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

I'll take that interjection. I would like to think I'd earn a lot more money if I did go back, but this is where I am.

To anybody who is listening to these proceedings, in particular on any building sites around the country: I'd like you to listen up. I'm a carpenter and joiner by trade. I then went back to school and did a law degree as a mature-age student. I was involved in small business for 35 years before I came into this place. What any small-business person knows is that cash flow is the lifeblood of any business. You can be the best carpenter, plumber or electrician—the best tradesperson—in the world, but if you don't have cash flow your business's days are numbered. Cash flow is king.

What we have seen for many years in this country, particularly in the construction sector, is a reluctance to pay on time. Subcontractors, in particular those in the construction sector, are often referred to as 'a builder's bank'. Those days must be numbered. We cannot allow or see a continuous situation where those down the contractual chain, those who are smallest in their business size, are effectively held to ransom.

Every state and territory in this country, particularly in the construction sector, has security-of-payment legislation. There are eight separate pieces of legislation which deal with security of payment in this country. There are not nine. There are six states, two territories and one Commonwealth. The one that's missing is the Commonwealth. There is no Commonwealth legislation which deals with security of payment. Security of payment is tied to payment times.

This bill will amend a scheme that was put in place by the former government back in 2021. This bill largely improves upon the original scheme that we introduced and put in place when we were in government. The original scheme provided for large companies to be held to account if they paid those down the contractual chain in a slow fashion. It's a name-and-shame type of approach, and that's a good thing. I think this bill can be improved in a number of respects, and I'll come to that, but I think it's really worthwhile to point out why this bill is needed to the extent that it is.

These figures are taken from ASIC. Company insolvencies in Australia for the financial year of 2022 were just a tick under 5,000. The figure was 4,912. In financial year 2023 they jumped to 7,942. That figure for corporate insolvencies went up by 3,000. In financial year 2024—and we ain't finished yet; we've still got the May and June reporting periods to go, so we're two months short—we've had 8,743 corporate insolvencies. We are seeing the greatest number of corporate insolvencies in many, many years.

You might ask yourself why this is the case. It is because of the cost-of-living crisis that this government is responsible for. We've now had five quarters of the most challenging economic circumstances since 1991. The growth for the last quarter was 0.1 per cent. It doesn't get much closer to zero growth than 0.1 per cent. Every day, when we come into this place, we hear the Treasurer crowing about how this government has been so good economically, but there are thousands and thousands of businesses out there in the real world that are doing it incredibly tough, not least of which are those in the construction sector.

We are seeing higher rates of construction company failures than ever before. The construction industry received the highest number of reports of insolvency, at 28 per cent, followed by the accommodation and food services industry, at 15 per cent, according to the Australian Institute of Company Directors. According to the Australian Institute of Company Directors, the most commonly reported causes of business failure were inadequate cash flow and high cash use. The member for Longman was a very successful businessman before he came to this place. He knows the importance of cash flow. He knows, as does the vast bulk of members on this side of the House who come from a small-business background, that cash flow is king.

The operation of this act is very important to recognise. The bill seeks to achieve seven outcomes. The first is to create a mechanism to permit the Minister for Small Business to direct an entity found to be in the slowest 20 per cent of payers overall or by industry to make enhanced disclosures to the regulator. The second is to permit the minister to direct a slow-paying entity to state in public-facing materials that it is a slow small-business payer. That's a good thing. If I am a small business and I'm looking to enter into a contract with a large company—this isn't expressly stated in the legislation, so here's a tip for those members opposite—wouldn't it be good to see on the front page of the contract a warning that the company that I'm about to enter into a contract with is a small-business slow payer? Wouldn't that be a good idea? If I was a small business and I had the opportunity or perhaps the luxury to enter into a contract with two or multiple sets of businesses and the contracts were on the table and I had one contract that said, 'This company is a lousy payer,' and another that didn't have that on the front page, which one do you reckon I'd go with?

The third is to allow the regulator to record in the register that an entity is a slow small-business payer. The fourth is to expand the functions of the regulator to include research, publishing and outreach with respect to payment outcomes. The fifth is to update the objects of the act to reflect the purpose of improving payment outcomes for small businesses and incentivising large businesses to make prompt payments. The sixth is to streamline reporting obligations and decrease the regulatory burden experienced by reporting entities. The seventh is to enable consolidated reporting in accordance with Australian accounting standards to improve the quality, completeness and comparability of data reported on the register. These are all fine things. They're good things. The most important thing, really, out of this bill will be the power to name and shame. It will be the ability or the requirement for a large business that, if it has been declared a slow payer by the regulator, it must put that on its public information documents. That could be a letterhead or their website, one would assume. But, as I said, it should also go on the contract, because that's the most important document when it comes to dealing with a small business.

On this side of the House, we are unashamedly pro small business. We don't like red tape. We do understand that this bill creates some red tape for businesses. We understand that. But life is a series of counterbalancing decisions, and, in this case, on this side of the fence, we regard that the importance of ensuring the cash flow of small businesses outweighs the regulatory burden that this would create on large businesses. For those of you who may be listening to this on the radio, a small business is one that has a turnover of less than $100 million. A big business is one that has a turnover of in excess of $100 million. For all those tradies who are out there on building sites, unless they're really making a motza, you're not going to be caught by this legislation. You can relax from a position of being caught by the obligations of this bill but you will receive the benefits when and if you enter into a contract with a large company.

The average payment time in this country for businesses is reportedly 37 days. I think that dreaming, from my own experience as a construction law barrister, particularly in the construction sector. It is not uncommon for small businesses to be strung out by 90-120 days. If you are a small business and you are paying your employees, you've bought your materials, you've paid for all of your business overheads, and yet you don't get paid for 90-120 days, is it any wonder that we are seeing such an increased number of insolvencies in this country right now? Unfortunately, this is fed by the cost-of-living crisis in this country. Small businesses are absolutely caught up by this cost-of-living crisis. Small businesses often have to mortgage their own homes. I bet the member for Longman did; I sure as hell did. We mortgaged our own homes to be able to ensure that we had enough money to pay our employees, and yet people are now paying three times the interest rates than what they were paying when we were in government. Three or four years ago people were paying around two per cent on their mortgage payments. It's now edging up at around 6½ per cent to seven per cent. If they have an overdraft, it's probably over 12 per cent.

The cost-of-living crisis that is being meted out by this government is the root cause of so much of the insolvencies that we are seeing. This is a sensible bill—it needs some amendments, and I look forward to those amendments being moved.

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