Andrew Wallace (Fisher, Liberal Party) Share this | Hansard source

Whether it's in the building industry or in the broader economy, some larger businesses have for many years exploited the vulnerabilities of those small businesses below them in the contractual chain. These are often mum-and-dad businesses. These small business owners work damn hard to provide for their families and in some cases struggle to keep their heads above water. These small family businesses are not asking for handouts. They just want to be paid the money they are owed for the work they were engaged to do—the work they did in fact perform. The statistics around payment times are very sobering. More than a third of small business invoices are paid after 30 days. These invoices take an average of 63 days to be paid. If all large businesses in Australia paid small businesses in 30 days, $7 billion in working capital would be transferred from large to small businesses, creating a net benefit to the economy of some $313 million each year. Only 80 out of 3,000 large businesses in Australia have signed up to the Business Council of Australia's voluntary supplier payment code in the three years since it began. It is simply not good enough that less than 0.3 per cent of large businesses have acknowledged this is a problem that needs to be addressed.

The Payment Times Reporting Bill 2020 requires large businesses and government enterprises with an annual income over $100 million to publish information on how and when they pay small businesses—that is, businesses with a turnover of under $10 million. From 1 January 2021, twice annually, around 3,000 large business will be required to produce a payment times report, including: the shortest and longest standard payment periods offered; the proportion of small business invoices paid in less than 21 days; those paid in between 21 and 30 days, between 31 and 60 days, and more than 60 days; the proportion of all procurement from small business suppliers; and, finally, their use of supply chain financing practices, which often force small businesses to accept a reduced amount if they want to be paid in a reasonable time. The provisions of the bill place a requirement on businesses that are incorporated, or have a physical presence in Australia, or are foreign businesses that carry on an enterprise in Australia that meets the income threshold, plus Commonwealth corporate entities and Commonwealth companies that meet the income threshold. Information from these reports will be made publicly available on a payment-times reports register for searching by small businesses or members of the public.

The new requirements will be supported by a payment-times-reporting small business identification tool to assist corporates in identifying their small business suppliers. The bill establishes a payment-times-reporting regulator to monitor and enforce compliance. The regulator will have powers to obtain and publish information, to investigate and to enforce civil penalties, as well as direct an entity to undertake an audit of their payment practices. Significant penalties will be in place to ensure that large businesses comply with the scheme. Failure to report has a maximum penalty of 60 penalty units for an individual or 300 penalty units for a body corporate. Providing misleading information has a maximum penalty of 350 penalty units for an individual and 0.6 per cent of the total annual income for a body corporate.

Not only will this register shine a very bright light on the shadows of large businesses with poor payment practices, and thereby incentivise them to clean up their act, but small businesses, mum and dad family businesses, will be able to assess the payment performance of a larger business when deciding whether to do business with them. Information is key to small businesses when pricing in the prospect of late payment, and this bill will do just that. Recently, businesses like Rio Tinto and Telstra rapidly abandoned poor payment practices, once they were subject to public exposure. Their payment policies were quickly shortened so suppliers were paid within just 20 days.

Many people might be wondering what the federal government is doing in this regard. The federal government is leading the way, and leading by example, in relation to responsible payment times. Since July 2019, Commonwealth agencies have paid invoices for contracts up to $1 million within 20 calendar days, or they will pay interest on those late payments. This captures 95 per cent of procurement contracts entered into by the Commonwealth. In addition, from 1 January 2020 government agencies capable of e-invoicing have been paying e-invoices valued at up to $1 million within five days. If they don't, they pay interest. Commonwealth agencies will be progressively coming on board with e-invoicing capability throughout 2020. The Commonwealth is also developing a procurement policy where large businesses who tender for government contracts will be required to match the Commonwealth's 20-day payment policy. This is a game changer. The federal government is leading by example and I have no doubt that businesses, particularly those that deal with the federal government, will come on board. I commend the bill to the House.

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