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Second Reading: Retails Leases Amendment Bill 2019

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Sam Hibbins MP
Member for Prahran
4 June 2020

Mr HIBBINS (Prahran): I rise on behalf of the Greens to speak to the Retail Leases Amendment Bill 2020. I will speak briefly on it and I will just go to what is in the bill, which is confirming the current practice of landlords passing on the cost of repairs, maintenance and installation of essential safety measures to tenants when agreed to in a lease. It requires retail tenants to be informed of the proposed rent before they extend their lease; allows more time for tenants to consider the terms and conditions of a proposed lease—14 days compared with seven under the current legislation; and sets a maximum 30-day time frame for the return of security deposits from landlords. Currently the act states deposits should be returned as soon as practicable, which has been open to exploitation. So the Greens support this bill due to the benefits that it provides our retailers and our small businesses.

 

I want to talk about small businesses and particularly those in our shopping strips and shopping precincts that have been so hit hard by COVID-19. Shopping strips like Chapel Street, Toorak Road or Hawksburn Village amongst others in my electorate, and like Sydney Road in Brunswick, really are essential to not just the economic heart of our local communities but the social fabric of our local communities as well. When you think of, for example, the Prahran electorate having Chapel Street, it really does make our place, our community, such a great and vibrant place to live.

 

When there is a downturn, when the shops are shuttered and when there are vacant shops, it really does affect the whole community, and people come up to me and always raise it as an issue when they see shuttered shops. It affects the whole area. Our shopping strips and precincts employ so many people within retail and within hospitality, many of them who are on casual rates or for example do not receive penalty rates. It is so important to not only the economic part of our community but also the social heart of our community.

 

Our shopping strips are ever evolving. If you look at Chapel Street, parts of it have evolved from retail to so many cafes and bars. If you look at Windsor, it has had a big shift over the past decade from somewhere that was retail with a lot of local stores, and now when a shop closes it is inevitably replaced by a bar or a restaurant. There is no judgement about that—I think Windsor is now probably the most happening place along the whole Chapel Street precinct—but they are ever evolving, and they face challenges. They have got the challenges of online retail, but they have also got the larger shopping centres that they have to compete with, so they do go through ups and downs.

 

We have got the service sector as well, which is more important to our shopping strips than ever before, whether it is real estate or whether it is medical. Then you have got the businesses that support other businesses, and they are really behind the scenes and at the heart of our shopping precincts as well.

 

Our retailers and our shopping precincts have really had to respond and innovate when it comes to the restrictions placed on them by COVID-19. When you think about what they are having to do—offering takeaway and offering new and innovative products to ensure that they can keep the doors open and keep business going—it has been really impressive. We have seen some really innovative marketing campaigns as well to let people know that their favourite business is still open, and I have been really impressed with how they have done that.

 

The challenge now, as our economy reopens, because of course people’s habits have changed, is how we can people get back to and aware that they can now go to their favourite shops or their favourite cafes. That is going to be a real challenge.

 

When COVID hit we were really keen to make sure that there was support provided to our local traders in the form of both no evictions for those who are leasing their property and rent relief as well. We wrote to the Premier, and we were really glad to see that down the track the Premier and the state government did implement that no evictions policy and offered some relief for small businesses and for traders. That was really important because among so many renters, in my discussions with them, there was a lot of talk about hibernation. I think that was probably not the most accurate of descriptions, because you have got so many of your costs—your overheads and your money going out the door—and rent was a big one of them, so it was really good to see an impetus for landlords and their tenants to have to come to the table and actually reach negotiations. There have been some good stories and there have been some not-so-good stories. But making sure there was the support of that law of no evictions really helped our traders in that situation.

 

We have been supportive of the government’s response to COVID in terms of the restrictions and the announcements. There have probably been two areas where they erred.

 

Sitting suspended 1.00 pm until 2.01 pm.

 

Mr HIBBINS: I will pick up where I left off before lunch. As I was saying, the Greens supported the government’s decisions in terms of the restrictions that were put in place to keep Victorians safe. However, where I do think they erred was in two areas where they did not clearly communicate to retailers and small businesses, which affected them.

 

Firstly, it was when they announced that they were shutting down essential services before a national cabinet meeting. That led to a lot of confusion, and businesses made decisions based on that. They made decisions not to open the very next day when, after the national cabinet meeting, what a shutdown of essential services actually meant was different to what people had presumed.

 

Secondly, it was when the government decided not to initially allow cafes and restaurants to open to a limited amount of customers, citing that the Premier did not think that was worthwhile because he had been advised that it was not worthwhile or profitable for businesses to do that. I think he was quoting from the Australian Hotels Association, who of course do not speak for many of the cafes and the retailers on those shopping strips. For many of those smaller traders, they would have been quite happy to open with just a smaller number of people entering their shops. So I certainly welcome the fact that the government then decided to give a bit more forewarning to those smaller cafes and restaurants about when they could expect to be opening up for trade, and many have done so now.

 

But what I think COVID really did highlight about the challenges for traders on our shopping strips is that really one of the biggest issues, and what is constantly raised with me, is that the rents are just too high. It is why we often go through these cycles of shops sitting vacant for so long but then they are not filled. The reality is that landlords are asking too much in rent, and they are often making decisions that they would be better off leaving their property vacant than offering it to someone at a lower rent.

 

I disagree with the previous speaker on the government side. I do think small businesses and our local traders are looking to the government to provide support to them, and I do think there is more that the government can do to support our local traders. In my view they need to be doing what they can to lower the barrier for people starting up a business, and they need to be doing what they can to promote and support people coming out to our shopping strips—getting the foot traffic, getting people out there. I think the solutions are in regulation, in investment and in innovation. And firstly, I do think that governments need to be looking at rent controls and vacancy taxes for our shopping strips. As I said, the rents are just too high, and we cannot have a ridiculous situation with landlords just sitting on their property—vacant property—and not being willing to lower the rents for whatever reason.

 

For this reason I do think we should be looking at a vacancy tax similar to what we now have for residential properties. You should not be able to just sit on a property and keep it vacant, because as I said it is not just about jobs—or it is that too for people employed in retail and hospitality—but it is the entire fabric of our local communities. We do not want to see vacant shops in our local communities and for a prolonged period of time. They do need to look at where it becomes too much. Where you have got existing businesses if rents are put up too high, then pressure is put on those businesses, so I do think there is an argument for looking at rent control. And I do think governments need to be supporting our shopping strips in terms of bringing people to them.

 

A lot of shopping strips put on events, put on festivals and put on art shows. We have got a fantastic sculpture show that is put on every year. The Toorak traders do that. I would love to see the Chapel Street Festival come back in a new form. I think that would be brilliant. A lot of traders report that some of their biggest sales are done during the time of the festival, and it would be great to bring that back to our local area. Often that is the difference between a business surviving and not surviving.

 

Governments do need to invest in the infrastructure and the place making for our streets. When our streets are looking tired, when the public realm is substandard, that drives people away. But when you have got a good public realm and you have got good public space and good public squares with tree coverage, that brings people to the area. For example, look at Swanston Street now and where it was 20 or 30 years ago. It has turned from a thoroughfare, a road, to now a fantastic public space. These sorts of upgrades bring people to the area. It helps trade and it uplifts areas. The government does have a really strong role in providing the investment.

 

Again in my patch, Stonnington has got the Chapel Street master plan that is being rolled out over many years, and that is a perfect area where you can see government investment. I know a number of other councils have master plans for their shopping strips, and that is certainly something where I think the state government should step in to support local councils and support shopping strips to implement those plans, understanding at times that, yes, when you have got a lot of public works going on in an area that can be difficult for a business, but as you have seen from countless examples of where this has been put in place the pay-off is certainly there.

 

Finally, I think we do need to look at innovation within our shopping strips. I always use the example of a shopping centre like Chadstone or whatever that owns all the shops. They can actually go out and land big tenants. That is how they bring footfall and bring traffic to those areas. A shopping strip does not have that capability, so what I would like to see is some government support for our shopping strips in terms of lowering the barrier to bring in artists to fill vacant shops or lowering the barrier to ensure pop-up shops can occur. Again, some of the barriers here are sometimes landlords being unwilling to rent out at a lower rate, but I certainly think that is where the government could step in. Whether it is funding or certain guarantees, that is an area that they should look at.

 

If you look at those areas, there is a really strong role for governments to play to support small businesses, to support traders and to support our local shopping strips that are just so important to the livability of our local areas. The Greens will be supporting this bill. We do want to see more support from our government for our local shopping strips, which are just so important to the local economic and social fabric of our communities.

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Sam Hibbins MP
Member for Prahran
4 June 2020
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