Government Ministers concerned small businesses are being treated unfairly

Government ministers responsible for small business and commerce are expressing concerns over commercial practices they say are unfairly impacting small firms.

In a discussion document, released this morning, Commerce and Consumer Affairs Minister Kris Faafoi and Small Business Minister Stuart Nash said many small businesses don't have a "fair and healthy" relationship with their suppliers.

They say there is scope for a law change to address some of these issues.

"For example, some businesses told us about the significant cashflow issues they have faced as a result of other businesses not paying them for several months."

Other issues outlined were bigger firms not complying with contract terms and businesses "preying on vulnerable consumers in shopping malls".

The ministers were concerned but said these issues are only anecdotal at this point.
They said they were now investigating the issue further and are calling for public submissions.

Nash said the Government wanted to build a more productive, sustainable and inclusive economy, but it won't get there with these types of practices in the marketplace.

"If there is a need for a law change, then we want to ensure that any changes are proportional to the problem."

At the moment, the Fair Trading Act prevents unfair commercial practices.

Despite this, the discussion document said businesses were still reporting issues.

The Ministry of Business, Innovation and Employment (MBIE) reported 45 per cent of businesses recently surveyed felt they had been offered unfair contract terms in the past year.

Some 47 per cent felt that they had otherwise been treated unfairly, according to the same survey.

"Unfair commercial practices can cause significant stress for consumers, in some cases leading to financial difficulty, while the consequences for businesses include cash flow issues, increased costs and stress," Faafoi said.

"Small businesses can face significant cash flow issues as a result of other businesses not paying them on time as per contract terms. This has flow-on effects for other parts of the economy, especially for the families and communities these businesses support," Nash said.

MBIE seeks written submissions which close at 9am on Monday, February 25 2019.