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Commercial Tenancy Relief Scheme Bill 2021

Aug 6, 2021 | News, Parliament

Mr BARTON (Eastern Metropolitan) (11:44): I rise to speak on the Commercial Tenancy Relief Scheme Bill 2021. This bill will provide critical support for many Victorian businesses who have done it tough since the onset of this pandemic. It is my belief that we must support these small businesses in their recovery. The empty shopfronts that plague the CBD and the suburbs have gone far enough. The continuing closure of small businesses must stop. It is these bricks-and-mortar shops that provide a unique vibrancy and sense of community to all our local neighbourhoods. Today we see once busy places to shop, eat and drink are now lined with ‘For lease’ signs and vacant shopfronts, many boarded up and covered in graffiti. Of course this is just the surface level of the financial turmoil being experienced by our Victorian small businesses.

To fix this there is much that needs to be done. There also lies responsibility with landlords to revisit their rent expectations. This pandemic recovery has been slow, and it is important opportunities are given to those small businesses who still want to give it a crack. Business confidence remains low, as lockdowns continue to be a necessary tool in getting COVID-19 outbreaks under control. There do need to be protections in place for commercial tenants. They should not be subjected to rent increases, rent relief should be available when desperately needed and evictions should always be the last resort.

However, while the support provided by the commercial tenancy relief scheme (CTRS) is needed, I do believe that the concerns of landlords must also be addressed. This pandemic has spanned 18 months, and we have been through five lockdowns. We cannot let the burden of these restrictions fall disproportionately on any one sector. This includes landlords. Many landlords have already provided significant relief to tenants through this pandemic. In fact Deloitte Access Economics found that nationally the commercial property sector has contributed over $15 billion in tenant relief to the national economy. Landlords are not all in a position to give so much. That is why the application process under this scheme must be rigorous while minimising its administrative burden on both landlords and tenants. There must be clear time frames built into the application process so the agreements and resolutions are reached. The current bill does not determine clear time frames for applications or for the provision of the relevant information. My concern is that these negotiations could stretch on for lengths of time, disadvantaging both landlords and tenants.

There must be rules in place to stop either party from taking advantage. This should include ensuring that when business turnover is determined it explicitly includes any revenue received through the Victorian government business support grants. Without this in place we may see a double dipping of financial support, which stops the money from going where it is needed most. It should also be required that a tenant produce a financial statement outlining the reduction in turnover of the entire business operations, including its online sales, rather than just the business operating out of a specific tenancy. Throughout the previous scheme there were instances of larger businesses that technically met the threshold for rent relief on a tenancy-by-tenancy basis; however, the business as a whole was successful. This disadvantages smaller businesses as it reduces a landlord’s capacity to offer relief to tenants in a greater need of financial assistance. We know that there are many who will take advantage of the support provided. We must do what we can to ensure that this scheme is not exploited to the detriment of others. There have of course been instances where tenants have been collecting rent relief, JobKeeper and business support grants while not opening the business or making an effort to trade. This does put landlords at a disadvantage, especially when they are already providing rent relief. I would suggest that the scheme include a mechanism where the landlord could be paid back by a tenant where it is found retrospectively that the business or group entity was ineligible for the rent relief.

Commercial Tenancy Relief Scheme Bill 2021

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This bill also fails to indicate a period of eligibility. It indicates how eligibility will be established but not how it will be maintained throughout the scheme. It is not okay for tenants who have recovered from their financial circumstances to continue to receive rent relief well after that point. We have seen throughout this pandemic spending bounce back from lockdowns despite peaks and troughs. In recognition of this, eligibility should be established periodically to minimise the financial burden on the landlords, who should not be subsidising businesses who do not need assistance. This would reflect provisions in the previous CTRS, where turnover was assessed at the end of each month. There are also many situations where tenants are still carrying different rent from the previous scheme as part of the previously struck rent relief arrangements. This new CTRS should only be able to be claimed against the rent of an unaltered lease, and the relief should not be claimable against the deferred rent of a previous arrangement.

The role of the Victorian Small Business Commission is critical in the implementation of this scheme. Many disputes within the previous scheme have proven difficult to resolve. Tenants have also been able to access a certificate of non-compliance in particular circumstances, and landlords have had no capacity to obtain a certificate of non-compliance.

A number have been applied inconsistently against landlords, and they should be addressed in the new scheme.

The Victorian Small Business Commission’s resources should be boosted to allow disputes to be resolved quickly and efficiently. I believe that there should be appropriate penalties in place for any party in a rent relief arrangement that is later found to have provided false information. This should encourage both parties to act transparently and in good faith. Of course rent relief should be provided to Victorian small businesses experiencing financial hardship—it is so important that we support them through this pandemic so that they can continue their important role in our community—but this support needs to be targeted. The burden should not fall on landlords to support businesses that have on the whole done well during this pandemic, nor should they continue providing rent relief to businesses that have recovered. This bill should address these matters and ensure that the support is being directed to where it is needed most. The time line on this bill has also prevented us from being able to consult appropriately with key industry stakeholders, understand the concerns of tenants and landlords and shape this bill accordingly, but I understand that there is great demand for this. So that will do.

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