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Retail tenancy code struggles to win support of big landlords

Tuesday, 28 February 2012 | By Michelle Hammond

The Franchise Council of Australia will tomorrow discuss a voluntary code of conduct for retail landlords and tenants, but the Shopping Centre Council is strongly opposed to the idea.

 

The FCA will host a forum in Sydney tomorrow, which will centre around discussions on a range of issues including a proposed retail tenancy code of conduct.

 

Other proposals include a payroll tax freeze, and government assistance for small business and occupation health and safety.

 

“[The event] is not intended to be a wailing wall. Those attending... are looking at ways for small business to be more successful,” FCA executive director Steve Wright says.

 

Retail tenancy code of conduct

 

Last year, the FCA put the focus on retail tenancy. It began working on a draft document and has called for industry support for the concept.

 

Wright says the code is designed to stem conflict between landlords and tenants about rental increases, end-of-term arrangements, fit-out requirements and abuse of market power.

 

But the Shopping Centre Council, which represents big retail landlords, opposes the code. It wants existing state and territory regulations to be aligned under a single set of national laws.

 

While the SCC has stated its opposition to the code, the FCA remains hopeful an agreement can be reached, particularly if it leads to harmonisation of retail tenancy laws across the country.

 

The guidelines are designed to give retailers confidence about security of tenure, and are particularly relevant given poor occupancy rates in North American shopping malls, Wright says.

 

The SCC has been invited to participate in the forum, but has labelled the proposed code as a “media stunt” and has told the FCA it will not discuss the matter.

 

Other issues to be discussed at the forum include:

 

Government assistance

 

The discussion about government assistance will centre on the model adopted by the United States Small Business Administration.

 

Since its founding in 1953, the SBA has delivered about 20 million loans and loan guarantees to small businesses.

 

“The FCA is not intending to ask government to be a lender,” Wright says.

 

“It is asking it to make use of an unused bank wholesale funding guarantee to provide a guarantee to business start-ups which lack a guarantor and who would otherwise get a bank loan if they had a guarantor.”

 

Payroll tax freeze

 

The concept of a payroll tax freeze will also be discussed at the forum.

 

“The FCA is not asking for a reduction of payroll tax. It is asking only for a freeze so that payroll tax bills paid by employers do not get any bigger,” Wright says.

 

“A freeze would remove any ‘threshold creeps’, which can be a disincentive to employ new workers as the new employment may take a business above the threshold.”

 

“[The business would] therefore incur the tax or even be dragged into paying payroll tax simply by granting a pay rise to employees, in order to keep them.”