Advocating for small businesses and family enterprise

Discussion paper | April 2016

© Commonwealth of Australia 2016

ISBN 978-1-925220-85-8

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Contents

Foreword ..................................................................................................................... 1

New advocacy powers ................................................................................................ 3

Inquiries and research ................................................................................................ 4

Working cooperatively with other arms of government ........................................... 5

Contributing to other inquiries and reviewing proposals ........................................ 6

Taking steps to promote best practice ...................................................................... 7

Other things you may want to raise with us ............................................................. 8

Next steps and how we will use your ideas .............................................................. 9

How to get involved .................................................................................................. 10

Share your ideas via our website .......................................................................... 10

Write to us ............................................................................................................ 10

Meet with us ......................................................................................................... 10

1

Foreword

I am honoured to have been appointed as the inaugural

Australian Small Business and Family Enterprise

Ombudsman.

A critical function of this new role is to be an advocate for

small businesses and family enterprises – an independent

advocate that sits within Government, and is backed by

legislation with the power needed to effectively influence

the business community and lawmakers.

My previous experience, including as a small business

owner and working in industry associations representing

small businesses and family enterprises, has given me a keen appreciation for the issues faced

by the sector.

To build on this, and as the inaugural Ombudsman representing this important constituency,

I want to spend time listening to the sector about what they want from this role – what are the

key things you want us to take up on your behalf? I am asking businesses and their

representatives to come forward and tell us what they think the big issues are. We want small

businesses and family enterprises to tell us what they want us to focus on as their advocate.

This short Discussion Paper is aimed at providing some key information about our office and

getting the conversation started about what you want from this role. I hope to hear as many of

your views as possible to generate strong discussion and debate.

At the conclusion of this consultation, we will develop an advocacy agenda which will give a

picture of our focus going forward, and some of the key principles underpinning our work.

We will make this advocacy agenda publicly available on our website and it will reflect the

results of our discussions with the sector throughout this consultation period.

I encourage all small businesses and family enterprises to see myself and my office as their

conduit to Government. Even after this formal consultation period has closed, we will always

want to hear from small businesses about what they think we could be doing to provide better

support.

As a former small business owner and a person who has an enduring connection with small

businesses, I recognise that small businesses and family enterprises in Australia are ‘a broad

church’ with many different needs and interests. I will seek to bring together the multitude of

voices within the community and share with people their views and opinions on the important

small business issues affecting them.

I look forward to working with the sector and making a positive contribution to the business

environment across Australia.

Kate Carnell AO

The Australian Small Business and Family Ombudsman

3

New advocacy powers

The Ombudsman has a number of powers – backed up by legislation – to make it an effective

advocate for small businesses and family enterprises. The Australian Small Business and

Family Enterprise Ombudsman Act 2015 (the Act) was passed by the Parliament late last year

and sets out two key functions:

• To assist small businesses and family enterprises, and

• To advocate for small businesses and family enterprises.

This discussion paper is all about the advocacy function.

The Act sets out a number of different activities which the Ombudsman may conduct in

performing the advocacy function. Broadly these include powers to:

• Conduct research and inquiries

• Work cooperatively with other arms of government to develop national strategies

• Contribute to inquiries and review proposals, and

• Take steps to promote good business practice.

Each of these powers is discussed in the following pages, along with some questions we hope

will prompt your thinking about how the powers could be best put to use. The questions are

indicative only – you can prepare your comments or thoughts for us in whichever way is easiest

for you.

In addition to the above powers, the Minister may specifically refer matters to the Ombudsman

for inquiry and/or advice.

Australian Small Business and Family Enterprise Ombudsman - Discussion paper

4

Inquiries and research

A key power of the Ombudsman that is relevant to the advocacy function is the power to hold

inquiries into, or research, issues that affect small businesses or family enterprises. The

Ombudsman can make a decision about what to inquire into independently of Government. This

is an important aspect of the Ombudsman power to be an effective advocate for small

businesses and family enterprises.

For example, an inquiry into payment terms

One example of an issue that the Ombudsman could inquire into is payment terms for small

businesses. Many small businesses experience difficulty with cash flow when there is a long

time between invoicing and payment.

The Ombudsman is aware that this is a serious issue for many small businesses and family

enterprises. We want to use this consultation to understand more about how this issues effects

small business and family enterprise.

The Ombudsman will be sure to hear all relevant perspectives when conducting an inquiry. It is

important for the Ombudsman to work collaboratively with business (including industry

associations) and other Commonwealth and state government agencies, and any other person

or organisation with a perspective on an inquiry.

During an inquiry, the Ombudsman is likely to take steps such as meeting with stakeholders,

seeking written comments and submissions, and engaging online to ensure that all perspectives

are heard. The Ombudsman also has power under the legislation to require the production of

documents relevant to an inquiry. Such a power will help the Ombudsman to get to the bottom

of issues.

For example, a demand to provide a copy of any standard payment terms

To follow on from the previous example, if the Ombudsman was inquiring into payment terms,

this power may be used to ask a corporation to provide a copy of any standard payment terms

that they have in place for the small businesses with whom they engage.

At the conclusion of an inquiry, the Ombudsman can report to the Government (through the

Minister for Small Business) and make recommendations. Recommendations might be aimed at

the business community or the Government (including regulators).

Questions

We are keen to hear from businesses about how they think we should use this power.

1. What issues do you think the Ombudsman should decide to research or inquire into and

why?

2. What issues are the most critical for small business and family enterprise?

3. What small business and family enterprise issues aren’t getting enough attention from

Government?

Australian Small Business and Family Enterprise Ombudsman - Discussion paper

5

Working cooperatively with other arms of

government

The advocacy function includes the power to work cooperatively with other arms of government

to develop national strategies. This includes the ability to act as a coordination point for inquiries

conducted by multiple governments.

This is an especially important power when it comes to issues that the states are responsible

for, but which have national ramifications or significance. The Ombudsman can act as a unifying

force for change for small businesses and family enterprises.

For example, the rule against perpetuities

One issue which has been raised with us as an issue affecting family businesses that operate

through trusts is an old law called ‘the rule against perpetuities’. Without going into all the legal

detail, this rule can create red tape for businesses seeking to hand down their business through

the generations.

The laws relating to trusts are generally state laws. Some states have abolished the ‘rule

against perpetuities’ while other states haven’t.

If everybody agreed to work together, the Ombudsman could play a role in coordinating the

states working together on issues such as this to ensure that there is a national strategy for

dealing with the impact of this law on family businesses.

Questions

4. Are there any issues that you think would be well suited to a joint project between the

states and the Commonwealth that could be coordinated by the Ombudsman?

5. What small business or family enterprise issues would you like to see all the Governments

working together on?

Australian Small Business and Family Enterprise Ombudsman - Discussion paper

6

Contributing to other inquiries and

reviewing proposals

Another power of the Ombudsman is the power to contribute to other inquiries that are occurring

across Government. A related power is the power to review proposals put forward which impact

on small businesses and family enterprises.

This will be an important way for the Ombudsman to ensure that the voice of small business is

heard wherever relevant to policy processes and decisions across the whole of Government.

In many cases, the contributions that the Ombudsman makes to inquiries or proposals may be

principle based. For example, whatever the subject, we would like to see laws and regulations

designed with small business in mind – which means no unnecessary ‘red tape’. Another core

principle will be the importance of transitional arrangements and effective communication and

education for the business community about any changes to law or policy that will impact on

business.

For example, inquiry into intellectual property

The Productivity Commission is currently inquiring into the broad issue of intellectual property.

A draft report is due at the end of April 2016.

Intellectual property issues are critical for many small businesses. Australia’s intellectual

property system needs to be as simple and straightforward to use as possible, and should

reward creative and innovative activity from Australia’s small businesses.

The Ombudsman intends to participate in this inquiry by providing formal submissions to the

Productivity Commission following the release of its draft report.

Questions

6. What types of inquiries do you think we should focus on?

7. Are there any proposals that you are concerned about impacting small business or family

enterprise?

8. What do you think are the core principles that are relevant to various issues, which the

Ombudsman should adopt when advocating on behalf of small business?

Australian Small Business and Family Enterprise Ombudsman - Discussion paper

7

Taking steps to promote best practice

Another critical power that the Ombudsman has is the power to take steps to promote best

practice in interactions between small businesses and family enterprises, and certain arms of

government and other businesses.

There are many potential ways that this power could be used. It might be the case that after

inquiring into an issue, the Ombudsman considers that there are certain steps that could be

taken to promote best practice, and this power could be used to achieve that.

It is possible that just identifying what ‘best practice’ means in a certain context or industry will

help in promoting best practice.

Best practice is much broader than formal legislation and government policies.

For example, research into the characteristics of a model business

Research has been recently conducted into the characteristics of a model business. This

research drew on interviews with representatives from leaders across business and

government.

Understanding the characteristics of a model business can help in establishing best practice. It

is expected that this research will be especially useful in helping Governments identify best

practice in interacting with businesses.

More information about this research is on our website.

Questions

9. Are there particular issues relating to best practice for your industry or the small business

sector generally?

10. What is best practice for Government when engaging and communicating with small

business?

11. What steps could be taken to promote best practice among family enterprises when it

comes to issues like succession and management of a family owned business?

Australian Small Business and Family Enterprise Ombudsman - Discussion paper

8

Other things you may want to raise with us

For the purposes of this consultation, we would like you to raise with us any small business or

family enterprise issue you think needs attention.

We have discussed above some of our key new advocacy powers and we want to hear from

you about how you think we should use those powers.

There are some limits on what the Ombudsman can do, stemming from the Constitutional

constraints of being a Commonwealth body. However an important role for the Ombudsman is

building networks with state and territory counterparts and if we agree with you that an issue is

important, but we find we can’t pursue it ourselves, then we will raise it with the right person or

agency to make sure your voice is heard.

We would also like to hear from you on other broad issues relating to our office, small business

and family enterprise.

We want to be as accessible and effective as possible for small businesses and family

enterprises across Australia and we welcome your feedback on how we can achieve that while

we are establishing our office.

Questions

12. What are your expectations of the Ombudsman?

13. How can the Ombudsman be an effective channel for you to the whole of Government?

14. What mechanisms do you think we should be using to reach small business?

Australian Small Business and Family Enterprise Ombudsman - Discussion paper

9

Next steps and how we will use your ideas

At the close of the current consultation period, we will do a stocktake of all of the issues that

small businesses, family enterprises and their representatives have raised with us and prepare

our forward work plan. We will also provide some feedback on the issues raised with us.

Some issues we will inquire into, do research on, and take other steps to pursue. We intend to

start making a real difference right away.

There might be other issues that we can’t pursue right away, but which we keep a watching

brief on and consider inquiring into down the track.

We want to be as transparent as possible about our advocacy work, and so we plan to publish

an ‘advocacy agenda’ that will signal to the business community and others what our key areas

of focus will be, and the principles that we will adopt in our advocacy work.

This formal advocacy agenda will build on all the work we are doing in the interim.

Australian Small Business and Family Enterprise Ombudsman - Discussion paper

10

How to get involved

We want to hear all points of view within the community and from as many people as possible -

individuals, small businesses, industry associations, large firms – everyone!

We want to understand how you think the Ombudsman can best advocate for small business

and family enterprises in Australia.

There are a number of ways you can get involved.

Share your ideas via our website

• You can contribute your feedback online via our exciting and interactive new platform for

sharing ideas – thinkBIGsmallTALK. Any information available here can be seen and

commented on publicly. There is a link to the thinkBIGsmallTALK platform on our

homepage www.asbfeo.gov.au

Write to us

• You can write us an email, letter or formal written submission. These can be sent to

advocacy@asbfeo.gov.au (our preference) or our mailing address:

Australian Small Business and Family Enterprise Ombudsman

GPO Box 1791

Canberra City ACT 2601

Meet with us

• To register your interest in meeting with us, you can email us at advocacy@asbfeo.gov.au

with your name and location. We will try to meet with as many people and businesses as

possible during our consultation period.

…an important note about privacy

The Ombudsman is bound by the Privacy Act 1988 and the Australian Privacy Principles

contained in section 14 of that Act.

All information (including name and address details) contained in submissions may be made

available to the public on the Ombudsman’s website unless you indicate that you would like all

or part of your submission to remain in confidence. Legal requirements, such as those imposed

by the Freedom of Information Act 1982, may affect the confidentiality of your submission.