[RECORDING STARTS] … one of those matters is being owed a lot of money. Yesterday the Small Business Ombudsman Kate Carnell told us that in this state $470 million is outstanding to various businesses in South Australia. Most are over 30 days. A very large chunk are over 60.
SA Health, according to Ms Carnell, is the worst offender at $200 million. The damage this does to the state cannot be underestimated. It means that any business who deals with the Government virtually supplies an interest-free loan and has difficulty paying its staff. Therefore, in many cases I know this to be true, have got to get bridging finance.
Now the State Government have an ad going to air on television at the moment exalting its jobs acceleration scheme. It won’t surprise you when we explain that owing nearly half a billion dollars for two to three months is a slowdown. It’s a duress placed on anybody who supplies a good or service to the Government.
I should tell you, if you’re a few days late with your land tax, Revenue SA will come after you and often ask for late fees in the thousands. The interest offered from the Government is minuscule. And, of course, they make you ask for it, which most won’t, because it’s likely they know that should they do so they will lose future business.
The United States and Canada, according to Ms Carnell, pay a 14 day turnaround. And according to the Small Business Ombudsman says it’s created 75,000 jobs. So this Government apparently doesn’t grasp that by paying exceedingly late they throw a very wet blanket over employment certainty and force some businesses to get financing waiting for our [inaudible] to cough up. I bring this to your attention because such huge monies outstanding is robbing this community of its viability and making things pretty damn tough.
Let’s talk to Michael McCormack, the Federal Minister for Small Business. Minister, what’s your reaction to this?
Leon, the fact the figures published by the South Australian Government itself show that it paid at least half a billion dollars after its due date in the 2015-16 financial year is simply not good enough.
Kate Carnell, the Australian Small Business and Family Enterprise Ombudsman is right. These small businesses – in particular – should not be used as banks by big business, let alone their own State Government. You’re right in your intro Leon. You said that if people owe the Government money and they don’t cough up when it’s due, they pay penalties. Well, I say so should the Government.
Certainly the Federal Government is leading the way. Government agencies paid 97 per cent of invoices of $1 million or less within 30 days in the 14-15 and 15-16 financial years. The current policy is pay within 30 days or pay interest. It’s high time the Jay Weatherill Government followed that lead.
Well Ms Carnell says we should be doing what the US and Canada do and make it 14 days, not 30.
Well it’s 14 business days. That’s probably not unreasonable either. But certainly her payment times inquiry sheds a light on some of the very shoddy practices by big business and indeed by some Government entities about not paying on time.
Certainly, I am very much looking at this issue. I don’t want to regulate payment times, but if change doesn’t happen it will have to be considered. It’s unacceptable. It’s absolutely unacceptable for big business, for Governments, to use small business as a bank.
When you say regulate payment times, are you saying you’d be thinking of doing this both for big businesses who sometimes won’t pay until after 90 days, which is extraordinary. Governments ought to be the leaders. They should be – the Crown – should be the model citizen, should it not?
Yes. And the Business Council of Australia has launched a voluntary code. I commend them on that initiative. But Leon the Government – the Federal Government – is leading the way in paying on time.
But 15 day business terms need to be looked at. I have Treasury looking at it at the moment to see how we could possibly do it. To see what we could possibly do and certainly what small business would like to see done. I have asked the Treasury to look into these parameters, into what we can do.
When you look at places like South Australia, here we have a Government which has overseen the worst energy problems in Australia. It’s overseen these payment times with $561 million in bills being paid after the due date. It is simply not good enough. It just shows a tired, lazy Government which is well due for replacement.
Are you saying you could regulate them to force them to pay when they should?
That’s what I have asked Treasury to look at. Because 60, 90, 120 days is just not good enough. Small business should not be used as a bank. Small business needs to be paid on time because it does – as Kate Carnell has said – it creates jobs.
But by paying on time it means small businesses will not have to extend its overdraft. It enables them to not have to pay exorbitant amounts of interest. They simply need to be able to keep their doors open and their lights on and to be able to continue to trade and meanwhile they wait for payments due from Government agencies. It’s reprehensible that they’re doing this.
Michael McCormack, the Federal Small Business Minister, who says he’s asking Treasury to look at regulating payments on time.