Retailers welcome recommended changes to retail tenancy legislation

Posted by James Ferre on 27th August 2008

Peak retail industry body the Australian Retailers Association (ARA) has today welcomed the recommendations in the Productivity Commission’s Market for Retail Tenancy Leases final report, but is concerned about the Commission’s silence on the required disclosure of tenants’ turnover figures.

ARA’s Executive Director Richard Evans said the release of the Productivity Commission’s report on retail leasing has recommendations welcomed by retailers, including nationally consistent model legislation and the introduction of a voluntary code to curb robust behaviour. The Commission has, however, still failed to recognise disclosure requirements of turnover as a significant form of tension between shopping centre tenants and landlords, according to Mr Evans.

“We are in a period of significant downturn in consumer demand and this report will come as good news for retailers, but with the significant caveat that the Rudd Government must now act to improve the retail tenancy market nationally,” he said. “When other Federal Governments have ignored the issue as being too hard, the new Government – with its policy of reducing the cost burden of differing state legislations – must now act.”

“We encourage the Government to move forward with haste to help retailers with the following issues that must be addressed in any new legislative framework: Code of Conduct to improve operational and negotiation behaviour; full disclosure by the landlord of true rent and plans for the shopping centre; non-disclosure of turnover figures directly to the landlord; end of lease negotiation; separation of shopping centres from other retail activity; and low cost dispute mechanisms.”

“This report confirms what governments have been told for many, many years yet seemingly do not have the courage to resolve – that is major shopping centres are a very different retail market compared to strip and small retail sectors. These shopping centres operate in a virtual monopoly due to planning laws and therefore have restrictive competition practices within their negotiations with retail tenants,” Mr Evans claimed. “Tenants are at a disadvantage at the negotiation table due to one-sided disclosure requirements and this issue can be remedied by simplifying the legislative template nationally and applying a code of conduct.”

The report, which can be accessed here, suggests methods to improve current legislation would include increasing transparency, moving to a nationally consistent framework and introducing a national shopping centre code of conduct. Changes to “relax planning and zoning controls that limit competition and restrict retail space and its utilisation” were to also warrant consideration.

A summary of the report’s key findings can be found at: www.pc.gov.au/projects/inquiry/retailtenancies/finalreport/keypoints.