of small businesses to Contribute to developing national strategies publicly name unco-operative parties).
appropriate bodies. on those matters;
Powers Review proposals relating to those matters
and advises the Minister on them;
Nil.
Promote best practice in dealing with small
businesses and family enterprises.
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Function Status quo Option 2 -- Australian Small Business and Option 3 -- Australian Small Business
Family Enterprise Ombudsman (the and Family Enterprise Ombudsman --
(Australian Small Business
Ombudsman) -- heavier powers lighter powers
Commissioner)
Powers and responsibilities to be legislated
• Ability to investigate 'relevant legislation,
policies and practices' (own-motion or on
request of Minister) relating to:
- Commonwealth and Territory
agencies;
- constitutional corporations ;
- any entity engaged in international
trade or commerce;
- any entity engaged in trade or
commerce among the States, within a
Territory, between Territories or
between a state and a territory;
- any entity in relation to insurance,
banking, telecommunications,
copyright, patents, designs or
trademarks; and
- any entity that is operated by those
living in or is located in a Territory.
• Power to conduct, and take evidence in,
hearings.
• Ability to require a person to produce
information or documents or attend
hearings, with at least 10 business days'
notice. Can apply a financial penalty of
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Regulation Impact Statement
Function Status quo Option 2 -- Australian Small Business and Option 3 -- Australian Small Business
Family Enterprise Ombudsman (the and Family Enterprise Ombudsman --
(Australian Small Business
Ombudsman) -- heavier powers lighter powers
Commissioner)
30 penalty units for non-compliance.
• Power to seek external advice and engage
external consultants.
• Prepare reports for presentation to the
Minister.
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Function Status quo Option 2 -- Australian Small Business and Option 3 -- Australian Small Business
Family Enterprise Ombudsman (the and Family Enterprise Ombudsman --
(Australian Small Business
Ombudsman) -- heavier powers lighter powers
Commissioner)
Concierge for Activities Activities Activities
dispute Provide information, Respond to requests for assistance by an As per option 2.
resolution and guidance materials and operator of a small business or family
operation of a Powers and responsibilities to be
support to small businesses enterprise.
mediation legislated
and family enterprises. Provide information, guidance materials and
service support to small businesses and family As per option 2 except for the following
Refer complaints to existing powers that would not be provided:
enterprises.
dispute resolution providers
Refer complaints to existing dispute Ability to require information from parties
where appropriate.
resolution providers where appropriate. in dispute (can apply a financial penalty for
Make preliminary inquiries Refer complaints to own dispute resolution non-compliance).
in response to complaints. service where appropriate.
Reject/refer complaints which are vexatious Ability to publicly name parties which
Powers refuse to participate or withdraw from the
or better dealt with by another entity.
Nil. recommended ADR process.
Powers and responsibilities to be legislated
Must transfer a request for assistance to
another Commonwealth, state or territory
agency, if that agency could deal with the
request and it would be more effective and
convenient for that agency to do so.
May work co-operatively with other agencies
of the Commonwealth, the States and the
Territories if it is more convenient and
effective to do so.
May recommend that an ADR process be
undertaken. If an entity does not undertake
that process, or withdraws from that process,
108
Regulation Impact Statement
Function Status quo Option 2 -- Australian Small Business and Option 3 -- Australian Small Business
Family Enterprise Ombudsman (the and Family Enterprise Ombudsman --
(Australian Small Business
Ombudsman) -- heavier powers lighter powers
Commissioner)
the Ombudsman may publish that fact.
Ability to require information from parties in
dispute (can apply a financial penalty for
non-compliance).
May keep a list of ADR providers.
May set appropriate fees for own dispute
resolution processes, including cancellation
fees.
Must not directly conduct ADR process.
Ministerial Activities Activities Activities
Direction Report directly to the Report regularly to the Minister on significant As per option 2.
Minister on significant small small business issues. Powers and responsibilities to be
business issues. Develop and report on an annual work legislated
Powers program. As per option 2.
Nil. Report on outcomes of research and inquires
to Minister.
Powers and responsibilities to be legislated
Conduct inquiries into issues at the direction
of the Minister and prepare reports for
presentation to the Minister.
For reports prepared under Ministerial
direction, the Minister will be required to
table reports in each House of Parliament
within 25 sitting days after the Minister
109
Australian Small Business and Family Enterprise Ombudsman Bill 2015
Australian Small Business and Family Enterprise Ombudsman (Consequential and Transitional Provisions) Bill 2015
Function Status quo Option 2 -- Australian Small Business and Option 3 -- Australian Small Business
Family Enterprise Ombudsman (the and Family Enterprise Ombudsman --
(Australian Small Business
Ombudsman) -- heavier powers lighter powers
Commissioner)
receives a report.
Allowance for right of reply for parties
named in the finalisation of reports to the
Minister.
Provide an annual report to Parliament
through the Department (Treasury).
Appointment Employed under a contract Activities Activities
Powers Not applicable Not applicable
Nil. Powers and responsibilities to be legislated Powers and responsibilities to be
Statutory appointment by the legislated
Governor-General. As per option 2.
Minister may appoint an acting Ombudsman,
which may be a public servant, as required.
Up to 5 year term, eligible for re-appointment
by the Governor-General.
Termination by Governor-General under
usual terms for statutory appointments.
110
Regulation Impact Statement
Appendix C
Case volumes process in the Office of the Australian Small Business and
Family Enterprise Ombudsman
Complaints and enquires
Source Total received
Commonwealth Ombudsman (Cat 2 referrals) 242
Australian Small Business Commissioner (Cwth) 414
Interstate/National disputes (from state SBCs)
46
International disputes (from state SBCs) 23
Australian Competition and Consumer Commission 912
Total 1,637
Provided advice or referred to 75%
existing complaints body
Total 1228
25%
Referred to Ombudsman's own ADR service
Total 409
Lighter ADR: 13% 53
Heavier ADR (eg mediation): 87% 356
Parties do not reach agreement 20% 80% Parties reach agreement
Total 82 Total 327
111
Chapter 11
Statement of Compatibility with Human
Rights
Prepared in accordance with Part 3 of the Human Rights
(Parliamentary Scrutiny) Act 2011
Australian Small Business and Family Enterprise Ombudsman Bill 2015
11.1 This Bill is compatible with the human rights and freedoms
recognised or declared in the international instruments listed in section 3
of the Human Rights (Parliamentary Scrutiny) Act 2011.
Overview
11.2 The purpose of the Bill is to establish the Australian Small
Business and Family Enterprise Ombudsman to advocate for, and give
assistance to, small businesses and family enterprises.
Human rights implications
11.3 This Bill does not engage any of the applicable rights or
freedoms.
Conclusion
11.4 This Bill is compatible with human rights as it does not raise any
human rights issues.
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Index
Australian Small Business and Family Enterprise
Ombudsman Bill 2015
Bill reference Paragraph number
Part 1, section 2 3.3
Part 1, section 4 3.9
Part 1, section 5 3.8
Part 1, section 6 3.10
Part 1, section 7 3.11
Part 1, section 8 3.12, 3.14
Part 1, section 9 3.15
Part 1, subsection 9(2) 3.17
Part 1, section 11 3.19
Part 2, Division 1, section 16 2.4, 4.10
Part 2, Division 1, section 17 4.7
Part 2, Division 1, section 18 4.7
Part 2, Division 1, section 20 4.9
Part 2, Division 1, section 21 4.12
Part 2, Division 1, section 22 4.20
Part 2, Division 1, section 23 4.11
Part 2, Division 2, section 24 4.13
Part 2, Division 2, subsection 24(2) 4.14
Part 2, Division 2, section 25 4.16
Part 2, Division 2, section 26 4.16
Part 2, Division 2, section 28 4.19
Part 2, Division 2, section 29 4.17
Part 2, Division 2, section 30 4.18
Part 2, Division 2, subsection 30(2) 4.18
Part 2, Division 2, section 32 4.15
Part 3 Division 2, section 39, Part 3, Division 3, section 54 and 2.4
Part 4, Division 4, section 78
Part 2, Division 3, section 33 4.21
Part 2, Division 3, section 34 4.22
115
Australian Small Business and Family Enterprise Ombudsman Bill 2015
Australian Small Business and Family Enterprise Ombudsman (Consequential and Transitional
Provisions) Bill 2015
Bill reference Paragraph number
Part 3, Division 1, section 35 2.3, 5.2
Part 3, Division 1, section 35 and Part 4, Division 1, section 65 2.2
Part 3, Division 1, subsection 35(b) 2.9
Part 3, Division 1, subsection 35(c) 2.7
Part 3, Division 1, subsection 35(d) 2.7
Part 3, Division 1, subsection 35(e) 2.8
Part 3, Division 1, subsection 35(f) 2.9, 2.10
Part 3, Division 1, subsection 35(g) 2.9
Part 3, Division 2, section 36 5.3
Part 3, Division 2, section 37 5.4
Part 3, Division 2, section 38 5.5
Part 3, Division 2, section 39 5.6
Part 3, Division 2, section 40 5.7
Part 3, Division 2, section 41 5.8
Part 3, Division 3, Subdivision A, subsection 42(2) 5.11
Part 3, Division 3, Subdivision A, paragraph 42(2)(a); 5.14
Part 3, Division 3, Subdivision C, section 44
Part 3, Division 3, Subdivision A, subsection 42(3) 5.11
Part 3, Division 3, Subdivision A, subsection 42(4) 5.11
Part 3, Division 3, Subdivision A, subsection 42(5) 5.12
Part 3, Division 3, Subdivision B, section 43 5.13
Part 3, Division 3, Subdivision C, section 45 5.13
Part 3, Division 3, Subdivision C, section 46 5.15
Part 3, Division 3, section 47 5.16
Part 3, Division 3, Subdivision C, section 48 5.17
Part 3, Division 3, section 50 5.19
Part 3, Division 3, Subdivision C, section 51 5.20
Part 3, Division 3, Subdivision C, section 52 5.21
Part 3 Division 3 Subdivision C, subsections 53(1) and (3) 5.22
Part 3, Division 3, Subdivision C, subsection 53(2) 5.22
Part 3, Division 3, Subdivision C, section 54 5.23
Part 3, Division 3, Subdivision D, section 55 5.24
Part 3, Division 3, Subdivision D, subsection 56(2) 5.25
Part 3, Division 3, Subdivision D, subsection 56(3) 5.26
Part 3, Division 3, Subdivision D, paragraphs 56(2)(a) to (b) 5.25
Part 3, Division 3, Subdivision D ,subsection 56(4) 5.26
116
Index
Bill reference Paragraph number
Part 3, Division 3, Subdivision D, subsection 56(5) 5.25
Part 3, Division 4, section 57 5.27
Part 3, Division 4, section 58 5.28
Part 3, Division 5, section 59 5.29
Part 3, Division 5, section 60 5.30
Part 3, Division 6, section 61 5.31
Part 3, Division 6, section 62 5.32
Part 3, Division 6, section 64 5.34
Part 4, Division 1, section 65 2.3, 6.2
Part 4, Division 1, subsection 65(b) 2.7
Part 4, Division 1, subsection 65(c) 2.7
Part 4 Division 1, subsection 65(d) 2.8
Part 4, Division 1, subsection 65(e) 2.10
Part 4, Division 1, subsection 65(f) 2.9
Part 4, Division 2, section 66 6.3
Part 4, Division 2, section 68 6.5, 6.14
Part 4, Division 2, section 69 6.5, 6.7, 6.16
Part 4, Division 2, section 70 6.7, 6.8
Part 4, Division 3, section 71 6.5, 6.9, 6.10, 6.20, 6.26
Part 4, Division 3, paragraph 71(2)(b) 1.15
Part 4, Division 3, section 72 6.10, 6.19
Part 4, Division 3, subsection 72(1) 1.15
Part 4, Division 3, section 73 6.11, 6.24
Part 4, Division 3, subsection 73(1) 1.15
Part 4, Division 3, subsection 73(2) 3.6
Part 4, Division 3, section 74 6.25
Part 4, Division 4, section 75 6.13, 6.29
Part 4, Division 4, section 76 6.14, 6.30
Part 4, Division 4, section 77 6.15, 6.31
Part 4, Division 4, section 78 6.16, 6.21, 6.32
Part 5, Division 1, section 79 2.4, 7.2
Part 5, Division 2, section 80 7.3
Part 5, Division 2, section 82 7.5
Part 5, Division 2, section 83 7.6
Part 5, Division 2, section 86 7.7
117
Australian Small Business and Family Enterprise Ombudsman Bill 2015
Australian Small Business and Family Enterprise Ombudsman (Consequential and Transitional
Provisions) Bill 2015
Bill reference Paragraph number
Part 5, Division 2, section 87 7.8
Part 5, Division 2, section 88 7.8
Part 5, Division 2, section 89 7.8
Part 5, Division 2, section 90 7.9
Part 5, Division 4, section 92 7.11
Part 5, Division 4, section 93 7.12
Part 5, Division 4, section 94 7.13
Part 5, Division 4, section 95 7.15
Part 5, Division 4, section 96 7.16
Section 2 8.14
Australian Small Business and Family Enterprise
Ombudsman (Consequential and Transitional Provisions) Bill
2015
Schedule 1: Consequential amendments
Bill reference Paragraph number
Item 1 8.7 to 8.13
Schedule 2: Transitional provisions
Bill reference Paragraph number
Item 1 9.4
118