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Australia’s economy is restructuring in a way no other economy is

Friday, September 08, 2017

We don’t know if the two are related, but

Australia’s economic growth is unexpectedly surging beyond expectations, and
The unfair contract protections for small business people are really starting to kick in.
Whether the two issues are connected or not, there’s no question that Australia’s economic structure is undergoing reform in a way not happening in any other economy.

The small business unfair contract laws are globally unique from what we can see. The impact is significant. Take just one example. The banks have been forced to rewrite their small business finance contracts.

And now the ACCC has launched prosecution of the waste management company JJ Richards. The ACCC alleges that JJ Richards’ standard form small business contracts contain eight unfair contract terms including:
  • binding customers to subsequent contracts unless they cancel the contract within 30 days before the end of the term;
  • allowing JJ Richards to unilaterally increase its prices;
  • removing any liability for JJ Richards where its performance is “prevented or hindered in any way”;
  • allowing JJ Richards to charge customers for services not rendered for reasons that are beyond the customer’s control;
  • granting JJ Richards exclusive rights to remove waste from a customer’s premises;
  • allowing JJ Richards to suspend its service but continue to charge the customer if payment is not made after seven days; and
  • creating an unlimited indemnity in favour of JJ Richards.
Frankly, it’s staggering to discover that these sorts of terms exist in contracts. They breach basic concepts of what a contract is. What’s now happening, however, is that the ACCC is structured to chase down unfair contract breaches. They are clearly very serious. This is transformational.

What we are witnessing is a huge shift in the power imbalance favouring big over small businesses. The balance is levelling out. Given that small businesses make up some 98 per cent of businesses in Australia this is a major structural change to the Australian economy. Over time, it should result in a more competitive and vibrant economy.

We’re mighty proud that we were the key advocate over almost a decade pushing for the laws. But there’s a significant  hole in the laws. Governments do not have to comply with the laws. They are excluded.

Ha! Looks like we’ve another long campaign to conduct. What’s good for the private sector must be applied to government as well!
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