Paul Scarr (Queensland, Liberal Party, Shadow Assistant Minister for Multicultural Engagement) Share this | Hansard source

I'm very pleased to rise in relation to this piece of legislation. For those in the gallery and those who are listening to this debate, what we're talking about here is the legislation Australia currently has in place requiring businesses of a certain size to report to a regulator with respect to the time it takes for them to pay invoices, in particular to small businesses.

The particular concern the Senate has sought to address, and this parliament has sought to address previously, in relation to this problem is outlined by the Australian Small Business and Family Enterprise Ombudsman, who said:

Late payments affect cash flow of the business owed the outstanding debt, forcing them to find ways to finance the short fall in their working capital instead of being paid on time and using the cash flow to grow their business. A lack of cash flow is the leading cause of business insolvency, and this underscores the importance of the issue of late payments, which can easily put many businesses out of operation.

Against the backdrop of late payments, there has been a growing trend in payment practices, particularly amongst large Australian and multinational businesses, to extend payment times. The growth in extended payment times is partly linked to the practices of multinational businesses who apply global policies to improve their working capital efficiency. Extending payment times for suppliers effectively uses the businesses in the supply chain as a cheap form of finance.

That's the issue. To put it in stark terms, just imagine that you are a small- or medium-sized business, you've incurred all the costs associated in producing goods or providing services to a large corporation—so you've incurred the expenses on that side of the ledger—but in some cases you're waiting for two, three or four months to be paid. In effect, your customer—the big business—is using you as a means to finance their working capital. It really is unacceptable in this day and age. So this is an important issue, and these are important reforms.

Once this parliament set up the regulator, a review was undertaken with respect to the process. We're considering here ways in which we can improve the process to take into account the findings of that review. I want to quote from the reporting data, which is publicly available. You can go onto a website and find the payment times for some of our largest companies—BHP, Rio Tinto, Coles or whoever. You can see that in an open website. The Bills Digest states:

The Payment Times Reporting Regulator released new data on the payment performance of more than 7,000 big businesses (many with an annual turnover of more than $100 million) on 1 February 2023.

Analysis by the ASBFEO —

the small-business ombudsman—

revealed that there has been virtually no improvement by big businesses over the past six months …

This is what the analysis of the current position with respect to timing of payment of invoices found:

that's four months to get paid—

So what you're looking at there, if you do the maths, is that only 31 per cent are paying invoices within 30 days. In the meantime, those small businesses are expected to finance all the expenses they've incurred in providing the goods or services. These statistics are quite startling.

So the coalition—the opposition—does support the reforms which are proposed in this legislation. However, one additional reform is proposed by the coalition. That is that not only should slow payers be outed, with a light being shone on those who do not make payments within appropriate times and those who are laggards in making payments to small businesses, but we should at the same time recognise those businesses who are fast small-business payers. Those companies which are doing the right thing—that number within that 31 per cent cohort who are doing the right thing—should be acknowledged. It shouldn't just be a stick; there should also be a carrot so that we as consumers, when we're making our choice as to whether or not to buy goods or services from a large business, are informed as to whether or not this business is doing the right thing by its suppliers, particularly small business. That's what the coalition is proposing here: not just a stick but also a carrot. I think that's a very good initiative, and I compliment my good friend and colleague Senator Cash for driving this reform.

How do we define a fast small-business payer? An entity is a fast small-business payer at a particular time if, at that time, the entity has to report under this regime and, for two consecutive reporting periods, the payment times report shows that they're paying within 20 days. If you're paying your small-business suppliers in 20 days or fewer, we're saying you should be recognised as a fast small-business payer. We the public should be aware of that, and you should be able to market that to the market—to the customers—so we can take that into account in deciding whether or not we're going to purchase our products or services from organisation A or organisation B. I can say, on my own behalf, that I would be particularly concerned, if I had a choice, about procuring goods or services from a company that is not paying its small-business suppliers in a timely manner, and I think many Australians would share my views in that regard.

A number of other issues are covered in the amending legislation, and I want to quickly talk about one of them. With respect to the outing of slow business payers, I am concerned about the discretion given to the minister to decide whether to trigger a process leading to the categorisation of a business as a slow business payer, which in itself triggers a process that could lead to appropriate notations on invoices and other material to bring that fact to the light of the public. I would have thought—and I say this in good faith, to those who no doubt have put a lot of time and effort into this reform—that that should not be a matter of ministerial discretion, because it opens the door to the minister deciding, in two exactly similar cases, 'I'm going to exercise my discretion in this case to out someone as a slow payer, but I'm not going to exercise my discretion in this other case, where the objective circumstances are exactly the same in the case of this supplier.'

I don't understand, to be frank, why there's that discretion in the process. From my perspective, as someone who believe in the rule of law—that we should all be treated equally before the law—it concerns me that that discretion is built into the legislation. From my perspective it should be objective. So, if you fall into the category of a slow business payer then you should be outed on that basis; if you fall into the category of a fast small-business payer, then that should be recognised as well. It shouldn't be a matter of ministerial discretion.

So, I've got a concern in relation to that. I know there's going to be a further review after this legislation goes through, and that is a matter that I will be particularly interested in. But hopefully the government will seriously consider the amendments that are being put forward in good faith by the coalition. I think they improve the scheme. They provide a carrot. We've got a stick, but let's also provide a carrot so we can recognise those companies that are doing the right thing. I think it improves the bill. I think it improves the process, the regime, and I commend that amendment to the Senate.