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House of Assembly - Fifty-Fourth Parliament, First Session (54-1)
2018-09-19 Daily Xml
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Late Payment of Government Debts (Interest) (Automatic Payment of Interest) Amendment Bill

Introduction and First Reading

Received from the Legislative Council and read a first time.

Second Reading

The Hon. D.G. PISONI (Unley—Minister for Industry and Skills) (17:49): I move:

That this bill be now read a second time.

The public sector has been criticised for not paying invoices in a timely matter. While invoice payment performance is generally at an acceptable level, there is still substantial opportunity for improvement. The late payment of invoices can cause clash-flow issues for business and negatively impact on their ability to meet financial commitments. As part of the 2018 election, the government committed to making interest automatically payable to businesses for any undisputed invoice paid late, where certain criteria are met, and creating greater accountability and transparency through the public reporting of invoice payment performance.

The existing act is limited in its application to small business and requires a necessary and costly bureaucratic process in order for late payment interest to be claimed. As a result, there have been almost no interest claims submitted under the existing Late Payment of Government Debts (Interest) Act 2013 since it was first introduced. The purpose of introducing this bill is to expand the act to cover all businesses trading within the public sector and to enable the automatic payment of interest of overdue accounts.

The untimely payment of invoices, where it occurs, is as much a cultural issue as it is a systems issue. Therefore, enacting this bill will send a strong message to the public authorities that the prompt payment of invoices is an important objective of the government. Establishing a financial penalty, which is automatically paid to business, will clearly reinforce this message and act to change behaviour over time.

The key changes to the existing act set out in the amendment bill are expanding the scope to cover all businesses trading with the government rather than the current limitation to small businesses; reducing the minimum interest payment threshold from $20 to $10; limiting application of the act to invoices with a value of $1 million or less; and automating the payment of interest to business such that it occurs within 48 hours or less of when the overdue invoice is paid in accordance with the government's standard 30-day payment terms.

The Small Business Commissioner will continue to retain a dispute resolution function under the act. I commend the bill to members. I seek leave to insert the explanation of clauses in Hansard without my reading it.

Leave granted.

Explanation of Clauses

Part 1—Preliminary

1—Short title

This clause is formal.

2—Commencement

Operation of the measure will commence on a day to be fixed by proclamation.

3—Amendment provisions

This clause is formal.

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

4—Amendment of long title

This clause amends the long title of the Act to remove a reference to small business.

5—Amendment of section 3—Preliminary

This clause removes definitions that are no longer required as a consequence of other amendments made by the measure.

6—Amendment of section 5—Occurrence of default event

This clause amends section 5, which sets out the circumstances in which a default event occurs for the purposes of the Act. Under the section as amended, a default event will occur only if an invoice sent or claim made by a supplier to a public authority is for an amount that does not exceed $1 million (exclusive of GST).

7—Amendment of section 6—Interest payable if default event occurs

Section 6 is amended by this clause to expand the circumstances in which interest is payable by removing the requirement for a default event in relation to which interest is payable to relate to the supply of goods or services as part of a small business. Currently, a supplier is not entitled to interest if the amount of interest that would otherwise be payable is less than $20. An additional amendment changes this so that the relevant amount is $10 rather than $20.

A further amendment removes the requirement for a supplier entitled to interest to claim the interest by furnishing an invoice in the prescribed form. Instead, a public authority that is required to pay interest under the Act must pay the interest within 48 hours of the authority paying for the goods or services.

8—Amendment of section 7—Disputes

This clause amends section 7 as a consequence of other amendments that mean that the question of whether a supplier is carrying on a small business will no longer be a relevant consideration.

9—Repeal of section 10

Section 10 is redundant and is therefore to be repealed.

Schedule 1—Transitional provision

1—Transitional provision

Under the transitional provision, the Act as amended by the measure will apply only in relation to invoices and claims rendered after the amendments commence.

Debate adjourned on motion of Hon. A. Piccolo.


At 17:52 the house adjourned until Thursday 20 September 2018 at 11:00.


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