Four Nationals Senators have called for appointment of an ombudsman to settle disputes under the Commonwealth Government’s Grocery Code.
They want to see the Small Business and Family Enterprise Ombudsman appointed to carry out this role.
The four Nationals Senators – Matthew Canavan (Queensland), Bridget McKenzie (Victoria), Barry O'Sullivan (Queensland) and John Williams (NSW) – made their call in additional comments in the report of a Senate inquiry into the Grocery Code presented yesterday.
They said stakeholders were concerned about dispute resolution processes under the Code, including their workability, timeliness and costs.
“We wish to add our voice to these concerns,” they said in the report. “Given the disparity between suppliers on the one hand and the major supermarkets on the other – in terms of market power, financial resources as well as experience and expertise in dealing with disputes – the ability of the Code to operate effectively hinges on the presence of effective, accessible and timely dispute resolution mechanisms.
“Suppliers face a number of hurdles in making and establishing a case for a complaint under the Code. Lack of access to relevant documents from retailers is one key issue. This is exacerbated by the presence of substantial information asymmetries, which mean that in many cases suppliers will face uncertainty about whether documents necessary to make and sustain their case even exist.”
They also said the potential cost to suppliers seeking dispute resolution under the Code is another significant barrier, particularly the cost of mediation and arbitration.
Their recommendations include replacing the Institute of Arbitrators and Mediators Australia under the Grocery Code with the Small Business and Family Enterprise Ombudsman, and funding dispute resolution services to the grocery sector by a small levy paid by signatories to the Code.
“Fees of around $2,000 per day for each participant are likely to represent a significant deterrent to small suppliers seeking arbitration,” they said. “Given the great disparity in size between parties, the potential for the party with the deeper pockets to extend negotiation periods and increase costs would undoubtedly be a consideration to be factored in by any small supplier seeking to have a matter resolved under the Code.”
They added: “We believe appointment of an ombudsman to oversight the Code would provide an effective and proven mechanism for low-cost, timely resolution of disputes under the Code.”
The Senators said the Government had provided $8 million over four years to the Department of the Treasury to transform the existing Office of the Australian Small Business Commissioner into a Small Business and Family Enterprise Ombudsman with additional functions and powers.
“The Office of the Australian Small Business Commissioner suggested that, to provide low cost alternative dispute resolution services, the Australian Small Business and Family Enterprise Ombudsman might assume responsibility for the resolution of disputes under the Code.
“We believe this would be sensible policy that would strengthen the operation of the Code.“