The Productivity Commission of Australia rejected the demand of small business lobby groups to tighten laws pertaining to large shopping centre landlords as it found little evidence of fundamental problems in the retail tenancy market.
Releasing its draft report on the state-based retail tenancy leases legislation, the Productivity Commission said ”the case for greater prescriptiveness in tenancy legislation is weak”.
Instead, Commissioner Neil Byron, who was appointed to investigate the state-based retail tenancy legislation by former Treasurer Peter Costello in June following calls from smaller retailers, has called for ”nationally consistent” retail tenancy laws while improving transparency, disclosure and dispute resolution.
The draft report, which outlines five recommendations, is a blow for small businesses who have complained that landlords have excessive bargaining power over them, skewing the fairness and efficiency of the market.
The Commission advocates unwinding the current ”prescriptive” retail tenancy legislation in each state and further clarifying unconscionable conduct.
The report also suggests a voluntary national code of conduct for shopping centre leases.
“The Commission’s preferred approach to retail tenancy regulation involves less prescriptive retail tenancy legislation, greater alignment with law governing commercial tenancies and, where practicable, national consistency,” the report said.
In the draft report, Byron said aspects of the system such as low cost mediation and changes to the Trades Practices Act providing more protection to small businesses, had improved regulation of the retail tenancies market.
But he conceded it had ”unintended adverse impacts” that included increased red tape through compliance and administrative costs.
According to the Productivity Commission there are 290,000 retail tenancy leases in Australia, with up to 58,000 written up each year. About one fifth of leases are in shopping centres.
The Commission is seeking responses to the recommendations before it submits its final report to the Federal Government in March.
