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September 03, 2020

The Morrison Government voted against fixing payment times for small businesses in the Senate today.

The government’s actions mean larger business will still get away with paying small business suppliers in as many as 180 days.

The Coalition likes to boast about supporting small businesses and yet blatantly opposed practical measures suggested by Federal Labor.

The Payment Times Reporting Bill 2020 is weak and riddled with deficiencies, and continues the seven year trend of this government failing to improve payment times for small businesses.

There are many deficiencies with the Bill raised by a number of stakeholders, requiring amendments to improve and strengthen the legislation.

Labor’s ‘failsafe mechanism’ amendment would have improved payment times to small businesses to 30 days or less. The failsafe mechanism could be triggered after three years of the scheme operating and would allow the Regulator (created by the Government’s Bill) to force large businesses not paying small businesses on time to pay them within 30 days of face hefty fines.

The Payment Times Failsafe Mechanism was intended to provide an incentive for reporting entities to collectively improve their payment practices or run the risk of more stringent regulation.

Labor has consistently made the case that prompt payments from large businesses to their suppliers are crucial to small business cash-flow. This has never been more important as businesses face a global pandemic and a recession.

During the COVID-19 crisis we've heard some shocking examples of large companies unilaterally telling smaller suppliers that their payment terms are being blown out, in some cases up to 6 months from the date of invoicing. For small businesses, this is just not sustainable, particularly as they face unprecedented cash flow problems.

Recent Australian Bureau of Statistics data shows that small and medium sized businesses are struggling to meet financial commitments, and yet the Morrison Government has deliberately voted against improving payment times.

For seven years, this government has failed to act on improving payment times for small businesses, and they haven’t effectively utilised this time in office to design an effective scheme to reduce payment times so small businesses are treated fairly.