LATE PAYMENT OF GOVERNMENT DEBTS (INTEREST) BILL

Second Reading

Adjourned debate on second reading.

(Continued from 14 November 2013.)

The Hon. R.I. LUCAS (11:56): I rise on behalf of Liberal members to support the second reading of the Late Payment of Government Debts (Interest) Bill 2013. This bill is to provide for interest to be paid to small businesses on all government debts outstanding for more than 30 days. Thirty days is the government's standard terms of trade. Other terms are applicable only where contracted. In the bill 'small business' is defined as any business with an annual turnover of $5 million or less. The ATO defines 'small business' as having an annual turnover of $2 million or less.

As the member for Davenport highlighted in the House of Assembly debate, there is an issue of inconsistency between the federal government arrangements in this arena now and state government arrangements. He highlighted a submission from the Law Society which raised the issue that there are many small businesses which obviously trade with state departments and commonwealth departments and the lack of consistency in the definition of both 'small business' and the arrangements means that there will be different circumstances applying in the state and federal arenas.

The Law Society, not unreasonably, was raising the issue: is it possible for governments at both levels to have consistent provisions in relation to this late payment issue? I would certainly be interested in the government's response at the conclusion of the second reading on that particular issue. Under the government bill business vendors are required to invoice the government agency authority for the interest payable. The interest is to be calculated on the RBA cash rate plus penalty interest of 5 per cent, and the Small Business Commissioner is to have dispute resolution functions under the bill.

I am advised that the agencies which are to be included have not yet been determined by the government. At the time of the original debate in June/July of this year, the only known exemption was to be the Department for Health which at that stage was to be excluded until the Oracle system was fully implemented. So certainly a question that I will be seeking an answer from the minister is: given that we are now almost four or five months later, which particular agencies are to be included in the government's arrangements and which agencies are going to be excluded? In particular, I am interested to know the position of the Department for Health.

The Liberal Party has put out a more comprehensive policy in the public arena in relation to this, but nevertheless, albeit the government is playing catch-up, the Liberal Party has determined that it will support the passage of this legislation.

The Hon. I.K. HUNTER (Minister for Sustainability, Environment and Conservation, Minister for Water and the River Murray, Minister for Aboriginal Affairs and Reconciliation) (11:59): The late payment of invoices to government, when they are not paid in such a timely manner as they should be, can have repercussions, firstly for government efficiency of course, but also for small business suppliers to government who need to manage their cash flow. The Minister for Finance in the other place has recognised this and has not backed away from it. He recognises that it is a cultural issue, one that commonly occurs when there is an implementation of a Shared Services-type model where staff are amalgamated from several different departments bringing different ways of meeting the same objectives to their job.

That is why the Minister for Finance in the other place requested a review when he became minister, and when the payment of accounts review was undertaken by the Office of Public Employment and Review, largely authored I am told by the Commissioner for Public Employment, Mr Warren McCann, the recommendations were thoroughly considered. As a result of the recommendations of the McCann review, automatic payment escalation was introduced. This enables the government to continue the processing of invoices in a timely manner, even if an invoice is left in the care of a staff member who is suddenly absent from work, for example, for six weeks. Invoices are now automatically progressed to the attention of another staff member, I am advised, if they are not progressed within a few days.

It may interest members to know that we have instituted an arrangement whereby CEs and ministers receive a monthly report which outlines the performance of their agency in respect of the timeliness of payments. It is not just Shared Services, of course, that is responsible for prompt invoice payment; there is also some degree of responsibility accepted on the part of CEs in managing their departments for late payment of invoices. Additionally, I am advised the My Invoice website was set up so that small businesses can go on the internet and track their invoice to get an informative position of when they can expect their payment. I am told that the website now has a hit rate running into thousands per month, which is a pretty strong indication that small businesses are seeing the benefits of this very useful tool in managing their own cash flow.

The McCann review in its implementation has produced a remarkable result in addressing some of the cultural issues that were letting Shared Services down, and now South Australians can expect prompt payment and quick explanation for any delays that happen into the future. To bring these recommendations to fruition has required quite an amount of dedicated work by Mr McCann and his staff, and the strong endorsement of all the chief executives and cabinet who confronted this issue and were determined to ensure that it was resolved correctly. It is very pleasing to be able to achieve this suite of reforms and I commend the bill to the house.

Bill read a second time.

Committee Stage

In committee.

Clause 1.

The Hon. R.I. LUCAS: I put two questions to the minister in my second reading and I seek a response.

The Hon. I.K. HUNTER: This bill will cover all agencies except for Health which is covered, as I understand it, by Shared Services.

The Hon. R.I. LUCAS: Could I clarify that because Health, as I indicated publicly recently, has the most appalling record of all departments and agencies in terms of performance in relation to payment of accounts. From recollection—and I do not have a copy of the release with me—I think most government departments and agencies were in the mid to high 90 per cent region in terms of payment on time. My recollection is that Health, as an agency, was down around about 70 per cent. Can the minister indicate why the most poorly-performing agency (Health) with a $5 billion-plus budget, which is 30 per cent of the state budget, is exempt from this particular late payment provision?

The Hon. I.K. HUNTER: My advice is that Health needs to roll out a new finance system. They are operating largely on legacy finance systems. As they roll out Oracle and BasWare throughout the Health agency, their performance will improve and, at that time, they will come under the purview of this legislation.

The Hon. R.I. LUCAS: What advice has Health provided to the government in relation to the rollout of Oracle? Oracle has been an issue for Health for quite some time. Our understanding was that the minister had indicated that the issues had been resolved in relation to Oracle. Can the minister indicate what advice the government has received as to when SA Health believes Oracle will actually be rolled out and will be subject to the provisions of the legislation?

The Hon. I.K. HUNTER: My advice is that the next range of scheduled rollouts of Oracle to three or four major sites will be in March. The rollout is designed to be complete over the next two years.

The Hon. R.I. LUCAS: Is the minister indicating that the government's advice is that it will not be until financial year 2016-17, potentially, that Health will be subject to the provisions of this legislation?

The ACTING CHAIR (Hon. J.S.L. Dawkins): Just before the minister responds, it would be helpful if members could take their conversations outside the chamber, the Hon. Mr Wortley included. The Hon. Mr Wortley, it would be helpful if that conversation and others are taken outside the chamber.

The Hon. R.P. Wortley: As long as that ruling applies to everyone else. I hear you chatting away for hours.

The ACTING CHAIR (Hon. J.S.L. Dawkins): I hope you are not reflecting on the Chair. I asked—

The Hon. R.P. Wortley: Just be consistent; that is all I am saying.

The ACTING CHAIR (Hon. J.S.L. Dawkins): Order! If you have a look at the Hansard you will note that I referred to a number of conversations, and I asked a number of people to remove their conversations. You had your back to me and you had not responded, and that is why I mentioned you specifically. However, I was referring to a number of people, and I have consistently held that view for some time. I would ask that conversations be limited so that the people who have the call are able to be heard. The minister has the call.

The Hon. I.K. HUNTER: Thank you, Mr Acting Chairman. My advice is that it was always the intention to roll out Oracle and BasWare across various Health agencies over a period of two years. It would, of course, be very confusing to small business, I imagine, to start to apply the legislation to separate agencies or subsets of agencies in Health as they roll out their own internal systems. It would be much simpler to wait for Health to complete its internal arrangements.

The Hon. R.I. LUCAS: But my question to the minister was: is it the government's advice that the expectation at this stage is that it will not be until financial year 2016-17 that Health will conclude what it needs to conclude and, therefore, the provisions of this legislation would apply to SA Health?

The Hon. I.K. HUNTER: My advice is that it would be at some point during the year 2015-16.

The Hon. R.I. LUCAS: I thank the minister for that clarification. The only point I would note in response to his speaking out on behalf of small businesses and avoiding confusion is that I think one of the issues for small businesses trading with Health, as I have indicated, is that SA Health's performance has been abysmal compared to most other government departments and agencies. I think small businesses trading with SA Health would prefer to have their bills paid on time, as opposed to some of the concern the government might have in relation to elements of confusion.

I make two other points; first, the minister in his response indicated that small businesses and others should be pleased that chief executives would now be receiving monthly reports on the accounts payable performance within their agencies. As I pointed out previously, former premier Olsen, in the period from 1997 to 2002, instituted a program where monthly reporting by agencies went not only to each chief executive and their minister but also to cabinet by way of an updated report so that the premier and all ministers would be able to monitor the performance of agencies in terms of paying their accounts on time. So, it was not just the chief executive receiving the report.

Clearly, if this has now been reinstituted after 11 years of the Labor government, I assume one of the first decisions the Labor government must have taken after 2002 was to actually get rid of that system. So, whilst we acknowledge that the reintroduction after 11 years is a good thing, we should also acknowledge the fact that the incoming Labor administration—

The Hon. I.K. HUNTER: On a point of order, the honourable member is debating the bill—the time for that is passed. We are in committee, and I ask him to address himself to the bill, clause by clause.

The ACTING CHAIR (Hon. J.S.L. Dawkins): I am sure the Hon. Mr Lucas will come to his question very shortly. The Hon. Mr Lucas.

The Hon. R.I. LUCAS: Mr Acting Chairman, I am responding to a statement the minister made in the committee stage on this particular clause. My question is: when did the Labor minister—

The Hon. I.K. HUNTER: On a point of order, Mr Acting Chairman, I did not make a statement—

The ACTING CHAIR (Hon. J.S.L. Dawkins): Point of order to the minister, but the honourable member was about to address his question.

The Hon. I.K. HUNTER: Well, I am hoping he is, because he has been on his feet raging about debating this issue. He should be asking his question of me.

The ACTING CHAIR (Hon. J.S.L. Dawkins): There is no point of order. He is about to ask his question. I call the Hon. Mr Lucas.

The Hon. R.I. LUCAS: Thank you, Mr Acting Chairman. I am disappointed to hear the minister squealing like a stuck pig just because questions are being asked in the chamber.

The Hon. I.K. Hunter: Get to your question.

The Hon. R.I. LUCAS: I will abide by the proceedings as determined by the Chair—not by you.

The Hon. I.K. Hunter: That would be a first time.

The ACTING CHAIR (Hon. J.S.L. Dawkins): Order!

The Hon. I.K. Hunter: Ask your question.

The Hon. R.I. LUCAS: Not by you.

The Hon. I.K. Hunter: Ask your question.

The Hon. R.I. LUCAS: Not by you.

The Hon. I.K. Hunter: Ask your question.

The ACTING CHAIR (Hon. J.S.L. Dawkins): Order!

The Hon. R.I. LUCAS: Stop the interjections—they are out of order.

The ACTING CHAIR (Hon. J.S.L. Dawkins): The Hon. Mr Lucas has the call and he is about to ask his question.

The Hon. R.I. LUCAS: Thank you, Mr Acting Chairman, if I could get over the interjections from the minister, my question to the minister is: when did the Labor government abolish the previous system that required not only chief executives but ministers to receive monthly reports on the accounts payable performance of their agencies?

The Hon. I.K. HUNTER: I can see no relevance in that question to the consideration of this bill. I was not a member of the government at the time; I do not have that advice.

The Hon. R.I. LUCAS: I think we can see the embarrassment of the minister apparent—

The Hon. I.K. Hunter: Only embarrassed by you.

The Hon. R.I. LUCAS: —in relation to—

The Hon. I.K. Hunter: You're the embarrassment.

The Hon. R.I. LUCAS: —as I said, highlighting—if the minister wants to persist to interject in relation to this particular debate—

The ACTING CHAIR (Hon. J.S.L. Dawkins): Interjections are out of order.

The Hon. R.I. LUCAS: Indeed. I listened to the minister in silence. It is disappointing that the minister is not in a position to answer these particular questions. The other question I put to the minister in the second reading, to which he has not provided a response, is the concern raised by the Law Society in terms of the differing arrangements between the South Australian government and the commonwealth government in relation to the late payment issue, in particular the definitional issues as they relate to small business. I put that question to the minister in the second reading; he has chosen not to respond to it. I ask him to provide an answer to that particular question.

The Hon. I.K. HUNTER: My advice is the answer is in two parts. We have chosen a definition that is consistent with the ATO but decided to include more small businesses under the act by increasing the threshold. As I understand it, there are multiple definitions used around the country, and we have chosen to accept a definition consistent with the New South Wales legislation.

The Hon. R.I. LUCAS: Can I clarify the minister's response? I thought he said initially that the state's definition was consistent with the ATO and then he concluded by saying it was consistent with the New South Wales administration. I ask him to clarify that. The advice provided to me by the member for Davenport was that the government's bill defines small business as any business with an annual turnover of $5 million or less and the ATO defines small business as having an annual turnover of $2 million or less, so there would appear to be—according to the member for Davenport, anyway—a difference of definition between the ATO and the South Australian government's proposition.

The Hon. I.K. HUNTER: As I said in my answer, our definition is consistent with the ATO but we decided to include more small businesses under the threshold, so we have chosen a figure of $5 million and the ATO's is $2 million.

The Hon. R.I. LUCAS: It is a novel definition of 'consistent with'. The ATO's definition of a small business is, as I have highlighted, a turnover of $2 million or less and the state's definition is $5 million or less, so that is a very generous use of the phrase 'consistent with'. It is actually a different definition, which was the point the member for Davenport and a number of others have made. Having noted the minister's inconsistency in response, I will leave that topic.

Can I ask the minister what the government's advice is in relation to the estimated budget impact of this particular initiative? What is Treasury including in the budget forward estimates as a cost of this particular initiative?

The Hon. I.K. HUNTER: My advice is there is nothing in the forward estimates because agencies will be required to meet any costs out of their existing budgets.

The Hon. R.I. LUCAS: During the consultation with agencies, did the government receive estimates from agencies, in particular the bigger agencies, as to what their estimated costs would be in terms of cost pressures? Education and Health, for example, would be more than half the total state budget.

The Hon. I.K. HUNTER: I do not have that advice.

The Hon. R.I. LUCAS: I do not wish to delay the passage of the bill today. Is the minister prepared to seek advice from the Minister for Finance and, if he is minded to do so, correspond with me in terms of providing an answer on notice in relation to that particular question?

The Hon. I.K. HUNTER: I will take that question on notice.

Clause passed.

Remaining clauses (2 to 10) passed, schedule and title passed.

Bill reported without amendment.

Third Reading

The Hon. I.K. HUNTER (Minister for Sustainability, Environment and Conservation, Minister for Water and the River Murray, Minister for Aboriginal Affairs and Reconciliation) (12:19): I move:

That this bill be now read a third time.

Bill read a third time and passed.