Bills

Late Payment of Government Debts (Interest) (Review) Amendment Bill

Introduction and First Reading

The Hon. S.C. MULLIGHAN (Lee—Treasurer, Minister for Defence and Space Industries) (15:46): Obtained leave and introduced a bill for an act to amend the Late Payment of Government Debts (Interest) Act 2013. Read a first time.

Second Reading

The Hon. S.C. MULLIGHAN (Lee—Treasurer, Minister for Defence and Space Industries) (15:46): I move:

That this bill be now read a second time.

I introduce the Late Payment of Government Debts (Interest) (Review) Amendment Bill 2024. At the 2022 election, the Malinauskas Labor government committed to making the public dollar work for South Australians, and this bill is the next step in delivering on this commitment. This bill delivers on our promise to support businesses by providing fair and timely payments for those that trade with the South Australian government. Businesses across the state understand the cash flow challenge that occurs when government departments are late paying invoices.

This bill will halve the standard payment time line, requiring government to pay invoices within 15 days, helping to improve cash flow and financial stability for businesses. Additionally, this bill will formally extend the reduced payment terms to not-for-profit entities that do business with the South Australian government, providing not-for-profits with the same level of protection and financial benefits. I seek leave to have the remainder of the second reading explanation inserted in Hansard without my reading it.

Leave granted.

These amendments build on the introduction of automatic interest payments on overdue invoices, by moving the method for calculating interest from the Act to the regulations. This incentivises the prompt payment of invoices and allows for greater flexibility and adaptability across the various government payment systems.

This Bill also amends the timeframe for resolution of interest on late payments from 48 hours to 2 business days. This change will allow for weekends and public holidays, enabling those government departments without automated systems to meet their obligations under this Act.

This Bill continues the Malinauskas Government's commitment to utilising South Australian Government procurement money to support local businesses and jobs, and compliments major changes the Government has already made to give local businesses a competitive edge. The Government has set a target to increase the amount spent with SA businesses by 5 per cent, injecting an extra $425 million into the state's economy.

This government has implemented the following commitments:

Adopt the following principles for government procurement, Value for money, Creating SA jobs, Increasing the numbers of apprentices and trainees in SA, stimulating innovation and new businesses & achieving environmentally sensitive, low carbon, socially-just outcomes.

Mandate SA workers deliver a minimum 90 per cent of labour hours on major infrastructure projects; impose penalties on lead contractors for not achieving these targets.

Require the use of South Australian manufactured products on public housing construction and maintenance programs, where available.

Require departmental procurement staff to undertake regular training on the industry participation polices of government, and education of local industry participants and providers.

Require Chief Executives to sign off on procurements where the successful tender is not a South Australian.

Undertake a broad market assessment to identify SA businesses that can deliver projects, goods or services to government and advise departmental procurement staff of industry capability.

Establish an independent complaints process for tenderers who feel they have unreasonably missed out on Government work.

Require that apprentices, trainees, Aboriginal workers, and long-term unemployed deliver 20 per cent of all labour hours on major projects.

Assist local business to become tender ready, holding regular industry-specific workshops conducted by the Industry Participation Advocate, helping more local businesses win work.

Only use local project managers, architects, designers, engineers, surveyors, planners, and other professional services providers on government projects.

Broadly publicise government procurement opportunities three months in advance.

Publish an annual project pipeline of coming infrastructure projects over $1Orn over the next three years, to enable lead contractors to prepare thoroughly.

Ensure that public projects above $500m are broken into smaller stages / components to allow multiple South Australian companies the opportunity to participate on projects, unless that nature of the project makes this unfeasible; and

Tenders for major projects will be released within 30 days of funding being available for the project.

The Government has commenced work to implement additional commitments:

Ensure the Auditor-General audits spending procurement and annually reports how much is spent on SA and non-SA goods and services.

Set aside 1% of government funding into a sub-contractor support fund, to enable the state to directly pay sub-contractors on government projects where lead contractors are unreasonably delaying payment of invoices or unable to pay invoices.

These are just some of the steps the Malinauskas Labor Government is taking to support local businesses and jobs, helping to build a strong economy for South Australia and build on the strong results that have already been delivered. More than $12.2 billion worth of economic benefit was delivered through State Government contracts to South Australian companies and workers in 2022-23, a 59 per cent increase on the previous year. The changes in this Bill are another important step this Government is taking to support local businesses and workers.

I commend the Bill to Members.

Explanation of Clauses

Part 1—Preliminary

1—Short title

2—Commencement

These clauses are formal.

Part 2—Amendment of Late Payment of Government Debts (Interest) Act 2013

3—Amendment of section 3—Preliminary

This clause amends a number of definitions in the Act.

Currently, the definition of designated contract excludes contracts that make specific provision for payment terms that are greater than 30 days. It is proposed to amend the definition so that the relevant number of days is prescribed in the regulations rather than specified in the Act. A related amendment is to be made to the definition of designated payment period.

This clause also substitutes a new definition of qualifying body. Under the new definition the term includes not-for-profit entities. A not-for-profit entity is—

an entity that is registered, or entitled to be registered, under the Australian Charities and Not-for-profits Commission Act 2012 (a Commonwealth Act); or

any other entity (other than a government entity) that is not carried on for the purposes of profit or gain or for the benefit of particular people.

4—Amendment of section 5—Occurrence of default event

Section 5 of the Act sets out the circumstances in which a default event occurs. Currently, those circumstances include payment made by or on behalf of a public authority to a supplier that is made more than 30 days after the day on which the invoice or claim is received by the public authority. As amended by this clause, the relevant number of days for the purposes of the section will be prescribed in the regulations instead of being specified in the Act.

5—Amendment of section 6—Interest payable if default occurs

This clause amends section 6 so that the minimum amount of interest is determined in accordance with the regulations rather than by reference to a formula set out in the Act. It will be a requirement of the Act that the regulations provide for a minimum amount of interest that is not less than the amount payable under the Act prior to the commencement of the amendment.

A supplier is not entitled to interest if the minimum amount of interest calculated under the section is $10 or, if another amount is prescribed, that amount.

Schedule 1—Transitional provision

1—Transitional provisions

The transitional provision makes it clear that the Act as amended applies to invoices or claims rendered after the commencement of the amendments.

Debate adjourned on motion of Mr Cowdrey.