Senator JOYCE—This is probably for Mr Byron. Every time I go through a shopping mall, I come across small retailers who have a large concern about the discrepancy between their rents and the rents of the anchor tenants. A small retailer has been told about the magnitude of the discrepancy between their rent and the much lower rents paid by anchor tenants. Shouldn’t small retailers have this information in order to work out if they are going to be able to be competitive on price with the anchor tenants that are in the same shopping mall as them?

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Dr Byron—I am delighted to attempt to answer that one. You are absolutely correct. There is a very substantial differential between the rents paid in large shopping centres by anchor tenants—the big department stores, the discount stores, the supermarkets and so on—and the rents that are paid by small, specialty retailers. The fundamental difference appears to be that the shopping centre management differentiates between those who attract customers into the centre and those who rely on that passing traffic to make a business. As you probably know, just yesterday afternoon we finished conducting the final public hearings in this inquiry in Adelaide. At every one of the public hearings we have had around the country the issue was raised of access to information about the leases being paid by not only the large operators in the centres but also by others. There is a system that exists in New South Wales, Queensland and the ACT where retailers who are willing to pay a small fee, tens of dollars, can find out through the lease registration system under the Property Act the terms and conditions of their neighbour’s leases. But no such information exists in Victoria, South Australia, Western Australia or Tasmania, and what we have been trying to ascertain in this inquiry is the extent to which access to that information, through mining the lease data, substantially enhances the negotiating power of the small tenants.

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Senator JOYCE—Does that suggest that we should we have a mandatory registration of all leases across Australia to protect tenants and to promote greater transparency?

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Dr Byron—Registration of leases is available as an option in every state—

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Senator JOYCE—Should it be mandatory?

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Dr Byron—The Law Institute of Victoria very, very forcefully argued why under Victorian property law it would be, in their view, prohibitively expensive and, frankly, useless. That is a subject on which we have received and are still receiving a great deal of highly contradictory evidence. Some people have said that, if the lease information only reveals the face rent and not the effective rent by taking into account any discounts, rent-free periods, contribution to fit-out, and the information off the lease documents could actually mislead the market about what the true rent was.

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Senator JOYCE—How could a specialty retailer compete if they are paying $1,000 or $2,000 a square metre and the major supermarkets are paying $200 to $300 a square metre?

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Dr Byron—I have asked exactly the same question of many of the participants in our public hearings over the last month and the answer that I have consistently been given is that they are still making money. I ask them why they would pay five times as much in rent to be inside a shopping centre as compared to being outside in a strip or a high street.

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Senator JOYCE—But they are aware that they are paying such a discrepancy?

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Dr Byron—In many cases they are, yes. You are right, not all. There are some people who have no idea who is paying what in their centre but many of them are very well informed and saying, ‘Despite the fact that the only other person who is paying more rent than me in this centre is the jeweller, we are there because we are still making money.’

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Senator JOYCE—Are you aware of evidence that landlords are bullying small tenants and treating them unfairly?

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Dr Byron—That position has been very consistently put to us throughout the hearings.

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Senator JOYCE—What evidence are you receiving from small retailers about the operation of unconscionable conduct, that is, section 51AC of the Trade Practices Act? Do you think it is working and what are your views on the operation of section 51AC of the Trade Practices Act?

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Dr Byron—We have received a lot of representations. At the moment, we have not yet finalised a position on that. We are still receiving submissions and looking for further evidence. If I can just deal with the essence of the argument, many people have said that section 51AC has been completely ineffectual because there have been so few prosecutions taken under it. The counter argument that we have also been told is that it is still doing a lot of work even though ‘the big stick is in the closet’. Just the hint or whisper of unconscionable conduct may itself be disciplining behaviour in the marketplace.

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Senator JOYCE—Do people have the capacity to pursue a 51AC case when they are up against the might of Coles or Woolworths or Mr Lowy?

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Dr Byron—In many cases it is not just a question of the might of the opposing power but many of the people who would seek remedy under unconscionable conduct are either already or on the verge of bankruptcy irrespective of who the defendant would be. But there are examples where the ACCC or a state retail tenancy unit have actually taken the action and picked up the costs.

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Senator JOYCE—It needs the ACCC really to pick it up because it is outside the capacity of most small retailers to prosecute a case under the section 51AC?

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Dr Byron—I think that would be a very fair conclusion.