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Reprieve for small business

SMALL retailers have won promises of increased protection from big business as both sides of politics sought to champion the cause of independent traders during the culmination of a bitter deregulation debate.

On June 23 the WA Government announced it was introducing legislative changes to protect small businesses as part of its long-awaited retail trading hours policy.

The move was aimed at softening Labor’s decision to partially deregulate trading hours from 2005 – offering later weeknight hours to big retailers but keeping Sunday trading firmly off the agenda.

The WA Government’s proposed legislation includes new provisions to protect small retailers from unconscionable conduct as well as moves to change commercial tenancy legislation.

Concern about landlords forcing small business to open longer hours has been a significant hurdle to retail deregulation.

The move comes a week after the Liberal Party launched its small business policy platform, which included a raft of proposals aimed at increasing small retail businesses’ ability to compete, and contained similar elements to the Labor Government’s Small Business Protection Legislative Package.

The WA Government intends to amend the Fair Trading Act 1987 to mirror section 51AC of the Trade Practices Act 1974 as well as amending the Commercial Tenancy (Retail Shops) Act 1985 and allowing the Commercial Tribunal to have jurisdiction to hear retail tenancy disputes regarding unconscionable conduct.

The retail trading hours debate hit a climax this month as the Government neared a decision on the matter, and the issue has brought to light the market gains by national retailers, particularly supermarket chains, in deregulated environments.

The Liberal Party’s policy was formed largely on the findings of a report by economist Gavan Forster who independently researched deregulated retail environments in Australia and overseas.

Mr Forster, a director of the Master Builders’ Association who conducted the review as part of his external consulting work, said that as an economist it made sense to support deregulation, however, after three months of examining the issue he found deregulated retail trading clearly hindered competition.

“From an economic point of view you would have to say deregulation is what should happen but when you put that into practice you get market failure,” he said.

“If you look at the whole approach to micro-economic reform, which was a feature in the 1990s, some sectors lose out. The rural sector, for example, having no tariffs has had a negative impact. Milk deregulation is exactly the same.”

Mr Forster said his investigations in the area found a strong correlation between deregulation of trading hours and an increase of market share by the major supermarket chains.

“To me the issue became not a question of deregulation but of market power,” he said.

“What was very interesting was that in Sydney, in particular, Coles and Woolworths do not really compete with each other. Many shopping centres only have the one operating in them.

“The other thing that surprised me was that WA small business is the fastest growing sector in Australia in terms of numbers of new businesses and retail employment growth. That is retail specific and it has happened in a regulated environment.”

The Government has had significant input from retail groups and its provisions to protect small businesses are a clear indication of concerns about market power.

However, deputy Opposition leader Dan Sullivan was surprised by the Government’s announcement and said the issue would be hotly contested at election time.

“They haven’t delivered what the consumer wants and they haven’t even been able to do that before the next election,” he said.

“What they’ve done is build a platform for small business groups to bat them on the head with come election time. They have broken an election promise.”

Mr Sullivan said the Liberal Party would oppose any moves to change WA’s retail trading hours.

Western Australian Independent Grocers’ Association president John Cummings said the Government’s decision to partially deregulate trading hours from 2005 was difficult to support.

“It is virtually impossible for someone to predict the economic and social conditions in two years time,” he said. “Partial deregulation, which is mid-week trading, would only satisfy two people – Coles and Woolies. I fail to see what that achieves.”

Chamber of Commerce and Industry of WA chief executive Lyndon Rowe said the Gallop Government’s proposal was the worst possible outcome.

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