Protection call for small business

WA's small business commissioner has slammed utility providers, telcos and other big corporations for forcing unfair contracts on mum-and-dad owned enterprises.

Commissioner David Eaton will call for greater protection for WA's 210,000 small business in a Federal Government review to consider whether they should be treated the same way as individual customers under certain aspects of Australian consumer law.

Mr Eaton said there were fewer safeguards for small businesses than for individuals in standard form contracts, which are offered by big business on a take-it-or-leave-it-basis.

Some of the unfair clauses include those allowing big business to unilaterally change the price or delivery terms of a product or service that they buy from or sell to a small enterprise.

Mr Eaton said the practice had a big impact on small business owners, causing them financial losses, stress and even destroying some businesses.

"Time and time again we have heard from small businesses subject to unfair terms in their contracts with larger businesses," Mr Eaton said.

"Changes to payment terms and delays in the payment for the supply of goods and services can have a significant impact on the cash flow and the financial viability of small business. There can be flow impacts of that small business being able to promptly pay its staff, suppliers and other creditors.

"Generally they do not have the capital reserves to carry large debt for extended periods of time."

Figures from the Australian Bureau of Statistics show small business is already a vulnerable sector, with only a 60 per cent survival rate over a four-year period.

Mr Eaton said standard form contracts also allow big business - but not small enterprise - to terminate an agreement at any time.

Usually there were no exit penalties for the big corporations but heavy fees for small businesses seeking to break ties.

Mr Eaton said there had been several examples where telcos had put automatic rollover clauses in contracts without the express knowledge of the small business client. This meant the entrepreneur was unable to renegotiate terms before the start of a new two-year contract.

Mr Eaton said while the Small Business Development Corporation in WA would push for better protections in its submission to the Federal inquiry, it wanted to ensure change did not come with increased red tape or costs.

A survey of WA small business which it was currently conducting online would form part of its submission.