Second Reading-RETAIL LEASES AMENDMENT BILL 2019

Mr FREGON (Mount Waverley) (14:19): I could not put it better myself than the member for Burwood did there—that fairness is always at the heart of what we do. It was very well said by my colleague there. I rise to speak on the Retail Leases Amendment Bill 2019 as well, and I am very, very happy to state that this is another fantastic bill for small business in Victoria. It is an important bill that will make things clearer and easier for small business owners. Once again we see the Andrews Labor government is looking out for business and fairness for business operators.

 

This bill has two main purposes, which I will expand upon, but simply put, it makes life a little simpler for businesses when they are negotiating their leases. This bill may not be as groundbreaking as the Wage Theft Bill 2020 we have been debating this week, but it is an important improvement nonetheless to the Retail Leases Act 2003 and the Building Act 1993. I would like to especially thank the Minister for Small Business and his staff and advisers and the many boffins who work in the area for bringing this bill to the house.

 

Now, I am glad to see the member for Mornington at the table there, because I do disagree that there have not been any bills. I think his words were, ‘This is the first small business bill’. I do not agree with that. I have mentioned the small business benefits of many, many bills over the last 18 months, so we will probably agree to disagree on that one.

 

The changes included here clarify that landlords can pass on the cost of repairs and maintenance for essential safety measures to tenants as outgoings—fire hydrants, sprinklers et cetera. There are many leases signed in good faith where this is already the case, but confusion was raised following a VCAT advisory opinion—R115/2014—which contradicted common practice. This bill resolves this confusion and allows the status quo of industry practice to continue by amending the Retail Leases Act 2003 and the Building Act 1993.

 

This bill also improves the leasing practice for Victorian retailers by amending the Retail Leases Act to deal with common timing issues between retailers and landlords in regard to signing leases. Similar to the member for Burwood, over the years I have signed a number of leases myself, and for the most part my landlords were also good to deal with and we acted in good faith. We were able to negotiate any differences and then find a way through and live with them, but this is not always the case for others.

 

It is also fair to note that not all tenants are perfect either, and this bill makes expectations on both sides clearer. This is very sensible. On that point it is also worth raising the current economic situation arising from the coronavirus pandemic that we are all still going through. It is no surprise to any of us here that a great many people from all walks of life are finding the current economic outlook very challenging—retail tenants no less than others. I have had many conversations over the last few months with tenants and landlords alike calling—especially around the time that the Prime Minister announced the moratorium on evictions—and looking for detail. I want to thank again the Minister for Small Business and the Minister for Consumer Affairs, Gaming and Liquor Regulation for the enormous work that went into really providing some relief and very timely guidance and assistance for tenants and landlords across the state—hairdressers, for instance, or hospitality businesses, who really had no hope of a normal income and are still finding it very challenging, and self-funded retiree landlords whose only income was the rental income, which would possibly not be coming in. To this end, I, like many of us here, was happy to see those measures brought in at both levels—state and federal government—and they are definitely assisting Victorians through this very difficult time.

 

I would also like to make note of Business Victoria’s assistance package that provided $10 000 to businesses affected by the coronavirus. I have been told by many businesses in my area of Mount Waverley that this has been crucial in just getting them along. It is good to see us slowly coming out the other side and businesses starting to open and cafes starting to open. We all hope that we can all keep going out and helping these people get back to their normal everyday lives.

 

But all that said, I have had conversations either side with some who have been unable to come to terms with the other party. It is disappointing, but that is business. Business Victoria and the Victorian Small Business Commission have been very useful here, and I have had good feedback from parties who have involved the mediation services that they provide. Most of the time people work it out. One example that was raised with me was from a hairdresser in my area. They requested a temporary discount from their landlord of many years of 10 per cent. Their clientele were trying but really they were not getting anywhere near the amount of revenue, but they had worked out that if their rent dropped by 10 per cent—I think they were getting JobKeeper as well—that would be enough to get them by. They had been a tenant of this landlord for many, many years, and the landlord’s reply was very quick and to the negative. In these situations it really is surprising—I am not just picking on landlords because it is not always them, sometimes tenants are difficult as well—and it is very disappointing to know that whilst most of us are trying to do the right thing and get us all through, there are some who do not play ball.

 

This bill clarifies and clearly sets out the lease obligations prior to the period where the tenant must decide on renewing the option of a lease. Previously a tenant was obliged to take up an option to renew the lease prior to a market review being undertaken and the tenant understanding what costs they would be up for when the lease was renewed. In practice, and I have been in this position myself over the years, the business owner has to presume that when the rent increase comes in they can afford it. Now, if you are signing up for a new lease in a new business and you are thinking, ‘Ooh, two years ahead am I even going to be here?’—well, for a new lease you probably know the price, but if you go for that first option and it is another two years, you think, ‘Well, is it two and a half? Is it CPI? Are they gonna throw something else at me?’. It makes it very, very difficult. Now, if you are in a bigger business you might be signing five years or something similar. So I think it is fairly sensible that you have all the information available to you when you have to make that decision to sign on the dotted line, given that you are up for it for a number of years.

 

Another change to the act that this amendment makes is that it addresses the matter of security deposits at the end of a lease. The Victorian Small Business Commission reported in 2018–19 that one in eight disputes under the act were around security deposits. Currently, and before this bill is in place, a landlord must return a security deposit as soon as practicable. Well, that could be a very long time, depending on the landlord in question. This amendment introduces a time limit on the return of security deposits, requiring landlords to return security deposits, whether they be bonds or bank guarantees, within 30 days after the lease ends. Now, obviously if there are repairs or something or disputes on things at the end of the lease they would be included, but I think 30 days is very, very sensible.

 

This bill is another example of fairness between business parties for small business. Landlords are businesspeople, tenants are businesspeople, so having a sense of equity for them that states that, without jumping in the middle of their negotiations, makes sense. If I can refer to the member for Essendon, he pointed out that business does not want government intervention, and I agree with that. In my years in business I would have said, ‘Give me a set of rules. Let me understand them; make them clear, fair, equitable. Now get out of my way and let me do my job’. This bill assists in that process, and I commend the bill to the house.