The Rudd Government has announced it will work with State and Territory counterparts to implement its response to the report of the Productivity Commission's inquiry into the market for retail tenancies.
Among its recommendations, the Productivity Commission has called for the introduction, by landlords and tenant organisations in the industry, of a voluntary national code of conduct for shopping centre leases that is enforceable by the ACCC.
According to the report, the code should:
- include provisions for standards of fair trading, standards of transparency, lodgement of leases, information provision and dispute resolution; and
- avoid intrusions on normal commercial decision making in matters such as minimum lease terms, rent levels, and the availability of a new lease.
Despite in-principle support, the Government has warned that a code should not be an additional layer of regulation and should only be pursued if the current legislative arrangements can be reformed appropriately to avoid any increases in complexity, regulation and compliance costs for business, especially for small business.
The report also called on states and territories to:
- develop a national reference lease;
- improve information and transparency in retail leases;
- examine the potential to relax planning and zoning controls that limit competition and restrict retail space;
- remove unnecessarily prescriptive elements of retail tenancy legislation; and
- remove restrictive clauses in retail tenancy legislation.
Restrictive clauses to stay – Fed Govt
The Federal Government said it “understands that the key differentiation between retail and commercial tenancies is the importance of location for retailers, and that current legislation provides important protections in this respect.
“However, in the process of harmonisation, the Commonwealth would encourage state and territory governments to examine the relevance and effectiveness of highly prescriptive aspects of retail tenancy legislation that do not improve operational efficiency and increase compliance costs for small business.”
Industry concerns remain
The Australian Retailers Association (ARA) said it remains concerned about the Commission’s silence on the required disclosure of tenants’ turnover figures.
According to ARA Executive Director Richard Evans, major shopping centres operate in a virtual monopoly due to planning laws and therefore have restrictive competition practices within their negotiations with retail tenants.
“Tenants are at a disadvantage at the negotiation table due to one-sided disclosure requirements and this issue can be remedied by simplifying the legislative template nationally and applying a code of conduct,” Mr Evans said.
“The challenge the Rudd Government has is to show leadership when others have not.”
To view the report, please visit http://www.pc.gov.au/projects/inquiry/retailtenancies/finalreport.