Chris Bowen (Prospect, Australian Labor Party) Share this | Link to this | Hansard source

The federal government has a policy on payments by its departments to small business. It is a clear policy and a good policy. But it is a policy that the government does not observe or honour. The policy issued by the Department of Finance and Administration stipulates that all government departments should pay their bills to small businesses within 30 days of the delivery of goods and a properly rendered invoice.

The policy defines a small business as one which has fewer than 20 employees. Earlier this year, on the Notice Paper, I asked each minister for the percentage of bills paid by their departments to small businesses within 30 days and within 60 days. The results were astounding. Some government departments could not even answer this. I do not know how a government department can claim to comply with this policy when they do not even keep records of their payments to small business.

The Department of Defence told me that 10 per cent of their bills are not paid within 30 days. This amounts to 103,000 bills in the last financial year. They could not tell me how many of these unpaid bills were for small business. The Department of Finance and Administration—the department which developed the policy and issued the directive to other government departments—could not advise the parliament on whether or not they complied with their own policy. They simply did not keep records. The Department of Prime Minister and Cabinet did not keep records, so this department, the most important and most senior in the government, does not comply with government policy.

Some government departments do keep adequate records; however, their performance is not adequate. The Department of Families, Community Services and Indigenous Affairs do not pay their bills to small business in time in 23.51 per cent or almost one quarter of cases. The Attorney-General’s Department did not comply with the policy in 15.44 per cent of cases. The response of the Minister for Small Business and Tourism to this issue has been appalling. She is quoted in the Financial Review of 20 June 2006 as saying:

The Howard Government introduced a mandatory payment of 30 days for small business invoices and conducts a comprehensive annual survey.

She went on to claim that 90 per cent of bills are paid on time, although she did concede that further improvement is possible. It beggars belief that a minister could claim that 90 per cent of bills are paid to small business on time when you look at some of the figures I just shared with the House.

The purpose of this private member’s bill is to promote transparency and, frankly, to shame government departments into doing better. If this bill is passed, it will require government departments to keep proper records of their payments to small business and to publish their performance record in the annual report. Departments would also be required to report on what steps they are taking to improve their performance in making prompt payments to small business.

This is not some esoteric matter of public policy or administration. Small businesses are usually run on a very tight cash flow. Late payments are a major problem for small business. Businesses receive bills that they are obliged to pay on time, yet payment for services rendered by them are often late. Not only this, but I know that many small business people spend a considerable amount of their time, effort and resources on chasing up late payments.

To some degree late payments will always be with us and I suppose, unfortunately, they are a fact of life for small businesses. However, the government should be doing better. The government should be setting an example. Small businesses do not want special treatment from government; they simply want government to pay their bills on time. I would not have thought that that is too much to ask.

Alas, some federal government departments do have a poor record of paying their bills on time. This private member’s bill is not a magic bullet. It is not an automatic solution to the problem, but it would introduce more transparency and accountability. It happens in New South Wales and in the United Kingdom. This proposal would increase the pressure on government departments to lift their game. The Liberal Party claims to be the party of small business, so it should at least bring this matter on for a debate. If in the end it does not, I would respectfully submit that small business people are entitled to assume that the government does not really care about paying its bills on time.

Bill read a first time.

David Hawker (Speaker) Share this | Link to this | Hansard source

In accordance with standing order 41, the second reading will be made an order of the day for the next sitting.