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

Second Reading

Adjourned debate on second reading.

(Continued from 6 June 2024.)

Mr TELFER (Flinders) (16:41): I rise to make a short contribution to the Late Payment of Government Debts (Interest) (Review) Amendment Bill, and to take the opportunity also to perhaps reflect on the impact of not just government terms and conditions when it comes to payments but also the impacts that all government decisions have on small business in particular. In South Australia, we are an economy that is really built on the foundation of small business all around our state. There are around 150,000 small businesses in South Australia, and the number of people that these businesses employ, the amount they contribute to our state's economy and the amount that we rely upon as a state on that foundation should never be underestimated.

This bill provides just a little bit more detail when it comes to the interaction of payments from the government with businesses that take on government work. Obviously, a lot of that interaction—as I have reflected on, there are 150,000 small businesses—is between government and small businesses. The contribution that the minister added to the debate and tabled without reading on the floor did provide a lot of additional context when we are looking at some of the arrangements.

I note with interest the time frame for the resolution of interest on late payments. The change may seem innocuous, from 48 hours to two business days, but it is interesting how, on reflecting on that, I recognise that small businesses work all week long. Every day is a business day for small businesses. Government may, indeed, break for weekends and not be participating in economic activity around our state, but small business does.

This may seem an innocuous change from 48 hours to two business days, but it probably just reflects that differentiation between private business operations and the Public Service. Basically, it just means that there are going to be additional delays on the requirements for payments to be going to businesses. It reduces incentives for departments to streamline operations without references to the challenges and cash flows small businesses may face. Not all businesses are big enterprises, and departments do not offer reciprocal options for non tech savvy businesses.

To provide a bit of context on the impact and contribution that small businesses make on our state's economy I think is really important. According to the government figures that 85.5 per cent of invoices are currently paid within 15 days, with approximately 2 per cent of invoices being paid after 30 days, we really need to reflect as decision-makers and especially those who are responsible for the processes within their departments on the impact that their decisions have on small businesses every single day. These are often single-people operations, businesses that employ a small number of people, all the way up to businesses that have significant turnover and have a significant amount of people under their employ.

It was interesting to read only in May this year The Advertiser report around hospitality business closures we have already seen in 2024, and this is a few months ago, and to reflect on the 36 hospitality businesses, small businesses that provide the foundation for our economy, closing in 2024. We saw some examples within that story of some of the businesses that had closed. Hospitality and entertainment businesses in particular, during a cost-of-living crisis have those additional pressures from members of the community not being able to spend as much money on hospitality and entertainment. Some of the small businesses to close included Hog's Breath Cafe Glenelg; Cardone's on Jetty Road, Glenelg; Little Banksia Tree in Bowden; Gouger Street's Super Bueno; cult Hill's pizza restaurant Lost in a Forest; Folklore Cafe in Port Adelaide; Morris Bakery in Naracoorte; Cameo Cinema in Murray Bridge; and many more.

There have also been impacts from the challenges that small businesses are facing in the non-hospitality closures. Some of the ones that were noted included Tucker Tennis in Brighton; Vadoulis Garden Centre in Gawler, one which was a real favourite in South Australia; Mega Fast Karts and Laser Skirmish Richmond, which was obviously forced to close because of the Torrens to Darlington project; and homeware store Moose on the Jetty in Brighton.

I bring up these small businesses in this place because, indeed, decisions that government make have impact on individuals and small businesses all around our state. As decision-makers we need to be acutely aware of those impacts. Like I said, decision-makers from the Premier down on the ministerial benches should absolutely be mindful of the impacts their decisions have on small business. It flows on as well.

The discussion is often had here about the impact that the incredible rise in energy prices has had on small business in particular in South Australia. We have the highest energy prices in the nation at over 40¢ per kilowatt hour for single-use rate plans. It is often the topic of questions in question time because it is so important that we get the policy settings right to support businesses, especially small businesses, in South Australia.

That price of over 40¢ per kilowatt hour is 49 per cent higher than the average of the rest of the national energy market. These impacts cannot be overestimated. This is on top of rising costs and high inflation; everything is costing more and it is costing small business in particular. These small businesses cannot absorb cost increases. It is hurting their bottom line. They are trying to pass it on to consumers, so that hurts consumers all around our state.

I note the quote at the time from David Penberthy in The Advertiser who was highlighting the importance of small business, and the fact that government should not lose sight of the impact that their decisions have on small business, and I quote:

Then there are those businesses that aren't too big to fail, but small enough to fail without anyone in power doing anything to help them.

They are coffee shops. They are sandwich bars. They are restaurants. They are retail outlets. They are garden centres.

They employ three people, or 10 people, or 20 people. In an individual sense, their demise causes the merest of blips in employment statistics and has negligible impact on the state's economy.

When these businesses close…they don't get a special cabinet meeting.

[They just get] platitudes saying it's a terrible shame and that things are clearly tough out there. Sometimes they don't get mentioned at all.

The individual demise of these businesses might be a blip on the radar but the collective impact is enormous.

As we move through this bill, which looks at the interactions between state government and those businesses that are involved in government business, we need to make sure that we get the arrangements right with those interactions but we also have a big picture perspective, because our state's economy is built on a foundation of small business. This government needs to have a strong focus on supporting these small businesses in the decisions that they make.

During this cost-of-living crisis, this government needs to have care and concern for South Australian families and small businesses doing it tough because it is real out there at the moment. It might get waved off by answers in question time that the economy is doing fine and everyone is happy, that it is all happy days all around the state, but there are small businesses out there that are really struggling with the burdens of multiple different aspects, and too many of them are driven by government decisions.

Ms THOMPSON (Davenport) (16:51): I am pleased to stand today to talk about an important step that we are taking to support South Australian businesses, the late payment of government debts amendment bill. This bill is part of the Malinauskas Labor government's commitment to making the public dollar work for South Australians.

One of the biggest challenges that businesses face is cash flow. This bill addresses that challenge head-on for businesses doing business with SA government by halving the standard payment timeline from 30 days to 15 days, meaning businesses will get paid sooner for their hard work. This will have a positive impact on many small businesses that work with state government departments. Contractors, cleaners, printers, sign makers and suppliers will all benefit from being paid sooner.

We are also extending these reduced payment timelines to not-for-profit entities, ensuring they receive the same level of protection and support. Furthermore, the bill moves the method for calculating interest on late payments from the act to the regulations, giving us more flexibility to adapt to various payment systems. Additionally, it amends the time frame for resolving interest on late payments from 48 hours to two business days, accommodating weekends and public holidays.

These changes build on the successes that we have already achieved. In 2022-23, more than $12.2 billion in economic benefits flowed to South Australian companies and workers through state government contracts, a 59 per cent increase from the previous year. This bill continues our efforts to use government procurement to support local businesses and jobs, aiming to inject an extra $425 million into our state's economy. Our government has already implemented several initiatives to support South Australian businesses, such as mandating that 90 per cent of labour hours on major infrastructure projects are delivered by SA workers and requiring the use of locally manufactured products in public housing projects.

On government projects, we are committed to only using local project managers, architects, designers, engineers, surveyors, planners and other professional service providers. We will also ensure that public projects costing more than $500 million will be broken into smaller stages or components, allowing multiple South Australian companies the chance to participate. We have also introduced training for procurement staff on industry participation policies and established an independent complaints process for tenderers.

Local businesses are already seeing the benefits. For example, Aboriginal Urban Design, an Aboriginal-owned business based in my electorate of Davenport in Bedford Park, have been instrumental in delivering infrastructure upgrades across Adelaide, including work on the significant Torrens to Darlington project. With this bill, they will be paid sooner for their work.

Similarly, the recently completed Flagstaff Road upgrade was in part delivered by South Australian company Bardavcol, who are now working on another very exciting project in my electorate, which is the safety upgrade of Main Road, Cherry Gardens. This project is particularly exciting for my community. Main Road, Cherry Gardens was listed by the RAA as one of the most risky roads in our state. I know that the community is particularly excited to see those works have started, are well underway and close to completion. Expected completion is by the end of this year.

We have had crews up and down this road for the last few months and I have really gotten to know the Bardavcol team, who have worked really hard, continuing to engage with the community on this important project. I commend them for their communications and their commitment. I am, of course, pleased that they will benefit from future payments being expedited.

We are not stopping there. We are working on additional commitments such as ensuring the Auditor-General's procurement spending audits and setting aside 1 per cent of government funding into a subcontractor support fund. This bill is a testament to the ongoing dedication to supporting local businesses and jobs, helping to build a stronger economy for South Australia, and that is why I commend the bill to the house.

The Hon. A. MICHAELS (Enfield—Minister for Small and Family Business, Minister for Consumer and Business Affairs, Minister for Arts) (16:55): I rise today also to support the Late Payment of Government Debts (Interest) (Review) Amendment Bill 2024. This bill marks a significant milestone in delivering an important election commitment of the Malinauskas government: to make sure that the public dollar works for the benefit of all South Australians, in particular our small businesses.

It is widely acknowledged that timely payment is critical for the survival and growth of businesses, particularly those that supply goods and services to the South Australian government. When governments do delay payments it puts unnecessary cashflow pressure on businesses. This is not just of theoretical concern to me. Mr Acting Speaker, as you are aware, before I took on this role I owned a small business myself so I know firsthand the stress and uncertainty that comes with waiting for a payment and how crucial cash flow is in keeping the doors open and staff wages paid.

Timely payments are not just a matter of efficiency: they are the lifeline of businesses. This bill aims to address the challenge by halving the standard payment timeline from 30 days to 15 days, ultimately ensuring that businesses are paid for their work sooner. Furthermore, the bill extends the reduced payment timeline for not-for-profit entities that engage in business with the South Australian government, promoting the same level of protections across all sectors. This inclusivity underscores our commitment to equitable support for all businesses in South Australia.

The bill endeavours to encourage the prompt payment of invoices and foster greater flexibility and adaptability across government payment systems. It will do this by shifting the method of calculating interest from the act into the regulations. Another important change is improving the timeframe for resolution of interest on overdue payments from 48 hours to two business days to take account of weekends and public holidays, ensuring government departments without automated systems can effectively meet their obligations under the act.

These reforms build on the positive impact the Malinauskas government is already having on our small businesses in South Australia. The substantial economic benefits delivered through our state government contracts to local companies and workers demonstrate our ongoing commitment to boosting our local economy. By continuing to increase the percentage of state government spending with South Australian businesses by 5 per cent, we are aiming to inject an additional $425 million into our local businesses in our state economy, going directly to South Australian workers and business owners. That is an incredible initiative.

Every day, around 155,000 South Australian small businesses deliver products and services not only around our state but around our country and around the world. Mr Acting Speaker, as you know, small businesses represent about 97 per cent of the state's total number of businesses. They employ about 300,000 staff, representing almost 40 per cent of the total South Australian workforce. They generate about $49 billion to our economy. They are the lifeblood of our communities. These small businesses create jobs and support workers, suppliers and families right across the state. Our government recognises the importance of small businesses and we are making real changes and implementing tangible policy to support them to build their capabilities and succeed.

Through my Office for Small and Family Business we are implementing the $14 million Small Business Strategy. This strategy is built around six key themes, identified through extensive consultation with small businesses across the state. These themes are around strengthening business capability, building skills and workforce, navigating the digital environment, boosting business sustainability, embracing diversity and, importantly, in line with these measures, improving access to government services.

Aligned with these themes is a suite of programs that we are rolling out under the strategy to support small businesses to build their capability, stay competitive and succeed. We have the Small Business Fundamentals Program, which provides grants to 12 delivery partners to directly assist businesses to build their fundamental knowledge and skills. These partner organisations are delivering a range of services to small business, such as mentoring and business coaching, financial management, human resources, marketing and more. Impressively, over 2,300 participants from a diverse range of industries have already accessed this program.

Of course, we also have our $4 million Women in Business program, which has a number of arms to it. It caters to the diverse needs of women entrepreneurs and is comprised of three key elements. First is our Women in Business Foundations Program, aimed at nurturing the skills of women in the early stages of their business journey. The Women in Business Advisory Program provides invaluable support in governance, strategic planning and mentorship to more high-end businesses. Finally, the Connecting Women in Business Program, fostering networking opportunities through events, forums and workshops, is also very popular.

Together, these initiatives empower women who want to run their own businesses to make sure they succeed and grow those businesses. I am proud to say that over 2,000 women have accessed the Women in Business program since its inception, and it is only continuing to grow.

Recognising the increased threat of cyber attacks on small businesses, we are committed to bolstering the resilience of our local businesses. The Small Business Digital Capability Program helps businesses improve their digital readiness and protect their assets. This includes the Cyber Uplift Step Program, which equips businesses with the skills to safeguard against cyber attacks and respond effectively if they occur.

We also have a Mental Health and Wellbeing Program, which offers tailored support to small businesses to improve access to mental health services. It helps business owners and their employees build resilience and capability in dealing with mental health challenges.

The Small Business Sustainability Support program assists small businesses in assessing their climate impact and in becoming more energy efficient, leading to cost savings and reduced environmental footprints.

I am particularly pleased to say that, as of today, announced this morning with the Treasurer, small businesses can now apply for grants of up to $50,000 to help reduce their energy bills under round 2 of the Economic Recovery Fund. These grants range from $2,500 to a maximum of $50,000, subject to a matching contribution, which will help up to 8,000 small businesses reduce their energy costs. These grants can be used for investments, such as installing power supply and generation equipment, energy-efficient appliances, automation technologies, and building improvements to ensure more efficient heating and cooling.

A total of $20 million has been allocated to this second round of the ERF, with grants available on a first-come, first-served basis until those funds are exhausted. All these programs and initiatives are not just about offering support; they are about building resilience, fostering innovation and ensuring our small businesses are well equipped to handle future challenges.

This bill is another step forward to make it easier for businesses to engage with the South Australian government. By streamlining processes and offering supports, we are helping businesses to increase their participation in state-funded projects. We have great initiatives like the Office of the Industry Advocate's Meet the Buyer event and the Supply to Government Panel, which provide invaluable information and advice direct to businesses on how to secure government contracts. They offer insights into government procurement processes, available opportunities and guidance in preparing for and participating in government contracts.

The Office of the Industry Advocate also provides a Ready to Tender online module, accessible via their website. It is a self-paced tool that covers four key areas of writing a tender, offering invaluable assistance to businesses preparing to compete for government contracts.

The Malinauskas government is committed to attracting the best local businesses to work on our most significant state-funded projects. By implementing efficient and fast payment procedures through all departments, local businesses can maximise the economic benefits from participating in these projects in a timely manner.

Our government has already implemented a number of commitments to support local South Australian businesses in procurement, and these include principles for government procurement that prioritise value for money, creating SA jobs, increasing the number of apprentices and trainees in South Australia, stimulating innovation and new businesses and achieving environmentally sensitive, low carbon and socially just outcomes. We have mandated that South Australian workers deliver a minimum of 90 per cent of labour hours on major infrastructure projects, with penalties for contractors who fail to meet these requirements.

Importantly, we are also requiring the use of South Australian manufactured products in public housing construction and maintenance programs where possible. We are ensuring that procurement staff receive training on industry participation policies and educate local industry participants and providers. Chief executives are now required to sign off on procurements where the successful tenderer is not from South Australia—so if not, why not?

The government has also undertaken a broad market assessment to identify South Australian businesses that can deliver projects, goods or services to the government. We have established an independent complaints process for tenderers that feel they have unreasonably missed out on government work. We are also ensuring apprentices, trainees, Aboriginal workers and long-term unemployed individuals deliver 20 per cent of all labour hours on our major projects. We are committed to only using local project managers, architects, designers and other professional service providers on government projects.

We aim to publicise government procurement opportunities three months in advance to ensure enough time for businesses to apply. To increase participation from our local businesses, we will break down public projects worth more than $500 million into smaller components, allowing multiple South Australian companies to be involved. We also plan to release tenders for major projects within 30 days of funding being available for the project.

Additionally, we are working to ensure that the Auditor-General audits spending procurement and annually reports on how much is spent on SA and non-SA goods and services. We have set aside 1 per cent of government funding into a subcontractor support fund, which will enable the state to directly pay subcontractors on government projects if lead contractors delay payments or are unable to pay.

These measures and supports are just a snapshot of the many initiatives the Malinauskas government has taken since being elected, demonstrating our strong commitment to supporting local businesses and industry in South Australia. In fact, more than $12.2 billion worth of economic benefit was delivered through state government contracts to South Australian companies and workers in 2022-23; that is a huge 59 per cent increase on the previous year.

The changes in this bill reflect the government's ongoing commitment to strengthening the prospects of our local businesses. As the small and family business minister, I am encouraged that this bill adds to the Malinauskas government's commitment to enhancing government efficiency and strengthening the economic landscape for South Australia to create job opportunities and support our very hardworking local small businesses.

By streamlining payment processes and fostering a more supportive environment for businesses, we are laying the groundwork to continue to make South Australia a great place to do business—in fact, with recent data coming out, the best place in Australia to do business. I encourage all members to support this bill and I commend the bill to the house.

The Hon. S.C. MULLIGHAN (Lee—Treasurer, Minister for Defence and Space Industries) (17:07): I thank members for their contributions on this bill. This is, as members have commented, a brief bill but an important one because, as the Minister for Small and Family Business just articulated to the house, it demonstrates this government's commitment to South Australian small businesses. This is just another way that we are trying to support South Australian small businesses. I thank members, and if there are any questions in the committee stage, I look forward to taking those. If not, I look forward to taking the bill through, hopefully, to its conclusion.

Bill read a second time.

Third Reading

The Hon. S.C. MULLIGHAN (Lee—Treasurer, Minister for Defence and Space Industries) (17:08): I move:

That this bill be now read a third time.

Bill read a third time and passed.