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Education and Employment Legislation Committee
Department of Industry, Science, Energy and Resources

Department of Industry, Science, Energy and Resources

In Attendance

Senator Cash, Minister for Employment, Skills, Small and Family Business

Department of Industry, Science, Energy and Resources


Mr David Fredericks, Secretary

Ms Elizabeth Kelly, Deputy Secretary

Small Business

Mr Peter Cully, Head of Division

Ms Rose Verspaandonk, General Manager

Australian Small Business and Family Enterprise Ombudsman

Ms Kate Carnell, Ombudsman

Dr Craig Latham, Deputy

CHAIR: I welcome the Minister for Employment, Skills, Small and Family Business, the Hon. Michaelia Cash, and Mr David Fredericks. Minister Cash, do you wish to make an opening statement?

Senator Cash: I don't, thank you, Chair.

CHAIR: Excellent. Mr Fredericks, do you wish to make an opening statement?

Mr Fredericks : I don't, thank you, Chair.

CHAIR: Brilliant. I will hand over to Labor.

Senator O'NEILL: To start off, I've got a few questions that refer to payment times and reverse factoring. I would like to discern this evening some understanding of the government's proposed Payment Times Reporting Bill. Correct me if I'm wrong; my understanding is that the government released the draft legislation plus a consultation on minister's rules—regulations—on 21 February this year. In Minister Cash's media release on 31 January 2020 there is a sentence that says:

The Government will introduce the Payment Times Reporting Framework legislation in the autumn sittings of Parliament.

According to the parliamentary sittings calendar, the autumn sitting runs from the beginning of February to the end of May. So my question is: which sitting week will it be and which house of parliament will the bill be introduced into?

Ms Kelly : I think that those matters are matters that are to be determined at a later date, but we're in the process of consulting on the exposure draft. When those consultations are complete, the bill will be scheduled in the normal way that those things occur.

Senator O'NEILL: Is the bill, at this stage, likely to meet the time line advised in the minister's media release?

Mr Cully : Yes, it is.

Senator O'NEILL: It's on track. So, Senator Cash, can you do the big reveal?

Senator SHELDON: The lights are on.

Senator Cash: Be very careful: this is all being recorded by Hansard. Senator O'Neill, thank you for your question. The answer to your question is yes. The department is currently finalising the consultation process, Mr Cully?

Mr Cully : Yes.

Senator Cash: The legislation will obviously then be looked at and the rules based on the consultation. My personal intention is to get it into parliament as soon as possible but no later than the conclusion of the autumn sittings. I, personally, would like to see it passed before we rise for the winter break.

Senator O'NEILL: Is it going to come into the House or the Senate?

Senator Cash: In the normal course of events, I would have thought it would go through the House of Representatives first.

Senator O'NEILL: Is that what you would expect, Mr Cully?

Mr Cully : Yes. Our expectation as well is that the general process is that the bills are introduced into the House.

Senator O'NEILL: Will the regulations that are referred to in the consultation paper that was released on 21 February be introduced at the same time as the legislation?

Mr Cully : The regulations don't get introduced in that sense. They're delegated legislation—minister's rules—so they're not introduced to the parliament. But it is our intention to have those draft rules drafted, for want of a better term, at the time of the debate on the bill, because certainly one of the things already in terms of key feedback from stakeholders is that they are keen to see the precise wording of those rules. We have consulted on what will be included and given the outline of the details of what will be there, but people obviously want to see the precise language.

Senator O'NEILL: The details, yes.

Mr Cully : Equally, we are keen for that to occur, for people to then provide us feedback on whether there are any technical issues with that and whether there is any further clarification to make. Obviously, we want to make sure the rules are as easy as possible for everyone to understand and use.

Senator O'NEILL: Okay, so 'introduced' is not the correct descriptor, but they will be made public at the same time as the legislation comes forward; is that correct?

Mr Cully : There's a matter that's still to be resolved around the timing of when they will be drafted—they have not been drafted yet—but certainly we would be looking to have them available at the time the bill is debated.

Senator O'NEILL: Right. The introduction and the debating of the bill are at two different times, so there could be a lapse in between?

Mr Cully : Yes, that's correct.

Ms Kelly : I'm not sure that you're able to make the regulations until the bill is passed, but the regulations would be available.

Senator O'NEILL: They would be considered in context—exactly.

Ms Kelly : Yes. That's the main thing, so that when the parliament are considering the bill they understand how it's going to operate in practice. Making the draft regulations available at that time will allow the parliament to be fully informed about how the new scheme will operate.

Senator O'NEILL: Where will they be made available as you've described?

Mr Cully : That will obviously be a matter for government, about how they will be released. But I think, in the ordinary course of events, if we were also looking to consult on them it would probably be something akin to what we've done with the exposure draft of the bill: putting it on the consultation page of the department's website to seek views.

Senator O'NEILL: Could I get you to explain why it is that the government opted to use regulations, or minister's rules, rather than legislate these definitions and functions.

Mr Cully : There's always a balancing act, with schemes like this, about how much specificity there is in the legislation and how much there is in delegated legislation. Delegated legislation is, obviously, very commonly used in a range of legislative contexts.

Senator O'NEILL: Yes. I've heard a couple of speeches in the Senate that have very much explored the government's use of regulation; in fact, they've described it as overuse of regulation and a lack of transparency and careful lawmaking.

Mr Cully : It is certainly intended to be transparent. Primarily, this is a novel scheme, a new scheme, and we are conscious that there will be a range of complexities with it in terms of it applying to the roughly 2½ thousand large businesses who will be required to report and the myriad different arrangements they have. I think it's important that there's some flexibility. If we're aware that the scheme is not operating as intended, the way the particular rules are drafted, and not capturing what it should or capturing things that it shouldn't, there should be flexibility for those rules to be amended. That's why there is the power in there for ministers' rules.

Senator O'NEILL: So the capacity for the minister to revoke legislation is a part of that. You framed it as a very positive way to respond to emerging realities and unintended consequences, but it's all with the authority of the minister, these regulations and management of it, isn't it?

Ms Kelly : It's the usual course, in schemes of this type, for the mechanical details of the way the scheme operates to be set out in regulations. Regulations are made by the Governor-General in council, obviously on the advice of the minister, but the process by which regulations are made is through the executive council.

Senator O'NEILL: In the consultation paper there's a proposal of a draft definition of a small business as a 'firm' with less than $10 million of annual turnover. What certainty will small businesses and firms have that are required to participate in the reporting framework if the definition is not legislated or the regulations are not introduced parallel to the legislation?

Mr Cully : They will have certainty around that, that that is the figure that will be used. Are you asking as well in terms of whether they will have certainty about whether or not particular businesses are in or out as a small business?

Senator O'NEILL: There's an arbitrary number there. How tightly is that going to be applied?

Mr Cully : One of the issues in developing this scheme was in working out what would be an appropriate small business identifier, a small business definition. There are a range of different definitions for small businesses that are used across the Commonwealth and states for different purposes. Some of those goes to the size of the business, in terms of the number of employees—fewer than 20 employees—but turnover under $10 million is a well-understood definition of what a small business is. We think that captures the best amount of small businesses, and that's why that particular definition has been adopted. Certainly, it's something we're seeking feedback on at the moment but we think that turnover definition of $10 million is the appropriate definition to capture the small businesses that we want to capture in this scheme.

Senator O'NEILL: But they remain at the mercy of the minister to change that regulation at any point of time. How does that provide businesses with certainty in planning?

Mr Cully : Legislation and regulation is always, potentially, subject to change. Importantly, these rules will be like other regulations—disallowable by the parliament. I think there's as much certainty as there is with any regulatory scheme about what that will be, and the intention is that there be a stable definition and a stable scheme. There's a very strong commitment to this scheme and to making it work and to making sure that it captures as broad a range of small businesses as possible.

Mr Fredericks : It's probably worth emphasising, I think it's right to say, that any change in the regulation would itself be a disallowable instrument as well.

Senator Cash: In the normal course of events.

Senator O'NEILL: So it will come back before the Senate for consideration.

Mr Fredericks : That's right. I'm still relatively new but my recollection is that there have been a number of observations from Senate inquiries about the concerns in using regulations, because of the nature of regulation. The bureaucracy have a right to, say, change. It gets slipped through parliament—I'll say it that way because people aren't aware of the short period of it being on the papers—and that means that the parliament isn't properly oversighting what can be substantially detrimental regulations. In this case, it can affect small and large businesses. I think the question's about making sure that it's a—and we see the legislation. It will be something that will be keenly looked at because there are deep concerns about the reparatory format as a process. It is deeply flawed, in my view, in many circumstances—not all—and we'll see what happens at this one.

Senator O'NEILL: The consultation paper on the regulation says a reporting entity will need to disclose:

Whether the entity offers any form of supply chain finance, reverse factoring or discounting and, if so, details of that arrangement and the total proportion (number and value) of invoices where these arrangements were utilised.

For people who are trying to keep up with this I'll give a view of what reverse factoring schemes are. Reverse factoring schemes are where small businesses pay a fee in order to receive payment for their service or goods on time, often when a large business extends contracted payment times. My question is: why has the government chosen to handle reverse factoring in ministers' rules, which can be revoked at any time, rather than in legislation?

Mr Cully : They're dealt with in the rules that will set out the detail of what businesses must report on, so I guess it's the logical place for that to sit, along with the other parts of what small business will be required to report on. So it's in the part of the rules that set out all the detail of what each big business will need to report on in terms of their payment of small business. The idea is that, by reporting on it, it captures the use of those forms of supply chain financing. There are a range of different supply chain financing. The small business and family enterprise ombudsman recently put out a report about that, with some very good descriptions of the various types. They range in what they do and they range in their complexity. The idea is that business will report on whether it's using any sort of supply chain financing, the details—so it sets out what those different types are—and then what that means in terms of their payment times.

Senator O'NEILL: So are you using this as a data-capturing exercise so you can get a bit of an overview of what the practices are?

Mr Cully : It certainly will have some benefits in terms of data capture to show how big businesses are using it. Not all supply chain finance is necessarily problematic. That's something that came out in the Ombudsman's report. It can have its place. Where it is problematic is particularly in cases where large businesses extend their payment times and then say to the small business, 'You will only get paid in a reasonable period if you accept a reduced payment.' That's obviously something we want to capture.

Senator O'NEILL: It's happening to many firms in construction. Many tradies are getting caught in this. It is an absolute abuse of power by people who should be paying their bills on time.

Mr Cully : Certainly we would say from a small business policy perspective that that's correct. It will give us some data that will be useful, but it's particularly around transparency to show that those big businesses are doing it. Certainly some of the recent examples have demonstrated that, where there has been some transparency and it has come out that large businesses have been seeking to do this, they've reversed.

Senator Cash: Perfect examples are the naming and shaming of Rio Tinto and Telstra, quite frankly. It shows you what the transparency actually did. They changed their practices as a result of the backlash.

Senator SHELDON: Minister, I'm sure it won't surprise you that in the transport industry, where there are low margins, large companies—well over $10 million—have the same practices exercised against them. These are low-margin companies. As you'd be aware, it's an industry that has a lot of pressure on safety. It has the highest death rate in the country. It has been directly equated through numerous studies and also government reports, both here and overseas, that it's because of the practices that are employed by people at the top of the supply chain. There is substantial pressure on every company in that supply chain, large and small, and there are direct consequences for when these practices occur which involve not only unfairness in the broader context but also death and injury. So I'm interested to look at the legislation.

Senator Cash: It's a very good point you make. Obviously with the payment times framework this is the first time the government has ever done this. I think it's a very good step in the right direction in terms of ultimately the goal we all want to get to, which is to ensure all businesses are paid on time and in full. In effect, 'on time' I would hope becomes 'as quickly as possible'. E-invoicing takes it to a whole new level. You raise a very good point as well. Government is progressing a payment times procurement connected policy. Government has to lead by example. What that will ultimately do is require large businesses to pay their suppliers within 20 days, so it will extend the government's 20-day payment policy on government contracts and ensure that they do it through the supply chain as well. That's obviously for government contracts, I know that.

Senator O'NEILL: There's a big world out there. I can hear in your comments, Senator Cash, that you're on board now, but, to be clear, the reason this has actually become a public issue is media pressure and the ACCC and Labor screaming and shouting about what's been going on for tradies, who've been talking to us when we have our meetings. They've been telling us about this for ages, so we've been trying to get attention on this very big problem.

Senator Cash: We'll agree to disagree on why the government's taken these policy steps.

Senator O'NEILL: There are steps, and, as I've raised in the questions so far, I have some concerns about how much of it is going to be by regulation rather than in the legislation to provide ongoing certainty to the sector. Going to another question, on the use of reverse factoring, the proposed minister's rules only seem to require the use of such arrangements and their details to be disclosed. Given that reverse factoring is used to hide contracted payment times and earlier payments are done by a third party at a discount or with a fee, what guarantee is there that the arrangements will give a clear picture of whether small businesses are being paid in full and within 30 days? There seems to be a bit of room in here for some playing around with the figures, an advantage to those who want to hide it.

Mr Cully : When I mentioned earlier about how we want to consult on the draft minister's rules to make sure they work technically, this is one of the ones we most clearly want to get people's views on to make sure we are capturing exactly what you've highlighted there. We want to make sure that supply chain finance or any other measures aren't used by big business to hide their actual performance. The idea is—

Senator Cash: Can you talk about the role of the regulator and the penalties? They're pretty significant penalties. I think there's a very good conversation there in terms of the explanation.

Mr Cully : Certainly one of the focuses of what we are looking to do is to make sure that the reporting is as accurate as possible in terms of businesses reporting exactly in line with what the legislation and rules say. We also want to remove the capacity for businesses to engage in practices that seek to hide their true performance—like with supply chain finance and the example you just gave. We would be looking to consult on the draft rules to make sure that they are drafted in a way that is broad enough—

Senator O'NEILL: So they can't keep putting up the con job numbers instead of the truth.

Mr Cully : That's correct. There are also very strong regulatory powers in the bill. There will be a regulator who is able to make sure that the information big businesses is providing is accurate. There are powers—

Senator O'NEILL: Who is that regulator? Is it another entity or is it going to come under the remit of something that already exists?

Mr Cully : The regulator will be an officer appointed from within the department; it will be an SES officer in the department.

Senator Cash: I'll just get Mr Cully to also take you through the penalties. The penalties for providing false information are significant.

Senator O'NEILL: Give me a number.

Senator Cash: I will. I'll get Mr Cully to take you to them.

Mr Cully : Off the top of my head, 0.6 per cent of annual turnover is the highest penalty. When we're talking about companies who, at a minimum threshold, have a turnover of $100 million to be reporting, 0.6 of a per cent is obviously significant. There's also a range of other civil penalties that apply, including daily penalties for continued failures to report on time. For instance, the failure to provide an auditor with assistance and keep records is a civil penalty of up to 200 penalty units for an individual or up to two per cent of annual turnover for a body corporate. Providing false or misleading information is 350 penalty units for an individual or, as I mentioned, 0.6 per cent of annual turnover.

Senator O'NEILL: I am impressed by the numbers and I'm sure other people will be too when they hear and look at it, but the reality is we've had an entity in here today talking about wage theft and the Fair Work Ombudsman and the scale of their capacity to actually watch what was going on with 177 inspectors. Having a regulator with 177 inspectors couldn't catch this. We're talking about highly visible big companies that have been hiding this and have adopted this as an unethical business model for the profit-making that they clearly chase over ethical action and sustainable business practices. And you tell me you've got a regulator that's not an entity; it's one person in the department.

Mr Cully : I think there are some quite significant differences between the two regulatory contexts here. The Fair Work Ombudsman is obviously responsible for enforcing payments for all employment businesses across the country, so we're talking about millions of businesses and where it can be quite complex in terms of what people should actually be getting paid is when you factor in things like penalty rates and other payments. There's quite a lot of investigative work that goes into that. What we're talking about here is a significant regulatory scheme but it's a scheme that will apply to, in our estimation, 2,500 big businesses. What they'll be putting on will be relatively confined. It's significant because it's their payment times and it's very important, but it's still a relatively confined reporting regime.

Senator O'NEILL: And one person to be the regulator for that?

Mr Cully : One person we appoint as a regulator, and they will have assistance within the department. It's not just going to be a single person. It will be one person who has the power of the regulator, so they are the person who can, for instance, require the large company to conduct an audit at its own expense to demonstrate that its figures are correct if the regulator is not satisfied with the information that's provided.

Senator O'NEILL: Thank you. I have so many more questions. I want to be reassured by what you're telling me, Mr Cully; I really do. But people need that money, they need to feed their kids, they need to pay their mortgage, they need to pay their wages, they need to pay their fuel bills and they need to keep their cars on the road—they need to do all of those things—and they're sick and tired of being done over by big business. I'd love to be reassured by what you're saying, but I'm not convinced that legislation that's being hastily pushed through, despite the great need that there is for a response, is going to do it.

Senator Cash: Senator O'Neill, it's definitely not hastily being put through. This is being worked on, as you know, because Treasury's also been involved for a considerable period of time to ensure that we actually get the details of it right. We are now at that stage. The consultation will soon—in fact, it has drawn to a close.

Mr Cully : It drew to a close on Friday.

Senator Cash: On Friday—I correct myself—and then the legislation will be introduced into the parliament. I would certainly hope that we can work together to get it through as quickly as possible—

Senator O'NEILL: But there are two bits here: there's the legislation and my continual concern about how much of this is regulation. If I can go to the legislative definitions, for example, of business entity size and eligibility of concessions or certain tax rates to use turnover as a basis, even the proposed definition of small business in the minister's rules proposes a turnover definition of small business. Why in the draft legislation is the government proposing using assessable income for reporting entity?

Mr Cully : Sorry to interrupt, I'm not—

Senator O'NEILL: Are you using the term 'assessable income for a reporting entity'?

Mr Cully : The way to determine what category they fall in is their assessable income. It's a technical definition to get us to the ultimate goal that it will be small businesses with an income under $10 million and big businesses with an income over $100 million.

Senator O'NEILL: So why doesn't the draft registration link the definition of a reporting entity to existing legal frameworks such as the annual corporate tax transparency data?

Mr Cully : That is certainly one of the issues that has come up in consultation. It is something that we're looking at as to whether that is the correct definition.

Senator O'NEILL: I've got concerns, because I know that Minister Cash voted against the frameworks legislation. However, it does exist and it would make sense to link it to that, wouldn't it?

Mr Cully : Sorry, Senator, that was the—

Senator O'NEILL: The corporate tax transparency data, rather than accessible income for reporting entity?

Mr Cully : I think, in our considerations, we thought assessable income was the most appropriate definition to use in this context. As I said, it's something that we are consulting on, that we are looking at.

Senator O'NEILL: And people have raised it with you?

Mr Cully : Yes, they have.

Senator O'NEILL: As a concern?

Mr Cully : Yes.

Senator O'NEILL: Could you provide me with more information about that on notice?

Mr Cully : Yes.

Senator O'NEILL: What concerns have been raised and how many have raised them. How many people have been engaged in consultation?

Mr Cully : It's obviously the public consultation, in terms of the exposure draft being released and it being open for public consultations. To date we have received 11 submissions, noting that it's still open until Friday. I think the other part is that, as the minister referred to, the bill is the end state of a lot of consultations. This has been a long process where we have engaged with big business, small business, stakeholders and representatives about the design of the scheme.

Senator O'NEILL: Would you be able to provide on notice the dates of those meetings and the attendees?

Mr Cully : Yes. We will take that on notice. Certainly, I convened a consultation with some stakeholders last Friday to work through the exposure draft of the legislation and the rules. They were some of the key stakeholders who had been involved in the earlier discussions.

Senator O'NEILL: I'm sure the subbies will have plenty to say about this.

Ms Kelly : Chair, could I correct something? Mr Cully has just confirmed something with me. I didn't want to mislead you, Senator O'Neill. These are not regulations made by the Executive Council. These are minister's rules, so they're subordinate legislation, but a different type to regulations. They're minister's rules, so they are made directly by the minister, as you asserted.

Senator O'NEILL: That is part of my concern.

Ms Kelly : They are still subject to disallowance.

Senator O'NEILL: They are, but they seem particularly insecure.

Ms Kelly : I just wanted to make sure that I had not misled you.

Senator DAVEY: I want to clarify some things. The Payment Times Reporting Framework: the intent is to allow small businesses to make more informed decisions, but can you explain how it will actually do that? How will it provide transparent information on things like the use of supply chain finance and the like by big businesses?

Mr Cully : The scheme is designed around transparency. That key transparency mechanism is that every large company's results, all of the detail of the information they provide, will be published on a website. That then will be open to small businesses and other interested parties to be able to look at those entities and see what their payment times performance is—everything from the period in which they say they will pay big business, to their actual performance and, as you mentioned and as previously discussed, their use of supply chain finance and other information. The idea is that it will be in a public document available to everyone, which will bring the transparency.

Senator DAVEY: So small businesses will be able to go to this one-stop shop and easily compare between similar big businesses to make a decision of who they do their business with?

Mr Cully : That is correct. They will be able to look at different big businesses and see what their payment time performance is.

Ms Kelly : I would also expect that there is considerable public interest in this sort of information. I know that the Small Business and Family Enterprise Ombudsman will take particular interest and I suspect will speak publicly about her views about the information as it comes available and will draw to public attention any concerns about the practices she sees there. I think it will be scrutinised by many people and players in the process when the information becomes available.

Senator DAVEY: That is good. Speaking of the ombudsman, last month Ms Carnell said that supply chain finance is a legitimate tool that can be used to free up cashflow for small and family businesses. Can you outline examples that you're aware of where supply chain financing specifically would be an advantageous tool for these small businesses?

Mr Cully : I don't think I can point to any exact examples. Ms Carnell is on after this and may be able to provide detail.

Senator DAVEY: I will ask her the same question.

Mr Cully : Certainly the notion that supply chain financing can be beneficial is only in circumstances where the normal payment term is a decent period. This is something that rapidly expedites it so that the person may be paid within two, three, four days. A small business may decide that it is beneficial to them to get that capital then rather than waiting the 20 or 30 days as a normal payment terms.

Ms Kelly : I think the example that the ombudsman provides in her discussion paper is a business who, for example, is facing a choice between an overdraft or using supply chain financing and will assess which of those is the most advantageous. It may on occasions be that choosing a supply chain financing option will be more advantageous than making use of an overdraft facility.

Senator DAVEY: Is that similar to reverse factoring? What's the difference between supply chain financing and reverse factoring?

Mr Cully : Reverse factoring is a particular type of supply chain financing. I think it's set out in the ombudsman's report. I think it's probably easier to refer you to that, because it takes it through. It's complex. It does set out quite neatly with a diagram and examples. I think it's the easiest explanation I've seen of how it operates.

Senator DAVEY: I'll have a look. How widely is it used in small business at the moment?

Mr Cully : I don't think we have an accurate figure on how much it is being used. Part of the ombudsman looking into this issue is to do that. As we mentioned, the Payment Times Reporting Framework, identifying that will give us a better sense of that. But there have been some noticeable cases where it's been publicly made known that it has been used, so in relation to CIMIC and also that both Telstra and Rio Tinto were looking at variants of it as well.

CHAIR: I will go back to Senator O'Neill.

Senator O'NEILL: Given the announcement by the Reserve Bank of a further drop to the lowest rates that we've seen in recallable history for many of us, I'm wondering that the claim is continuing to be made that there could be an advantage in paying a premium to get your money by this reverse factoring scheme, over the cost of an overdraft. It simply doesn't make sense to me. It aggrieves me from a point of view of the authentic transaction that is done when a service or good is purchased and the right of the person who provides the service or good to be paid in full as agreed at the time of the contract. This blurring of the lines as things advance further down the chain becomes very problematic, and always the person who pays the most is the one with the least power and the one with the greatest pressure. In my understanding of how this country works, particularly in regional Australia, it is small businesses, and indeed micro-businesses, many of whom have created their own work because there are no jobs, that will pay the price down the track for these changes that people are discussing as the new and wonderful business model of how you interact. I've got very serious concerns about it.

Ms Kelly : I don't think that anyone was saying that. I was certainly recalling the example provided in the ombudsman's discussion paper on this issue. It might be something you might wish to take up with the ombudsman when she appears following us. Her paper was written sometime ago, certainly before those most recent changes. I think it might be an opportunity to allow the ombudsman to address that particular example.

Senator O'NEILL: Some stakeholders have said that they've been told the applicable penalties will be calculated daily. Is this the case?

Mr Cully : Yes. Some of the provisions do allow for daily penalties for an ongoing failure to provide information.

Senator O'NEILL: Where is that detailed in the legislation?

Mr Cully : If I recall our discussions, I think it may not be as clear on the face of the legislation as we might like, but that is definitely the effect of it.

Senator O'NEILL: The question that follows is what penalties are applicable daily. The draft legislation, to the best of my knowledge, says 60 penalty units, the equivalent of approximately $12,600, for failing to report and 350 penalty units—about $73,500—as a pecuniary penalty for false and misleading reports. Are you saying that those penalties apply for each day?

Mr Cully : For the failure to report, the 60 penalty units, that is my understanding. The misleading reports is not a daily one. That's a one-off. The 350 penalty units is for an individual, not a body corporate. The penalty for that particular provision is the 0.6 per cent of turnover that I referred to earlier.

Senator O'NEILL: If we do 0.6 per cent of turnover, is that based on any particular year, or can you pick the year where you didn't make too much? How is that determined—at what moment? I'm thinking that this is a picnic for all those who are looking for a little path around it. I come here and I want to do a good job for people. Other people out there go, 'I want money and I don't care who I hurt to get it'. Those people will be like swarming bees coming in search of honey with these open and not transparent pieces of legislation.

Senator Cash: It's exactly the opposite. This is probably one of the most transparent pieces of legislation in terms of what the outcome will be. This will be publicly available information that people can go on and look at to see how these particular companies are paying their small businesses. You made a point before about what happens if they try to circumnavigate or circumvent the legislation. It's publicly available.

Senator O'NEILL: I think my word would be 'rorted'.

Senator Cash: Rorted then. Someone can pick up the phone and tell the regulator there is a problem. That's going to be very serious for the company if it is then proven that they have misled the public in terms of reporting their payment times, because of the significance of the penalties. This is incredibly serious in terms of the transparency and the consequences of failing to be transparent.

Senator O'NEILL: Let me do some real world experience from my understanding of small business and having lived in small business. I'm one of those typical migrant families: low skills, no skills, arrived, work hard, pay your bills and expect to be paid on time. Getting to the point now, where it's out to 120 days for people in construction waiting to have their money coming in—

Senator Cash: It's unacceptable. It's absolutely shocking.

Senator O'NEILL: By the time they get to the stage where they're desperate for the dollars, the last thing they are going to do is ring up a regulator and report someone, because everything is on the line every single day. They will know that they just have to keep quiet and put up. That's what they're doing now. That's what they're going to continue to do, because power is operating in this in a way that will not allow a regulatory response to circumnavigate the problems that exist. I just can't see people acting in the way you've just described, because it would be against their own interests and they will lose the job. If they're out on a major piece of infrastructure building roads, laying pipes, doing whatever they're doing, and they say 'I haven't been paid; I'll ring the regulator' the next thing is that the regulator will be on to the company. They will say, 'We know who that was' and there goes your contract.

Senator Cash: There are consequences also for undertaking that behaviour. I think we will have to agree to disagree in terms of what the effect of the Payment Times Reporting Framework implementation will be. I'm more than happy to have a briefing provided to you so you can go through this in detail. In the normal course of events, this also will be debated in both the House and in the Senate. You will also have an opportunity to explore in further detail the legislation that we ultimately introduce. I would certainly hope we can work together to pass this as soon as possible.

Senator O'NEILL: We want to make sure that anything that is passed is not going to create problems for small businesses rather than solve problems. I think there are many businesses that are in great need after the bushfires.

Senator SHELDON: How many small business grants have been applied for and can you give the detail of the location state and number of the distribution?

Senator Cash: The formal agency responsible is the National Bushfire Recovery Agency. They appeared on Monday in PM&C estimates. All of these questions were asked, and they have been answered. What we would be able to provide you with, if the department have it with them, is the information that we have from the Bushfire Recovery Agency, because that is how we obtain our information, because that is the central agency that has been set up to deal with the response.

Senator SHELDON: Right.

Senator Cash: Go through the questions, and then we'll—

Senator SHELDON: Whilst I consider that.

Senator Cash: Absolutely.

Senator SHELDON: On 20 January, Minister, you and the Prime Minister put out a media release headed 'Immediate small business support for bushfire affected communities'. You've proclaimed that the bushfire response was a success, saying, 'This government has been able to respond so quickly, with so many different measures'. Considering it's over a month later, I'm just not quite clear how many grants have been received. I know you said you'd come back with the figures, but I just want to be clear on how many grants have been received and how many have applied and received loans.

Senator Cash: This is the remit of the Bushfire Recovery Agency. The department may well have some information they can provide you with, but it will be information we have obtained from the Bushfire Recovery Agency, and all of this was articulated on Monday—I think it was Monday afternoon and evening—by Mr Colvin, who is heading the Bushfire Recovery Agency.

Senator SHELDON: Again, I'll come back to that question. I'm waiting to see. You were checking whether that was correct—that is, whether the degree of questions I want to ask you about have been fully explored there.

Senator Cash: That's fine.

Senator SHELDON: Scott Morrison admitted last Friday that his small business loans scheme is a flop. He said:

And we're taking another look at the small business assistance program. It is right. I mean, traditionally in relation to any natural disaster, there has to be a direct impact on the business. That's what's always been in place, whether it's the floods in north Queensland or fires anywhere else or cyclones … we're having a good look about how we can sort of rebuild in these places and build back better. And that includes how we might look at changing the way we're delivering that support.

I'm again quoting the Prime Minister, who said:

… the issue with small business, is this is that many of the places where the fires were, they didn't go right into the towns so the businesses directly, didn't get fire damage where they've had other things that have disrupted supply and things like that, then sometimes that's taken into account. But there's been a hit on the town, which has obviously hit those businesses and that's and that's not falling in the normal categories for how disaster assistance is applied. And that's what I was talking to Andrew about last week.

… … …

So we're looking at how that can be better supported for those businesses that believe that they can build back, that they will be there next year, the year after that, the year after that. We're looking to see how we can support them with their plan to get their business back on its feet.

Do you agree the program is a flop and the money and the support needed is just not reaching the small businesses that need it?

Senator Cash: I don't believe the Prime Minister said it was a flop. I don't think that was a direct quote. Is that your analysis?

Senator SHELDON: It is very clearly my analysis when the Prime Minister was saying—

Senator Cash: No. The answer is, no. I don't agree with the categorisation that you've made. I think the Prime Minister has been very, very clear that we have provided an unprecedented response in terms of what we have been able to announce. There are ongoing discussions as to what more can now be done.

Senator O'NEILL: There are two words in there 'announce' and 'be done', and there's a very big gap in between. Can I give an example of the Country Labor conference from over the weekend? Country Labor people from across New South Wales came to Singleton and brought stories of their communities. Many of them were severely impacted by fire. We've talked about mental health here tonight. There are major concerns, with a failure of staffing right across the area in terms of mental health. They have lots and lots of things that they're talking to me about. The pressure on small businesses, where there is no wage if they can't work, is very real. There is mental pressure there. This is a perfect example. A fire took out a tradie's house, his ute and all his tools. He put in a claim to get his ute and tools replaced and was found ineligible and couldn't get the money. He had to use money that he did get promptly from his insurer—so I'll give them a plug here—for his house, so he is cross-subsidising now, using money from his housing repayment, to buy a ute and replace some of his tools so he can get started again. That person is very concerned and feeling how lucky he is because he has actually got a payout for his house. Lots of people he knows are not in such a fortunate position. They didn't have a house to be able to get that money on the spot and get going. There are small businesses like that across the entire country. I'm sure they're on Kangaroo Island in South Australia. I'm sure they're in Victoria. I can tell you, from people talking to me in New South Wales, that they are right across the state and they are screaming for this government to give them what the promise is. But the gap between announcing it and delivering it is like day and night. That is the problem.

Senator Cash: Just in relation to the particular example that you have referred to, I'm more than happy to take those details offline.

Senator O'NEILL: I appreciate that. It's very concerning. It's one person, and this system is failing.

Senator Cash: I think these questions are for the Bushfire Recovery Agency. They are the lead agency. We can take the questions on notice and refer them, but I do believe—and Senator O'Sullivan can correct me—they were gone through in detail with the head of the relevant agency on Monday.

Senator O'NEILL: That's cold comfort to somebody who hasn't worked for three, four or five weeks because they've got no ute and they can't get the money that you're telling them is there.

Senator Cash: Chair, what I don't want to do is get the department to read out everything that has been done to date, because, again, it's not this department; it is the Bushfire Recovery Agency that is the lead department and has all of the data.

Senator SHELDON: Minister, whether we call it a flop or a misadventure or ill considered, I'll say this: at least there is now a recognition that the program as intended is not working. Is the government looking at alternative support for businesses in fire affected areas who were indirectly affected by the bushfires?

Senator Cash: I think the Prime Minister made clear that the comprehensive package that we announced was the first tranche, and this was measures to immediately support impacted small businesses. I believe he has also made clear that the government is actively considering what further measures could be provided.

Senator SHELDON: Can you give us some detail of what the support might look like?

Senator Cash: Unfortunately I can't, because it is all done at this point in time through the National Security Committee of cabinet, and they are ongoing considerations that are going through a cabinet process.

Mr Fredericks : In addition, those proposals, if and when they get worked up, would be the responsibility of the—

Senator Cash: Bushfire Recovery Agency.

Mr Fredericks : Bushfire Recovery Agency as well.

Ms Kelly : Senator O'Neill, if I could just—

Senator SHELDON: Sorry; you've got a clarification, have you?

Ms Kelly : In relation to the example that you provided, as the minister said, these schemes are the responsibility of the Bushfire Recovery Agency, but the example that you provided, on the information that you provided, would seem to fall squarely within the directly impacted businesses. If a tradesman's ute and tools were burnt directly by the bushfire, that on its face would seem squarely within—

Senator O'NEILL: That's what he thought too. Sadly, that's not the reality.

CHAIR: Senator O'Neill, please stop shouting.

Ms Kelly : I'd urge you, Senator, to pass on the details—

Senator Cash: Pass on the details and I'll get the Bushfire Recovery Agency to have a look at them immediately.

Ms Kelly : We understand that there isn't always a very clear understanding. Of course people who are suffering these impacts are not in the best position to understand and access the government schemes, so we're very keen to make sure that people understand when they are eligible for this sort of support.

Senator SHELDON: There are a number of things we want to get bipartisanly done here. This is a serious issue for the entire country. I appreciate the conversations that we're having, but there is also a need for action and consideration. I'm interested in the minister's view on these matters. Labor has put forward there should be a wage assistance announcement. I recently had a constituent from one of my duty electorates speak to me about the fact that he lost his home. He doesn't begrudge people in his local community who have got support, because they're farmers. In actual fact, he's pleased to see that for those who have got assistance that it's in the right direction. He's seen others who have missed out because they've fallen through the cracks, and Senator O'Neill has just given an example. In his circumstance, he's an employee, he works for a transport operator, he's lost his house, his insurance was extremely low and he's had a two-month delay—

Senator Cash: So he was in a directly affected—

Senator SHELDON: He is directly affected. He received some cash assistance, but—

Senator Cash: From the grant process?

Senator SHELDON: From the grant process. It was pursued by my office. As part of those grant processes that have been asked for by the Labor Party but also recognised by the government, so it's credit to all of us for working together. But in his circumstance, he's not able to work because of health issues arising out of the fires, so labour wage assistance issues and moneys that he should be assisted with are wanting. We've still got a very serious situation for many workers, and the Labor wage assistance program goes to the wage questions about those workers who are affected in these areas. Labor announced the small business and bushfire affected areas support to include wage assistance, a business task force and greater financial counselling help. Will the government consider taking up the offer from Labor to adopt these ready-made policies, or do you still consider our help as merely playing politics?

Senator Cash: I could sit here and go through with you the extensive announcements that have already been made, but that was canvassed on Monday night in detail, and, again, any policies that we are currently discussing are being discussed in the context of the cabinet process.

Senator O'SULLIVAN: Chair, just to be helpful to the committee, these matters are also being discussed next-door in the Community Affairs committee, particularly in relation to support payments to individuals, as I understand.

CHAIR: Thank you, Senator O'Sullivan, for that. Senator Sheldon, do have you many questions left? Looking at the time—and after our previous conversations—can you put them on notice?

Senator SHELDON: No, I've covered the questions I want to cover.

Senator Cash: Senator Sheldon, we'll also make sure that we redirect all those questions back to the Bushfire Recovery Agency to make sure that you are provided with the statistics that you've requested but from the body that actually has the statistics, the lead agency.

Mr Fredericks : I think if we could seek the details of those couple of questions.

Senator Cash: Yes—offline, we'll seek the details of the individuals referred to.

Senator SHELDON: We may need to follow up some questions on notice as well.

Senator Cash: That's fine. Yes.

CHAIR: Thank you for that. There being no further questions for the Department of Industry, Science, Energy and Resources, small and family business division—

Senator O'NEILL: We've got till 10.

CHAIR: But we've had discussions about how we might finish a bit earlier and other questions go on notice. I release the department—

Senator O'NEILL: Sorry, There's one line of questioning—three questions, if I can?

CHAIR: Okay. I tried.

Senator O'NEILL: Just with regard to mechanics accessing manufacturer technical information—

Mr Cully : That's not for this part of this department. It's not part of the small business function.

Mr Fredericks : To assist you for next time: that's in outcome 1 of the newly formed department and, at present, that outcome is examined by—

Mr Cully : I think it might potentially also be something that's been done through Treasury; there are some areas there. I'm confident it's not us; I'm just not confident—

Mr Fredericks : To the extent it is us, it is outcome 1 in the Economics committee.

Senator Cash: Are you happy to put that on notice?

Senator O'NEILL: We'll have to send it to the right place!

Senator Cash: The secretariat will make sure it's sent to the right place.

Senator O'NEILL: Okay. The machinery of government is confusing! Can I ask a couple of questions about unfair contract terms? Is that you?

Mr Cully : No. Treasury is the responsible agency for unfair contract terms.

Senator O'NEILL: While we're discerning that, I will go to the bushfire response—that's also really somewhere else?

Senator Cash: Yes, that's the Bushfire Recovery Agency.

Senator O'NEILL: And eligibility for small business programs? That's actually you?

Mr Fredericks : You got us!

Senator O'NEILL: I can see the cheers—so relieved! Can I quickly ask about the Business Evaluation Program that the government offers. It provides an analysis of your business by an independent business adviser. According to the eligibility criteria, a number of small businesses are excluded from that program. What's the reason for excluding these particular small businesses that have been operating for less than three years?

Ms Kelly : Senator, I'm so sorry. I think that question relates to the Entrepreneurs Program, which is in the main body of the industry department—outcome 1—which was before the Economics committee this morning.

Senator O'NEILL: Okay, I'll just say I've struck out three times and that's it! Thanks.

CHAIR: There being no further questions for the Small and Family Business Division of the Department Of Industry, Science, Energy and Resources you are released.