11 June, 2020
I rise today to speak on the Payment Times Reporting Bill 2020. I support this legislation both as the member for Warringah, representing 17,000 small businesses whose lives will be improved by the passage of this bill, and as an advocate for transparency and accountability.
Firstly, of course, I would like to thank our local businesses. 2020 has been a challenging year for so many, first with tourism disruption from the bushfires and the smoke that blanketed the Warringah electorate, and then during this coronavirus crisis, where so many businesses have been affected, from those who have had to completely shut down, like cinemas, gyms, restaurants and some retailers, to others who have had to completely adapt their business model. If there's one thing I've seen when out and about in the community—when it's been possible to do that—it has been the resilience of so many of our small businesses and their desire to work so hard to rebuild after this difficult period.
The small businesses in the electorate have told me that they've suffered at the hands of payment terms offered by large businesses. For many, landing a large business as a client is the dream. They imagine income security, regular payments and freedom to innovate to create a more efficient business model. In reality, sadly, sometimes their experiences with large businesses can include not being paid within the contracted period and large businesses using 90-day payment terms or using bankruptcy as a means of not paying debts. Slow payment and nonpayment of small business is a real issue. Cash flow is king for small businesses, and the growth of small businesses is dependent on cash and capital. So, if their largest client is not paying, it can completely constrain their growth and innovation, as more effort is spent chasing payments rather than running their business or searching for improvements and new clients. It puts in jeopardy their ability to employ and to keep growing. Business owners' personal mental health is another casualty due to the stress and impact on personal lives and viability of local small businesses.
The benefits for small business and the economy have been estimated by the AlphaBeta consultancy. They estimated that a normalised 30-day payment time would have a net benefit of over $500 million per year to small business and over $300 million per year to the Australian economy. That is substantial, and certainly something to encourage the government to do more to assist small businesses.
Transparency and accountability are very important to me. I'm an advocate on many fronts for more transparency and accountability throughout our society, throughout government and, in particular, for the operation of business. I support this legislation in strengthening the reporting requirements and empowering small businesses with greater information and choice. It enables individuals to make informed decisions, so improving the transparency, accountability and integrity of large businesses is a win for small-business owners. It will empower small-business owners with the ability to make an informed decision about whether their business can cope with the payment terms offered by that large client. They will be able to plan for slow payments if that is what they are told to expect. One would hope that this transparency will lead, though, to an overall improvement in the payment terms offered by large businesses, as quality small businesses may choose not to engage and take business elsewhere. Further, the transparency and pressure of peers will work to improve payment terms offered. This is where the market will hopefully work its best and encourage competition and encourage better efficiency.
There is, of course, room for improvement, and I encourage the government to push this legislation further to include a maximum payment term for businesses. The Small Business and Family Enterprise Ombudsman, and various small business lobby groups, have called for the establishment of a statutory maximum period of, for example, 20 to 30 days. Rather than relying on normalising a 30-day payment time, legislating the payment time would more effectively achieve benefits to the economy and small businesses alike. I hope that there will be further consideration of how this measure and other measures to further assist small businesses can come about. So, whilst this bill is not perfect, it's a vast improvement to the status quo, and I commend the Payment Times Reporting Scheme and support the government with this legislation.
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