Julian Hill (Bruce, Australian Labor Party) Share this | Link to this | Hansard source

I just ask everyone to imagine walking into their favourite local coffee shop—for the member for Jagajaga here it might be in Heidelberg—grabbing a coffee and some breakfast and saying, 'Actually, I'll be back in 90 days to pay you.' Imagine going to your favourite local gift shop—I'd suggest Endeavour Hills Shopping Centre; there's an excellent gift shop there—buying a gift for your mum and saying, 'Actually, thanks for that, I'm going to take that now and I'll be back next March to pay you.' That is unthinkable and it's also wrong, just as it should be wrong for big business to long delay payments for small businesses.

Cash flow and payment times are absolutely critical for small businesses. It's simply unfair for big business to delay payments. Late payments are a major stress, and it's incredibly wasteful of the time of small-business owners and operators for them to have to spend time chasing and chasing the accounts departments of big businesses that just don't seem to care. Small business is critical to the Australian economy—more than $500 billion of economic value. More than 2.5 million individual small businesses are creating more than five million jobs and employing more than five million Australians in those jobs.

I would say, at the outset, something about one of the silliest things that we hear from those opposite. It is a very long list; I wouldn't say this is at the top. The Minister for Climate Change and Energy over there would probably talk about nuclear power and so on. That is pretty silly. But one of the silliest things we hear consistently is their schtick, their claim, their brand propaganda that somehow the Liberals are the party of small business. It's just nonsense. I say unequivocally, if you actually look at the at the record—not announcements, not the spin, but actually what the Labor Party has done in government and the difference between the last government and this government—Labor is the party of small business. Those opposite run this line that no-one over here on this side has ever worked in a small business and that no-one over here has ever run a small business. That's also simply not true. It doesn't matter; they just keep saying it because it is part of their brand propaganda and shtick.

I worked in a small business. It was my university job. It was tough. My mum actually chose not to go back to nursing. She tried, but, when my dad died, she just couldn't make the shiftwork balance with caring for my brother and I. So she worked for some decades in a small business doing accounts, stock control and sales. I ended up doing that as my university job and saw firsthand the stress of the cashflow impacts, the way that you have to balance payments and the impact when suppliers are simply not paying you on time.

Many government members—the employment minister, for instance—have operated their own small businesses, and many of our current ministers have husbands, wives or partners who operate small businesses—the Minister for Small Business, for instance.

To be very clear, when you strip it back, the core purpose of the Liberal Party has never changed. It's to protect those who already have the most accumulated wealth. That's the thing that sets them completely off. The other thing that sets them off, of course, is changes that are fair to workers. That's another speech.

But I'll stand on the government's record. This bill exemplifies that. The context is important. The budget, which complements that, will ease the pressure on 2.5 million Australian small businesses, providing more than $640 million in practical and targeted support. The payment time changes are important, but so is the government's initiative to invest $290 million, extending the $20,000 instant asset write-off, making it easier for small business to invest and grow. They like to claim that on the opposition side as one of their policies. They conveniently forget that it was the Rudd and Gillard government who put that measure in. Then the Liberals got elected and Tony Abbott scrapped it, until we embarrassed them into putting it back. But they like to pretend it was theirs.

The bill overhauls the payment times—

Andrew Hastie (Canning, Liberal Party, Shadow Minister for Defence) Share this | Link to this | Hansard source

Deputy Speaker, on a point of order on relevance: as much as we're entertained by this journey through history and partisanship, can we get back to the bill?

Chris Bowen (McMahon, Australian Labor Party, Minister for Climate Change and Energy) Share this | Link to this | Hansard source

Deputy Speaker, on the point of order, there's a very clear tradition of members being able to range broadly about how we got to a situation and why the matter before the House is important. I think that the member for Bruce is entirely within standing orders.

Scott Buchholz (Wright, Liberal Party) Share this | Link to this | Hansard source

I thank the members for their contributions. The debate before the House is the Payment Times Reporting Amendment Bill 2024. The member for Bruce did start off relevant. I'll be listening carefully.

Julian Hill (Bruce, Australian Labor Party) Share this | Link to this | Hansard source

I think the point of order proved my point: they don't actually like it when you talk about their practical record on small business and why bills like this are necessary. We could all argue the point about the second reading amendment, which no doubt, as sure as night follows day, is pretty broad and would cover pretty much whatever you wanted to say. But I'll keep on.

The bill overhauls the Payment Times Reporting Act. It levels the playing field so large businesses have to treat small businesses fairly. It will increase the pressure on big business to pay on time, including name-and-shame provisions for slow-paying big businesses. You don't want to have to use them. The point is to create incentives, through the system, for big business to do the right thing and pay on time. To be fair, many big businesses do pay on time. They get this; they get that there SMEs, their suppliers, are important and that keeping them viable, keeping them afloat by doing the right thing and paying on time, does matter. But the bill will also do this but in a way which reduces red tape, streamlines reporting pressures and removes inefficiencies in the system.

The Payment Times Reporting Regulator is getting $33 million, as a complementary budget measure, to improve its ICT infrastructure. It's part of modern government, really. You can't just design measures like this without the policy going hand in glove with ICT improvements. As we saw repeatedly under the former government—was it $92 million they wasted on the failed visa privatisation through Liberal mate Scott Briggs, and, before that, their first crack at it, another $80 million or thereabouts on a failed ICT project?—it's important, like this measure shows, to get the ICT lined up with the policy changes. The reforms impact the same large business cohort—large businesses with over $100 million—required to report previously but do it in a way, as I said, that cuts red tape and makes it easier for big businesses to comply with their obligations.

There has been a legitimate question raised as to why the minister needs a power to give direction to slow payers of small businesses. Quite simply, the power will shine a light on large businesses that are persistently slow in paying their small-business suppliers. It creates the incentive, as I said, for large businesses to treat small businesses more fairly. Such a direction can also draw attention to the practices of slow-paying large businesses much earlier and with more prominence than just the reporting regime: 'If a large business pays slow, people will know.'

I'll leave my remarks there. I'm sorry to have upset the shadow minister in stating a few facts, but it is a fact that when the Liberals were last elected to government they cancelled the instant asset write-off test. I know it upsets them when you say it. They'll find another point of order. I don't want to upset you. I mean, you can get your steps up. You can jump up and down and take little points of order to stop the truth coming out, Shadow Minister, but it is a fact. Labor are proud of our record on small business. I'm proud of our budget initiatives and I'm proud of the fact that we've found a way, with this legislation and the complementary ICT investments, to get big businesses paying small businesses more quickly, making a real difference to cash flow and such.

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

I rise to talk on the Payment Times Reporting Amendment Bill 2024. This is a bill which is near and dear to my heart. It's a bill that encompasses an area of law I practised in for 16 years.

Julian Hill (Bruce, Australian Labor Party) Share this | Link to this | Hansard source

You should go back.

Andrew Wallace (Fisher, Liberal National Party) Share this | Link to 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.

Carina Garland (Chisholm, Australian Labor Party) Share this | Link to this | Hansard source

I'm really pleased to rise in support of the Payment Times Reporting Amendment Bill 2024. This is fulfilling a commitment that we took to Australians at the last election. This important piece of legislation delivers on our commitment to the nation. Our commitment was to deliver legislation to improve payment times to small businesses, with an emphasis on payments being made within 30 days or less. As part of delivering on this commitment, our government commissioned Dr Craig Emerson to undertake a review of the Payment Times Reporting Act 2020, which has helped to inform how this legislation has been written and will be implemented.

The review by Dr Craig Emerson found that, in its current form, the Payment Times Reporting Scheme is ineffective, so this bill overhauls the Payment Times Reporting Act 2020 to level the playing field and encourage large businesses to treat their small-business suppliers fairly. The treatment of small business by large business through this mechanism forms the essence of this legislation, and I think it's something that all fair-minded Australians would believe is the right thing for their government to do. We are acting on our commitment that we made during the election. We know small businesses are the backbone of the Australian economy, employing more than five million people and contributing more than $500 billion to the national economy.

In my own electorate of Chisholm we are home to 22,545 small businesses, employing tens of thousands of people in my community. These small businesses make an enormous contribution to the fabric of my community. One of my favourite parts of the job is getting to meet and know many small-business owners in the electorate. We recently launched our Chisholm 'shop local' initiative. I was so delighted to host our wonderful Minister for Small Business at a local small-business roundtable recently. I really want to thank everyone who participated in that event. My most recent Shop Local, Love Local campaign has been to encourage the Chisholm community to support local businesses in the lead-up to Mother's Day. My office created the Chisholm Mother's Day gift guide, featuring amazing local businesses, encouraging the community to both shop local and love local. At the end of last year, I was really pleased to see a local small business featured in the parliament gift shop, Tinta Crayons. There are still products available there, if people would like to see some of the fantastic work being undertaken in my electorate and being brought to our nation's capital.

The businesses that I feature in my gift guides and that I promote throughout my community and shop at as well are the ones that stand to benefit most from the legislation before the House. We know how important cash flow and payment times are to small businesses, particularly for small businesses who supply goods and services to larger companies. It's unfair for those larger corporations to delay paying small business invoices. Customers would never think of walking into our local bakeries, newsagents or coffee shops and trying to get away with 90-day payment terms. So this is an important step forward in bringing fairness into our business landscape. We know that late payments affect the cash flow of the business owed the outstanding debt, which forces many small businesses to find ways to finance that shortfall in their working capital and this restricts the ability of small business to use their cash flow to grow or invest in new products and services. We also know that a lack of cash flow is the leading cause of business insolvency.

Unfortunately, we also know that there has been a growing trend in payment practices, particularly amongst larger multinational businesses, to extend payment times to Australian small businesses. That growth in extended payment times is partly linked to the practices of multinational businesses applying global policies to improve their working capital efficiency. This effectively renders Australian businesses as the low-cost financiers of large and multinational corporations, and that should simply not be so.

It is a matter of fairness that this legislation addresses. It helps to level the playing field for small businesses right across Australia and for the more than 22,000 small businesses in my electorate of Chisholm. Our reforms will reduce regulatory burdens for reporting entities with obligations under the act, incentivise large businesses to improve their payment times and streamline processes and remove inefficiencies. Reforms will also improve outcomes for small businesses and incentivise large businesses to make prompt payment. That includes a shift to consolidated reporting in accordance with Australian accounting standards to improve the quality, completeness and comparability of reported data. Additionally, a mechanism for the Minister for Small Businesses to give a direction to an entity in the lowest 20 per cent of payers overall or industry to make enhanced disclosures is contained here as well. The minister can direct a slow-paying entity to state on its website and in procurement ESG related and other documents that it is a slow small-business payer as well as to inform the market on how to access its payment time reports. The payment times reporting regulator will then place a record in the payment times reporting register that the entity is a slow small-business payer.

These are important reforms and will function as both incentive and disincentive for large businesses as it relates to their small-business payment times. With faster payment times, improved cash flow and fewer administrative burdens, our reforms will make a real difference. We know that better payment times benefit everyone, which results in gains to productivity, supporting higher wages and profits and expanding employment opportunities.

These reforms are an important part of the Albanese Labor government's better deal for small business. We are delivering for small businesses, helping them to bounce back from challenges and improving their long-term resilience. Our budget is helping to ease the pressure on Australia's small businesses by providing more than $640 million in practical and targeted support. We're extending the $20,000 instant asset write-off, making it easier for small businesses to invest in their business. We'll provide additional targeted energy relief of $325 to around one million eligible small businesses through the Energy Bill Relief Fund. This builds on the up-to-$650 rebate that is being provided in this budget year.

Our government is also investing $18.3 million in two innovative programs—the cyber health check program and the Small Business Cyber Resilience Service—to help small businesses build their resilience to and bounce back from cyber attacks. This is in addition to the existing $23.4 million our government is committing to the Cyber Wardens program delivered by the Council of Small Business Organisations Australia. We've already delivered $18.6 million to help support small businesses adapt and build resilience through digital technology through the latest round of Digital Solutions, and we are continuing to strengthen this vital sector by investing an additional $10.8 million to extend access to free mental health and financial counselling support for small business owners. This additional funding builds on the $15.1 million we've already invested in these programs.

We've also updated the Commonwealth procurement rules, with small businesses getting a larger slice of the $75 billion in contracts that the Australian government spends every year. This will result in a 20 per cent target for small businesses when it comes to government procurement spend. Unfair contract terms are now illegal, thanks to our action, so small businesses can negotiate fairer agreements with large partners. We've also responded to Dr Michael Schaper's review of the Franchising Code of Conduct.

Our government is committed to supporting small business and investing in their future and the ambitions and aspirations of small business owners right around the country, because we know that small businesses are vital to the fabric of Australian society. We will always do what we can when we can in order to help small businesses and the communities they serve. I want to take this opportunity now to thank the small business community in my electorate of Chisholm. Our government does not underestimate the investment in resources, time and community that it takes to operate a small business, to recruit and train employees, to organise payroll and to build a future for those owners and their families. Indeed, I grew up in a household where my family ran a small business. I trust these reforms will make a meaningful difference to small businesses right across my electorate of Chisholm and across the country. I'll also take this opportunity to remind people to shop at and love their local small businesses. Thank you so much.

Michael McCormack (Riverina, National Party, Shadow Minister for International Development and the Pacific) Share this | Link to this | Hansard source

Small business plays a crucial role in the Australian economy. According to the Small business data report: 2023 year in review, approximately 42 per cent of private sector employment is in the small business sector. Small business adds one-third of gross value. It accounts for 97½ per cent of all businesses, roughly 2½ million, and it generates $500 billion of economic activity. That's a third of Australia's gross domestic product. They are big numbers. They are impressive figures. And we should, as the member for Chisholm has just stated, do everything we can to help small business. And I hear, hear, hear from the member for Moreton. He knows how important small business is in his Queensland community.

Last week, we heard—and we welcomed, indeed—the member for Chifley, the Minister for Industry and Science, saying that small businesses need some tax relief—some more tax relief, in fact. He said that the corporate tax rate should be lowered. He's not here this week. Maybe he's been sent for reprogramming by the Treasurer, who I'm not quite sure totally agreed with the member for Chifley's assessment of where the corporate tax rate is or should be, but no doubt the member for Chifley will consider the error of his ways when he goes against the member for Rankin. I say that very facetiously; I wouldn't want people to think I don't believe the corporate tax rate should be lowered, because when I was the small-business minister back in 2016 the small-business tax rate went down to its lowest level in 70 years. I was very proud of that.

As I just said—and the member for Chisholm agreed in her contribution—we should do everything we can to support, to promote and to enhance small business because it's small-business people who take the risk. It's small-business people who open the doors, who pay the rent, who pay the wages. Now they're having to pay even more wages after the announcement this week by the Fair Work Commission that wages are to go up by 3¾ per cent. No-one denies workers should be paid their dues, but it comes on the back of small business; they then have to find, in a cost-of-living crisis, more to pay their workers. What do they do? Do they put the price of their products up? Do they put the cost of their services up? Who ultimately pays for that? It's the consumer, the customer. Someone has to pay. Whether it's superannuation or wages, it's that small-business operator—that person who often pays their employees first, as they should; who puts away money for their superannuation, as they should; and who often gets paid less in small business than the person they employ to help run their shop. I pay tribute and credit to those small-business operators. They are risk-takers. In many cases—that is, farmers—they are price-takers, not price-makers, and they are certainly risk-takers because they operate on the smell of an oily rag. They operate on the whim of the weather gods. They operate on whether or not there are going to be good times in the economy.

We're talking about payment times reporting. Indeed, anything that can be done to ensure payment times are what they should be has got to be considered very much on its merit and very much supported by the coalition. But let's just consider the 4 June Daily Telegraph editorial, which was headed, 'Insolvencies are climbing and could send NSW broke'. Luke Achterstraat was the co-writer of this; he is the chief executive officer of the Council of Small Business Organisations Australia, so when he speaks we ought to listen. It was co-authored by Denita Wawn—someone very well known to me—the CEO of Master Builders Australia. And she and he, like the good member for Chifley, bell the cat. He calls for a lower corporate tax rate. They, in a very what could be called grim article, wrote about the shocking insolvency figures released just last week detailing the crisis facing small business in my home state of New South Wales:

ASIC's latest insolvency statistics provides the horrid figure of almost 4000 NSW businesses going bust in the year to date—

That's what they wrote; that was the second sentence in that very alarming article—

Business insolvencies in NSW are now up 61 per cent year on year.

In the same week the NSW government has set ambitious housing targets to be met, the sobering news is construction industry insolvencies are up 111 per cent from this time last year.

And we have a housing minister who talks about increasing the housing stock. I don't necessarily disagree with her, but, when you've got state governments shutting down gas, when you've got state governments like Victoria stopping the timber industry, I wonder how this is going to be met by the housing industry when they are trying to power homes, when they are trying to construct homes. What in goodness knows name will they be building houses out of if they can't use Australian timber? What we'll do is we'll import it. We'll just rape and pillage rainforests overseas to get the timber we need to build houses to accommodate the numbers of migration, which are just not sustainable. The numbers are just not sustainable. In fact, in January and February alone, we welcomed—and I do use the word 'welcomed'—more than 100,000 new citizens in each of those months, as part of the overseas migration intake. That number is equivalent to the yearly total of migrants during the Howard era. This comes on the back of a cost-of-living crisis. This comes on the back of a housing crisis.

Amanda Rishworth (Kingston, Australian Labor Party, Minister for Social Services) Share this | Link to this | Hansard source

Plenty of people, though, are here temporarily.

Michael McCormack (Riverina, National Party, Shadow Minister for International Development and the Pacific) Share this | Link to this | Hansard source

Sure. I don't disagree with the minister at the table, but it still is a truism that we are importing record numbers of people, and they are staying mainly on the eastern seaboard, where 85 per cent of Australians live. They are not taking up the offers of employment or accommodation in regional Australia. Regional Australia—which carried this nation, by the way, during COVID—

Kevin Hogan (Page, National Party, Shadow Minister for Trade and Tourism) Share this | Link to this | Hansard source

All the time, not just COVID.

Michael McCormack (Riverina, National Party, Shadow Minister for International Development and the Pacific) Share this | Link to this | Hansard source

Indeed, but particularly during COVID. I take that, Member for Page—all the time.

Amanda Rishworth (Kingston, Australian Labor Party, Minister for Social Services) Share this | Link to this | Hansard source

You're just having a conversation.

Michael McCormack (Riverina, National Party, Shadow Minister for International Development and the Pacific) Share this | Link to this | Hansard source

We have great conversations, let me tell you. Unlike the caucus of the Labor Party, we actually get along.

Indeed, regional Australia is carrying this nation, but never more so than during COVID. Small businesses in regional Australia are doing it tough. As this Daily Telegraph editorial by the two authors I mentioned earlier states:

We are clearly not doing enough to support those doing it tough. Legislating housing targets is one thing but ensuring builders can remain in business and deliver on these targets is another. Recent building approval figures for NSW show over the last 12 months less than 45,000 homes were approved, well below the 75,000 required each year.

That's just New South Wales. It doesn't take into account Queensland or Victoria, where there is so much pressure on the housing markets, as there is right across the nation. As Luke and Denita point out:

The ASIC figures also reveal very few industries were left untouched. Retail industry insolvencies are up 31 per cent year on year.

Thirty-one per cent, Deputy Speaker. They go on:

The stakes are extremely high, with 850,000 small businesses in NSW employing 1.7 million people and paying annual wages of almost $70bn.

But what did we get during the recent budget? Well, we got 36,000 more public servants. That's what we got. Someone's got to pay for those too. Taxes will pay for those—taxes paid by small businesses, taxes paid right across the board. The editorial says:

We seem to have forgotten that a future plan for Australia starts with empowering the entrepreneurs willing to risk their own capital.

We need to ensure red tape is reduced rather than increased to help small businesses survive.

That is so very true. They add:

Too many government measures are only adding to the fatigue of small business owners.

For instance, from 1 January all small cafes and restaurants will be required to label the origin of each seafood item on its menu.

While this might make business sense for luxury establishments, it means more cost and red tape for mum-and-dad fish-and-chip shops selling seafood baskets and marinara pizzas.

The NSW Small Business Commissioner has estimated costs of over $2800 for a small-business owner to physically alter printed menus.

It's just another bit of bureaucracy, just another bit of red tape, brought to you by a Labor government.

Graham Perrett (Moreton, Australian Labor Party) Share this | Link to this | Hansard source

Supporting Australian aquaculture!

Michael McCormack (Riverina, National Party, Shadow Minister for International Development and the Pacific) Share this | Link to this | Hansard source

That'll be the day! This bill seeks to achieve several outcomes. It's going 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. It is also going to name and shame. It's going to permit the minister to direct a slow-paying entity to state in public-facing materials that it is a slow small business payer, provide information on how to access its payment times reports and allow the regulator to record in the register that an entity is a slow small business payer.

There may be any number of reasons, good and bad, for a business to be tardy in paying its bills. Does it deserve to be named and shamed? According to the government, yes. The Payment Times Reporting Amendment Bill is going to expand the functions of the regulator to include research, publishing and outreach with respect to payment outcomes, update the objects of the act to reflect the purpose of improving payment outcomes for small businesses, incentivise large businesses to make prompt payments, streamline reporting obligations and decrease the regulatory burden experienced by reporting entities. It will also enable consolidated reporting in accordance with Australian accounting standards to improve the quality, completeness and comparability of data reported on the register, so it is going to be more onerous on small businesses.

Whilst the coalition supports the measures this bill contains, we need to remember that in everything we do in this place that there are people out there who are doing it really tough. There are small business operators who are finding it very difficult to keep opening their doors and to keep the lights on. That's not just because their power bills are going through the roof, but because of the red tape and bureaucracy that this Labor government seems to always want to foist on small businesses.

Not many of those opposite—a few, I will admit and agree—have actually run a small business. Many of them have actually run picket lines out the front of businesses, but not many of them have actually operated a small business. I have, I know, and it's tough. I know the member for Page has run a successful business. We come to this place with that knowledge, expertise and skin in the game. We've put own hard earned on the line to build a better local economy and to help our families—at the end of the day, that's first and foremost.

This government is doing so much to impede and hamper small business smoothness and efficiency. I will acknowledge the work being done by Bruce Billson, a former small business minister, heading up the Australian Small Business and Family Enterprise Ombudsman's Office. Small businesses should go to ASBFEO and have a look at what they have available on their website, because it is fast, it's knowledgeable and it will help a small business operate in these difficult times, in these trying circumstances. It will help them with tax and it will help them navigate their way through the various acts, and it is to be encouraged and admired.

I worry about small business. I worry about the fact that unions are dictating the terms to this government, as you would expect. There's always a payday when a Labor government is elected because they've got to pay back their union masters. They've got to pay back those who pull the strings. They are mere puppets of the trade union movement, and that only affects and impedes and slows small businesses across Australia, who need every bit of help from this disappointing government.

Allegra Spender (Wentworth, Independent) Share this | Link to this | Hansard source

As the minister said in her second reading speech, small business is the backbone of our economy. They represent 97 per cent of all Australian businesses, around 40 per cent of private sector jobs and 30 per cent of GDP.

Small businesses deliver growth, innovation, productivity, employment and support for local communities. I'm very proud of the small businesses in Wentworth who are doing all these things. Some of those businesses, such as florists and cafes, you'll see as you walk down the street, but many of those small businesses will be businesses in the B2B sector. They're people that you don't see, but they are also critical parts of the supply chain. They are the beds of our innovation. There are so many businesses I've seen in Wentworth who may be small now but aspire to great things. So many of the Australian businesses that we have in the community today were small businesses once. It is that innovation, that talent and that drive that we, in this place, need to harness.

To come to the Payment Times Reporting Amendment Bill, this is a really important bill on the basis that there are important relationships between those small, medium and large businesses. According to the BCA, trade between small and large businesses represents around $700 billion a year. That is enormous. At the same time, in looking at that trade, we need to recognise the environment that our small businesses are operating in right now. It is a hard time to be a small business. Coming out of the COVID pandemic, when lockdowns were in place and demand slumped, businesses now face the enduring effects of inflation, supply chain bottlenecks, a struggling economy, high material costs and, still, difficulty in finding people to employ in their businesses. It is a really difficult time to be in business, and that's something that I hear constantly from the people I know in the business community.

On top of that, smaller businesses are facing a skewed business environment in the hands of large local multinational organisations that can exert power in different ways. That exertion of power actually stops smaller businesses growing and developing in the way that they would like to. I think this is an important area to address in the parliament. One area where this plays out is in payment times. As a former small-business owner, I know firsthand how difficult it is to manage the timing of cash flows, along with everything else. According to ASIC, inadequate cash flow is the most common cause for insolvencies in Australian businesses, and often, as a small business, this can be out of your hands. My mum often told me that when she started her business she learned very quickly and very early on that you have to get paid. That was a big part of what she used to do, as someone who supplied clothes to bigger businesses. As the owner of a new business starting out she was as obsessive about that as she was about the quality and fit of the clothes she made—because you have to get paid. If you don't get paid, you don't have a business.

The small business ombudsman found, in 2017, that large businesses were extending payment terms and delaying payments to better manage their own inventory and essentially using delayed payments as a form of cheap credit. This is undertaken often without consideration for the impact on small businesses dealing with their own cash flow issues. In 2020, the original form of this act established the Payment Times Reporting Scheme to address this issue. The scheme required regular payment time reports from eligible entities to be published on a register which could be accessed by small businesses. The idea was: greater transparency, faster payments.

A review of the original act published two years later, however, found that the register had no material decrease in payment times and found no evidence that small businesses were rejecting customers based on the reports published. That makes complete sense to me, because, if you're a small business, most of the time you don't get to pick and choose your customers. You're trying very hard to get and build your customer base, so, even if someone is a late payer, if you believe they're going to pay you you're going to stick with them. As of this week, the average payment time is still at 32 days, above the 30-day target period outlined in the legislation, with payment times in many instances extending well beyond this.

This bill strengthens the act from 2020 by implementing greater enforceability and compulsion powers for the regulator. Under this new law, the regulator will have expanded powers to gather information beyond just payment times from large businesses and to enact penalties for the slowest payers and those who fail to comply. The explanatory memorandum outlines that slow payers will be required to publish a statement on their website and other relevant documentation, including procurement documents, invoices and other commercial documents.

I recognise what this bill is trying to achieve but I have concerns that, for all its good intentions, it may not achieve the outcomes it seeks. That's because piecemeal solutions without the muscle behind them may not do anything substantial to affect small businesses and may instead just increase the volume of regulation in the economy. Despite the change in this bill, the legislation fails to address the fact that the 2020 review found that small businesses generally don't have the luxury of being choosy as to with whom they conduct business. Even if large companies have to publish their track record, small businesses are unlikely to turn down a major contract because of payment delay. Previous reviews tell us that.

The mechanisms of this bill are also somewhat dependent on the average. The explanatory memorandum states that the bottom 20 per cent of late payers will be subject to penalties, but currently not even the average payment falls within the target 30-day period. While it means that the most egregious offenders will be punished, there is little incentive for those businesses safely in the middle of the pack until the bottom quintile get their act together. My question to the minister is: is this the best that we can do to get rid of slow payments in our economy? For instance, would the government consider implementing a policy to not use slow payers in public contracts as an additional incentive to see if that's one way that we can actually drive better practices for small businesses?

In conclusion, the government is bringing this legislation forward to try to protect small businesses. I support the ethos and I support what the bill is actually trying to achieve. My big question is whether this will have the muscle to make the difference in the payment times for small businesses that I believe the minister would like to make and that I know small businesses critically need. One last issue I want to raise is that regulators that are established without powers or the means to make meaningful difference to the business community are worse than useless. I see this in the current ACCC, which only has a capacity to deal with 42 per cent of competition complaints, only 70 per cent of which are conducted within the target time of 12 months. So, if we have a regulator that can't actually deliver on the protections, then we don't actually have the protections in place, as much as we might feel that we are passing those protections as we stand here giving speeches in the House.

I will support this legislation because I believe this is a significant issue. However, I'm not convinced that it will significantly improve the lives of small businesses in the way that we would like it to. I hope I am proved wrong.

Aaron Violi (Casey, Liberal Party) Share this | Link to this | Hansard source

I want to commend the member for Wentworth for her contribution. I was listening intently, and the member is right: unless there's a tough cop on the beat, it's not going to make a difference. It was a wonderful contribution explaining the importance of cash payments. When the member was talking about her mum, I had a flashback to my former boss, good friend and mentor Andrew Blain, who owned Yarra Valley Snack Foods, where I was lucky enough to work for seven years. He spoke to me about the importance of cash flow and used to always say, 'Aaron, just remember: a sale isn't a sale until we get paid.' That's the reality for small business. They don't have millions of dollars in cash reserves. They don't have money sitting there to afford it. On a balance sheet of assets, profit and loss is important, but the lifeblood of a small business is cash flow and having more cash in the bank to be able to pay your employees, pay your suppliers and survive.

The reality that we need to acknowledge for many small-business owners and family businesses across Casey and across the country is that, when they don't have the cash, the people that go without are the owners. The owners always pay themselves last. When they don't have the money, they will pay their employees, they will work with their suppliers and, many times, they will go weeks without payment themselves. So we need to do everything we can in this House to make sure that we're supporting small business, that we're creating the conditions for them to succeed and that, when they do make a sale to a big business, they get paid. I want to take a moment to thank all the small businesses in Casey and across the country for everything that they do. You are the engine room of the economy, you drive innovation, you drive economic growth and you take risks, in many cases putting your family house on the line to chase your dream. Our role and our responsibility is to make your life as easy as possible.

Governments should not be picking winners. Governments shouldn't be backing multinationals and billionaires. They should be focused on creating the economic conditions so small business can thrive. In my community and in many communities across the country, it's the small businesses that give so much back. Anyone who visits a sporting ground in their community will see that. They will see it on the signs around the boundary. Every one of those sponsors is a small and family business giving back to their community. I've seen lots of IGA signs at sporting clubs across my community. I've never seen a Woolworths or a Coles sign at a sporting club in my community. That's why we need to back small business.

I spent 15 years working with and in small businesses, dealing with companies like Woolworths and Coles. Let's understand some of the behaviour of these big businesses—some of the behaviour that we need to stamp out. I hope this legislation will have an important role in doing that. As one example, Woolworths and Coles, in their negotiations with small businesses, will say to them, 'We'll pay you within 90 days, but if you give us an extra per cent out of your margin, we'll pay you within 60 days. If you give us another per cent, we'll pay you within 30 days, and if you give us another per cent, we'll pay you within 14. Give us five per cent and we'll pay you within a week.'

Let's be clear about this behaviour: this is Woolworths and Coles using their market share to bully small businesses—small family food manufacturers trying to survive—and prop up their profits and their margins at the expense of those businesses. That is some of the behaviour that we are talking about. That is some of the behaviour that we need to eliminate, because, if small businesses don't have cash flow, they won't survive.

This is the most challenging time businesses have had. I was speaking recently to a business leader in my community, a man who is not prone to hyperbole or exaggeration. His family business has been operating for three generations. He's been in the business for over 37 years and he said to me that this is the toughest economic environment that he has endured. It is a time when revenues are coming down because people are spending less, and we saw that in the national accounts. Their revenues are less but their expenses are going up. Every expense is going up for them: their rents, their mortgages, their energy bills, their insurance, the raw materials that they're getting from suppliers. Everything is going up and, unfortunately, we're seeing that when we walk through our communities and there are empty shopfronts. We're seeing it in the insolvency numbers. We're seeing it every day. We know it's challenging for small businesses, and we think: what is the government doing to support small business?

I will always stand in this House and speak on any legislation to support small business, but I was thinking this week that it had been a while since I'd had the opportunity to speak on legislation about small business in this tough economic environment, so I asked my team to reach out to the Parliamentary Library to do a little bit of research. I asked them a simple question: how many pieces of legislation directly related to small business has the Minister for Small Business introduced into this House in the last two years? I was waiting to get that answer, and it shocked and disappointed me when I got the response from the Parliamentary Library, because the fact is that this is the first piece of legislation that the Minister for Small Business has brought to this House in two years.

We are two years into the Albanese Labor government. We are in an environment where small businesses are struggling, and they are getting no support from the government. This week the Parliamentary Library gave me the data that this is the first piece of legislation that is directly related to small business that the Minister for Small Business has brought to this House. We are two years into the government, and it shocks me.

Julie Collins (Franklin, Australian Labor Party, Minister for Small Business) Share this | Link to this | Hansard source

You don't want to regulate them, do you?

Aaron Violi (Casey, Liberal Party) Share this | Link to this | Hansard source

It's not always about regulation, Minister for Small Business. It's about supporting them. It's about providing opportunities to help small business grow. The interjection from the Minister for Small Business is: 'You don't want to regulate small business.' That shows how out of touch this government is. Talk about a government that doesn't understand small business! It tries to defend the fact that, in two years, it has brought in no support and no legislation for small business. This is coming from the Parliamentary Library. If you want to dispute the Parliamentary Library, feel free to. But this is the first piece of legislation that the minister has brought to this House. I believe she is on her feet next. She can contradict me and contradict the Parliamentary Library if she likes, but it's not about what you say; it's about what you do. For two years, the Albanese Labor government have abandoned small business. They have abandoned small and family businesses in my community and across the country, and those businesses know it. They tell us every day. The member for Page knows. They tell us that every day when we are talking to them. They feel abandoned. The facts show that they have been abandoned by this government.

This piece of legislation—let's be clear—was enacted in 2020. This was a piece of legislation enacted by the coalition government. It commenced on 1 January 2021. The review was called for by the minister in December of 2022. The minister then got the review in September of 2023. It took until December of 2023 to get a response. We are now in June of 2024 and we've finally got the legislation in this House. It then needs to be enacted. It then actually needs to operate. When you are a small business and your cash flow is under so much pressure, days, weeks and months matter. They make a difference. But, for two years, we have had no legislation from the minister. They have sat on this report for months and years. They're finally bringing it to the House. The first piece of legislation to support small business that the minister brings to the House is actually a coalition piece of legislation. I don't think anything else can sum it up more than that.

It's heartbreaking, because so many families are doing it tough. I was talking to a hospitality venue in my community. The husband and wife who own that venue are now working over 80 hours a week each just to keep the business afloat because they cannot afford to pay the wages of their employees. They are sacrificing time with their family. Their children are having to pull out of sporting organisations and organised sport for two reasons. They don't have the money to pay the fees and for the uniforms and they don't have the time to take their children to the events. They have sacrificed everything for this business. They are sacrificing everything today. They are working so hard. The sad part is that they have been abandoned by this government. That's the reality. That's one story. I could share many more. It is disappointing to see.

As I said, two years in, we've finally got a piece of legislation and it is a coalition piece of legislation that has been worked up. I think that sums up the Albanese Labor government and the disrespect and disregard they have for small business across Casey and across the country.

Julie Collins (Franklin, Australian Labor Party, Minister for Small Business) Share this | Link to this | Hansard source

I would like to thank those who have contributed to the debate. I know how important small businesses are to the electorates that we represent. The Payment Times Reporting Amendment Bill 2024 is an important part of the Albanese government's commitment to delivering a better deal for small businesses. The bill implements important amendments to the Payment Times Reporting Act 2020 to level the playing field by promoting fair and timely payments from large businesses to their small-business suppliers. Our government recognises how crucial prompt payments are to small businesses and their cash flow. We are supporting small businesses to support broader economic growth.

The bill introduces a framework of transparency to name best- and worst-paying large businesses. This will create reputational pressure for large businesses, encouraging them to improve their payment times, terms and practices. It is important for the regulator to have appropriate powers to ensure big businesses are meeting their obligations under the act.

This bill broadens the regulator's functions to include undertaking research and publishing analysis on payment performance and practices on reporting entities. This research will identify the causes of slow payment practices and barriers to improvements and will provide the public with tools and data to understand and interpret the payment performance of large businesses. At the same time, this bill reduces regulatory burden for entities covered by the act, streamlining processes and removing inefficiencies from the act.

The reforms in this bill implement the government's response to Dr Emerson's review of the Payment Times Reporting Act 2020 and complement the other measures the Albanese Labor government is taking to support small businesses. Our budget is helping to ease the pressure on Australia's small businesses by providing more than $640 million in practical and targeted support. We're extending the $20,000 instant asset write-off to make it easier for small businesses to invest and grow their business. We will provide further targeted energy bill relief of $325 to around one million eligible small businesses through the energy bill relief fund, which builds on the up to $650 rebate that is being provided this financial year.

The government is investing over $60 million to help small businesses uplift their cybersecurity and digital capabilities. We're investing in free mental health and financial counselling support for small-business owners. We've updated the Commonwealth procurement rules, and small businesses are getting a bigger slice of the $75 billion in contracts the Australian government spends every year. We've made unfair contract terms illegal so small businesses can negotiate fairer agreements with large partners. We've responded to Dr Michael Schaper's review of the Franchising Code of Conduct, supporting changes to ensure a fairer franchising sector by requiring all agreements provide a reasonable opportunity for franchisees to make a return on their investment and provide greater access to low-cost legal advice if disputes occur.

This bill delivers on the government's commitment to improve payment times to small businesses. I am pleased that this important bill will receive support from the opposition and members of the crossbench. I trust members understand how important these reforms are, and I look forward to seeing this bill supported in the Senate. I commend the bill to the House.

Question agreed to.

Bill read a second time.