Ministerial Statement

Government Invoices and Accounts

The Hon. A. KOUTSANTONIS (West Torrens—Treasurer, Minister for Finance, Minister for State Development, Minister for Mineral Resources and Energy, Minister for Small Business) (14:02): I seek leave to make a ministerial statement.

Leave granted.

The Hon. A. KOUTSANTONIS: The Late Payment of Government Debts (Interest) Act 2013 and associated regulations was enacted on 17 February 2014. This initiative was proposed by the then Minister for Finance to encourage government agencies to improve their invoice payment terms. It also facilitated the payment of interest to small business vendors in the event that invoices are paid outside the government's standard 30-day terms. Much has been recently said about the government's payment of account performance and I think it is necessary to place some facts on the record.

Shared Services SA processes payment of approximately 2.2 million vendor invoices per annum on behalf of a number of state government agencies. The percentage of invoices paid on time after being received by Shared Services from agencies other than SA Health has increased from 91.7 per cent in 2011-12 to 97.2 per cent in 2014-15. In June 2015, 97 per cent of invoices were paid within 30 days, consistent with the annualised performance. The significant improvement achieved can be attributed to a range of initiatives that have been implemented following a review of accounts payable performance across the public sector in 2012—in particular, the deployment of Basware, an across-government system which automates invoice processing.

Government budget management is on an accrual basis: expenditure is recorded when invoices are received. Accordingly, there is no budget advantage from delaying invoices. I repeat: there is no budget benefit from delaying the payment of invoices. However, there are a range of contributing factors beyond the government's control that may lead to a delay in payment, namely submission of non-tax compliant invoices, receipt of defective goods or non-receipt of goods and services. In such circumstances, it is reasonable for the government to delay payment until issues have been resolved.

Data sourced from Dun & Bradstreet as part of the 2012 review highlighted that the average time to pay an invoice in the Australian business sector is 52.3 days, compared to 28.4 days for the South Australian government. This figure has further reduced over recent years, in line with the improvement in payment performance, demonstrating that public sector performance in this area is significantly better than industry standards.

The act requires the Treasurer to table a report before parliament within 18 months of its effective date, detailing how an automated system for the late payment of interest will be implemented. Following a comprehensive review by Shared Services, there are a number of significant factors which suggest implementation of an automated late payment interest scheme need not be progressed:

since the act took effect, there have been no identified claims for late payment interest submitted by small business vendors;

since 2011-12, there has been a consistent improvement in accounts payment performance across the public sector; and

the ongoing cost to government of administering late payment interest automation (around $250,000) outweighs the estimated maximum amount of interest that would be payable (around $134,000 per annum).

Moreover, the administrative cost to small business would be the same or higher than the current process of submitting invoices to claim interest on late payments due to registration requirements. The Small Business Commissioner has been consulted on these facts and he agrees that the implementation of an automated system for late payments is not required. As a result, I now table the following report for parliament, titled Late Payment of Government Debts (Interest) Act 2013—Automated Interest Payment.

The report recommends not proceeding with the automation of late payment interest, but notes business will still be able to claim interest by raising an invoice and submitting it to the relevant authority. The government recognises that, as one of the state's biggest consumers of goods and services, we have a responsibility to make prompt payments on any invoices submitted. We take this responsibility very seriously and we are pleased to have made some substantial improvements in recent times, and we will continue to strive for further improvements.

The SPEAKER: I call to order the member for Stuart and the deputy leader, and I warn the deputy leader for the first time. Uncharacteristically, there was no provocation in that ministerial statement, yet it was met with a torrent of interjections just on the basis that members to my left did not like the information contained in the ministerial statement.