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

Second Reading

The Hon. K.J. MAHER (Minister for Aboriginal Affairs, Attorney-General, Minister for Industrial Relations and Public Sector) (16:51): I move:

That this bill be now read a second time.

I seek leave to have the second reading explanation and explanation of clauses inserted in Hansard without my reading them.

Leave granted.

I rise to introduce the Late Payment of Government Debts (Interest) (Review) Amendment Bill 2024. This Bill supports implementation of the Government's procurement reform election commitment to pay contractor invoices in 15 calendar days.

The SA Government processes approximately 3.2 million invoices each year, worth roughly $17.2 billion. As I am sure you would all agree, the timely payment of these invoices is vital to supporting positive cash flow for businesses trading with public authorities, particularly small to medium local businesses.

In 2018, this House took a positive step forward by introducing automatic interest on overdue invoices to incentivise prompt payments by public authorities. This Bill will strengthen the Government's commitment to prompt payments, by reducing the current standard 30 calendar day trading terms to 15 calendar days.

Members will note that it is intended to prescribe the payment timeframes by Regulation, which will occur following passage of the Bill.

A number of supplementary changes are also proposed to modernise the Act, provide greater flexibility and expand coverage. These changes include:

Inclusion of Not-for-Profit Entities: The definition of 'qualifying bodies' will be expanded to encompass all not-for-profit entities.

Interest Calculation: The method for calculating interest will be moved from the Act to the Regulations, providing greater flexibility for any future changes that may be considered appropriate. It is important to note that the Bill makes clear that any prescribed formula must provide for interest payments that are equal to or greater than the amount determined in accordance with the current calculation method.

The timeframe for public authorities to make interest payments on overdue invoices will be changed from 48 hours to 2 business days.

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 Hon. L.A. Henderson.