Nicholas Way

Now small business has been given a collective bargaining power it didn’t have before, and about time too.

Collective bargaining for SMEs

It’s a good reform and one the Howard Government deserves credit for. After a strong lobbying campaign by small business, the Government agreed to amend the Trade Practices Act 1974 to allow small businesses to collectively bargain more effectively with big business.

By doing so, the Government implicitly recognises a market reality – big business has more clout in any commercial negotiations with its smaller brethren. Pitting a small food manufacturer against Woolworths is a David v Goliath confrontation, except this time David is minus his sling shot.

Certainly big business was far from happy with the legislation. Its number one lobbyist, the Business Council of Australia, argued long and hard against the legislation, but the Government pushed ahead and rightly has enjoyed the political kudos in small business circles for doing so.

Just to make sure its message is being heard among small businesses, the Minister for Small Business and Tourism, Fran Bailey, recently launched a $2 million education campaign to inform them of these enhanced rights under the Trade Practices Act, which took effect from January 1 this year.

For example, small businesses will be able to begin collective bargaining in as little as 28 days, compared with six months before Parliament agreed to allow collective bargaining to be simpler, quicker and cheaper.

Her statement made it quite clear that this Government believed that when small businesses sat down at the negotiating table with the big end of town that the playing field was uneven. “Collective bargaining offers small businesses the ability to negotiate on a more equal footing with bigger businesses,” Bailey says.

There are other benefits to small businesses, as Bailey explains. “Collective bargaining saves small businesses money as they can pool their resources to negotiate with big business. Small businesses that have already expressed strong interest include farmers, motor traders, independent petrol station owners, newsagents and hoteliers.”

(See yesterday’s Briefing for the new transaction thresholds for some types of business.)

Bailey is quick to highlight the fact that Labor opposed the legislation; and it’s hard to understand why, for a party that espouses a political philosophy that should find it supporting the underdog. Your local service station owner isn’t in the same league as a Shell or BP and the legislation rightly recognises this.

That said, the collectivist thinking underpinning the legislation does raise an interesting question. A Howard Government that supports collective bargaining for small businesses because big business implicitly can’t be trusted also argues that individual workers are more than capable of negotiating their own working conditions.

Evidently what’s sauce for the goose isn’t sauce for the gander.