Bert Van Manen (Forde, Liberal Party) Share this | Hansard source

It's always a pleasure to rise in this place and speak on pieces of legislation that this government is looking to put in place to assist small to medium businesses, because they're the engine room of our economy. According to the Australian Small Business and Family Enterprise Ombudsman, small business and family enterprises account for almost 98 per cent of businesses, 35 per cent of Australia's gross domestic profit and 44 per cent of Australia's workforce. In my electorate of Forde, we have over 17,000 small and family businesses, and these are the lifeblood of our community and our local economy—businesses such as RAMS Auto Care in Beenleigh; Merino Country in Shailer Park, a terrific local business that uses 100 per cent Aussie merino wool in its products; the GCI Group in Yatala; and many others.

But, as has been pointed out by a number of speakers already in the debate on the Payment Times Reporting Bill 2020, for small business cash flow is vital. It's the cash flow that allows businesses to pay their suppliers, pay their staff and invest in making their businesses even better. When large businesses are tardy in paying their bills, it causes difficulty for small businesses. The Prime Minister has been very clear on what large businesses need to do, especially in the current environment where we are seeing the effects of COVID-19. They need to, among other things, ensure they pay their bills on time or, preferably, ahead of time.

This bill seeks to implement the government's commitment to require large businesses and government enterprises to report on their small business payment terms and times. Research shows that, in 2017-18, payments from large to small businesses were worth $281 billion, with some $77 billion of these payments paid later than 30 days. When payments were late, the average length of time for a small business to be paid was 63 days. For small businesses this means that they have to carry higher overdrafts, a greater risk for their business, in terms of loss of cash flow.

Delays like this are killers for small business. They hurt cash flow. They harm their ability to hire, invest and grow. We want and need our small businesses to grow and reach their potential. Delays like this often force small businesses to seek alternative, expensive forms of financing in order to sustain their operations. They also affect the ability of small businesses to pay their suppliers. So not only is it the initial small business that is affected. Delays create a ripple effect across our local communities and across the economy. If all large businesses paid their bills to small businesses within 30 days, it would have an overall net benefit to the national economy of some $313 million per year, or around $2.6 billion over 10 years. Now that is a significant benefit and one worthy of pursuit.

It's important that the Commonwealth, as a model business, leads the way in this area. As the Commonwealth government, we have contracts worth around $16.7 billion with small and medium businesses, and it's vital to ensure that we adopt best-practice payment practices. The Commonwealth has already adopted a range of measures to improve payment times, and there would be no point in introducing this legislation if the Commonwealth didn't already show the way.

It's important to note that this legislation doesn't mandate payment times, but this bill does require big business to report on how quickly they say they will pay, as well as when they actually pay their small business suppliers. This will show if big businesses are living up to their payment rhetoric. And that is part of the problem. Often, we hear the rhetoric from big business but the reality is very different. I'm sure many members in this place over the years have had discussions with small business owners in their electorates about the difficulty of getting payments out of large business in a timely manner.

These times will be reported on the Payment Times Reports Register for all to see and judge. People may ask: 'It's fine to have payment times reported on a public register, but what if large businesses breach their stated times?' This bill introduces the Payment Times Reporting Regulator to administer the legislation, monitor compliance and take enforcement action if and when necessary. This regulator will have the ability to impose penalties. This way, we will create cultural change in large businesses to ensure best practice is adopted across our economy.

We've already seen some of the benefits of the approach in the bill shining a light on this bad payment behaviour. Recently, businesses such as Rio Tinto and Telstra rapidly abandoned payment practices which negatively impacted on small business once they were subject to public exposure. As a result of the community concern, their payment policies were shortened to ensure suppliers were paid within 20 days. Locally, I'm pleased to say Teys abattoirs, one of the largest employers, if not the largest employer, in my electorate of Forde, seeks to pay farmers within seven days. So we've seen big business can react quickly to community expectations, and, in the instance I've just mentioned of Telstra and Rio Tinto, we know that this legislation has already had a positive impact. But—and it's important to outline, as I just have in relation to Teys—there are good corporate citizens out there who do do the right thing by their small business suppliers.

The coalition doesn't believe in creating more red tape for business. Hence, there are no mandated time frames for payment. Of course, if the government said payment times must be 30 days, business may well slow payments to 30 days and not pay early, even if they're able to. That would be counterproductive for small business—and the government believes this is not in the national interest—hence the reporting regime coupled with a strong regulator to ensure compliance.

With 17,000 small businesses in Forde, there are some stand-out examples of suppliers to larger businesses. As I mentioned, GCI Group is an innovative company in Yatala that takes advantage of cutting-edge technology to deliver metal fabrication and laser cutting services to some of the biggest companies in Australia, from JJ Richards to Downer Group and Tridiam. Gail, who is the sales manager at GCI Group, tells me that having more awareness and transparency around payment times will greatly assist GCI, especially when it comes to planning and scheduling jobs for clients. I had the pleasure of joining the Prime Minister last year when we visited GCI to see how a small business in Forde is leading the future of manufacturing in Australia. Another prime example is ATP Science in Loganholme, who already supply some of the largest health and nutrition companies in Australia and are seeking to stock their products in major supermarkets. ATP Science have a similar story—having certainty and prompt payment times allows them to plan and invest back into their business to hopefully grow and hire more locals. I'm pleased to say that that's exactly what they're doing with the new factory that they're currently building. These businesses will definitely benefit from this bill and the cultural change that it seeks to engender.

As a coalition government, we believe in small business. We know it's the backbone of our economy. Many of my colleagues on the government benches have run or worked in small business; it's in our DNA. I know the minister is especially passionate about small and family businesses. When she visits my electorate and chats with small business owners and those who work in business, her passion is on full display. You can see that the businesspeople appreciate that we're a government that has their back and gets their concerns.

There are many things that we have been doing throughout this coronavirus pandemic to support small business. In addition to legislation such as this, we can look at a no more perfect example than the JobKeeper program the government initiated as part of our COVID response plan. This program, designed to keep employees in touch with their employers, was taken up by small business and sole traders across the electorate of Forde. We want to see business thrive and prosper. It's through our small to medium businesses striving and prospering that we see the economic development and the jobs. Also, importantly, many of the small to medium businesses are leading innovation in our country. It is why it's critical that we support these businesses to ensure that they get paid on time. As I said at the outset, good cash flow helps these businesses with the things I've outlined above. A predictable cash flow helps business to employ, grow and survive. I know the small to medium businesses across the electorate of Forde, and across the electorates represented in this place, will be keen for the passage of this bill and the cultural change it seeks to drive for the future of all businesses in this country. I wholeheartedly commend this bill, in its unamended form, to the House.

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