The calm before the storm? No major competition or consumer surprises in Budget 2014

Published On 14/05/2014 | By Melissa Monks | Consumer protection, Reform

The Abbott Government’s first Federal Budget brings no significant surprises from a competition and consumer law perspective.

The ACCC has secured a modest amount of additional funding, largely to assist it to “monitor prices and protect consumer interests in relation to the repeal of the carbon tax”. This additional funding of $68.5 million over four years from 2014-2015 is on top of the $25.3 million of extra funding provided recently through the Additional Estimates process in the wake of revelations that the regulator would run out of money by April 2014 after a $25 million loss in the last financial year. Although this year’s announcement does not compare with the generous $175 million ‘plus extra allowances for court cases’ that was provided to the ACCC in last year’s Budget, the competition and consumer regulator has fared far better than fellow regulators. For example:

  • the Australian Taxation Office and Australian Securities and Investment Commission have had their funding significantly reduced by $120 million and $140 million respectively;
  • the Office of the Australian Information Commissioner will cease to exist altogether and the Privacy Commissioner will take on its privacy functions as an independent statutory position within the Australian Human Rights Commission; and
  • the Government has temporarily reduced funding given to the media regulator the Australian Communications and Media Authority (AMCA).  The ACMA will lose $3.3m as a one off efficiency saving. This reduction in funds is in addition to the increase in the whole-of-government efficiency dividend from 2.25% under Labor to 2.5% under the Coalition.

However, the ACCC’s portfolio will increase. From July this year it will take on responsibility for private health insurance price monitoring functions as the Private Health Insurance Administration Council ceases to exist. At the same time the National Competition Council (NCC) Secretariat, with the role of providing administrative and research support to NCC Councillors, will also transfer to the ACCC. While the latter change raises concerns about the actual or apparent independence of the NCC from the ACCC, according to the Budget, appropriate safeguards will be established to retain the NCC’s independence.

Small business has emerged a winner, with the Government committing $1.4 million to implement its long stated commitment to extending the unfair terms regime under the Australian Consumer Law, allowing small business to access the same protections currently available only to consumers. This measure is not surprising, given Small Business Minister Bruce Billson has advocated for the reform since around 2008. However, the scope of the change remains uncertain until we see how “small business” will be defined – that is who is protected and who is not – which may depend on business turnover, contract value or some other measurement. This element of the Coalition’s plan is still yet to be revealed, as is the timing for implementation of the extension, although Budget funding is stated to commence from the 2014-2015 financial year.

Once this reform is introduced, it will have far-reaching consequences for the economy, giving small business a new weapon in dealings with larger companies and is likely to result in more disputes, litigation and regulatory action than has taken place to date. It will also mean that Australia is the only major jurisdiction to afford this form of contractual protection to business customers. Many large businesses will need to review and potentially redraft the range of standard form agreements they use to engage small business (contrasting with the Coalition’s pledge to cut red tape and the regulatory burden). This is a significant undertaking that businesses may be well minded to kick start now given the formal and real commitment by the Government in this Budget to implement reform.

The bonuses for small business don’t end there. The introduction of a Small Business and Family Enterprise Ombudsman to replace the Small Business Commissioner, to facilitate access to government small business programmes and support, contribute to making laws and regulations more small business friendly and act as a “concierge for dispute resolution” has the green light with the allocation of $8 million in funding over four years. Plus $2.8 million to establish a specialised unit within the Department of Finance to help small business to compete with large rivals and gain better access to securing government work.

Otherwise, there are no further Budget announcements impacting on the competition and consumer law landscape, making this a relatively low key Budget from this perspective. However, with reporting from the Government’s ‘root and branch review’ due early to mid next year and the ACCC’s financial position still not completely out of the red, this Budget may be the calm before a budgetary storm in 2015.

Photo credit: Image courtesy of Martin Howard (“Australian Coins and Notes Macro”) licensed under CC BY 2.0. Remixed to B&W and resized.  

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About The Author

Melissa Monks is a Special Counsel in the Melbourne office of King & Wood Mallesons specialising in competition and consumer protection, retail energy, food law and general commercial law.

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