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Thursday, 11 June 2020
Page: 3979

Ms CHESTERS (Bendigo) (17:28): As other speakers on this side of the House have indicated, we support the bills that are before us, the Payment Times Reporting Bill 2020 and the Payment Times Reporting (Consequential Amendments) Bill 2020, but we have concerns—hence why the Payment Times Reporting Bill 2020 going to be referred off to a Senate inquiry. We support it as a first step, but I would add that it's actually a really weak step, and I'll outline why in a moment.

For a long time, we have been advocates for better payment practices for small-business suppliers. Just as with wage theft, big businesses who misuse their relationship with small businesses and pay them late do so deliberately. It's become part of their business model. It's an insidious practice that is hurting so many. We see, time and time again, big business taking the little guys for a ride. What was hoped for with these bills was tough legislation, making sure that we had a big stick to actually go after the big guys who are treating so many little guys appallingly. We do not have a big stick. We have a very weak step towards reform that is necessary, particularly in a time like COVID-19 and a recovery.

Talking to local businesses in my area, it is all about cash flow. Businesses have not reopened because of cash flow—businesses not being able to get the numbers that they require to balance the books, businesses that didn't apply for JobKeeper because of cash flow. For businesses, as many people would know if they consulted in their electorate, cash flow is king. It is what allows them to keep trading. It is what is necessary. It ensures that they have the money to pay wages, pay super, pay the rent. After COVID-19, it is something that we need to be acutely aware of. Every piece of legislation that comes before this parliament should have that lens upon it. That is why I say this is a weak step.

This legislation is talking about self-regulation. That's not a big stick. That's not a tough cop. That is not someone who's really going to back in small business. Self-regulation is just window-dressing. It's the suggestion that the big guys are going to do the right thing. Come on! After how many decades, when will the conservatives finally accept that self-regulation is about saying you're doing something when you're not doing anything at all? Self-regulation of an industry that is already behaving badly will not deliver the cultural reform that's required. We do support this bill, because it is a first, little step, but I hope that, between now and when this bill passes, the government listens to the concerns of industry, small businesses and Labor and actually make some real changes to this bill so it can deliver real reform and relief to our small businesses.

Prompt payments to small businesses are far more important to cash flow than to larger businesses. Larger businesses have many different ways to increase capital, whether it be through raising equity, whether it be through bond markets, whether it be through not paying their workers super, which quite often happens. Even wage theft has become part of a model for big businesses in raising capital.

I see those opposite shaking their heads and asking, 'How can this be related?' Well, it is. It has been demonstrated. It has been talked about. The Fair Work Ombudsman talks about how big business these days are using wage theft as a model, deliberately underpaying their workers as a model, and using the capital in other ways. That's why we have been consistently saying there needs to be reform in that space. Maybe in this pandemic we will see the government finally move on wage theft and we'll see a bill come forward, but let's hope it's not more window-dressing like the bill we have before us. Let's hope it's not a self-regulation model like the bill we have before us.

What we are seeing in Australia is large businesses using small businesses as their piggy banks to boost their own working capital position. Even more insidious, what we are seeing is these big businesses going to third-party financiers and saying to little businesses, 'If you want to be paid on time, pay a fee.' Can you believe that? It's hard to believe that that's even legal. It's hard to believe that, when you have reform in front of you, the government hasn't even attempted to crack down on this insidious behaviour that has crept into corporate culture.

I was shocked when I had a small business raise this with me, a construction business in my electorate, someone who supplies building materials into the construction industry. They informed me that they had the option to sign up to this recovery of their invoices and that for a small fee—or what they thought was a big fee; they paid it—they could actually get paid on time. They could sign up to a new payment model. My first question was: how is this legal? After several letters back and forth and after several conversations with people in the tax office, with people in the department, with legal experts, with local lawyers and with even the Fair Work Ombudsman's office, it turned out that it was true. You can actually do that. For companies who deliberately don't pay businesses on time, there is a window that has opened up for this opportunity. What an evil business model. They go out there and prey on small businesses that are desperate to have their invoices paid. Let's just remember that these are businesses who've done the work. They've supplied the goods or supplied the service. They just want to be paid for that, and to get what they're owed they're being asked to pay a fee through these third-party financiers. Can you imagine asking workers to pay a third party—'We're going to take some of your wages so that we can process it.' Can you imagine if that were to be the case? Wait a minute—it is happening in some places. That's what's happening in some places when it comes to JobKeeper. So the government might want to address that one pretty quickly, that we do actually have some employers deducting a fee for processing JobKeeper. Not all employers are bad employers. Not all businesses are bad businesses. But when you have this toxic corporate culture creeping in, the government needs to act. That is where we need the regulation. Not self-regulation, but decent regulation that has real penalties and that stops this culture in its tracks.

This bill, the Payment Times Reporting Bill, introduces a new payment times reporting scheme which requires about 3,000 large businesses and government enterprises with a turnover of over $100 million to publicly report biannually their payment terms and practices for their small-business suppliers. It's a bit like a name and shame. You need to demonstrate that you're doing the right thing. And we all know how successful these schemes have not been in the past. So I'm surprised that the government has said, 'This is our big reform.'

The government argues that, by providing access to this information on large businesses who pay on time, small businesses will be able to make more-informed decisions about their potential customers. We now live in a world where the small business can choose its customers! We now live in a world where, in the building and construction industry, where you have some really major players, the little supplier in my electorate can rock up to Lendlease and say, 'We're not going to do that hospital work worth $50,000 because you're on the government's list.' That's not how business works. What the small supplier in my electorate wants is to do that government job. They want to do that work for Lendlease, and they want to be paid in a quick time frame. They've got their employees to pay. They've got their own suppliers to pay. The government has this weird idea that the small business will be able to shop around for better customers. The absurdity of suggesting that shows just how out of touch they are with how business works, how our economy works and what is happening.

It's not just on the worker side. I always thought, being from Labor, that they just didn't understand how things work from the worker perspective, that they actually believed that a worker had the power to sit down and negotiate an individual contract with their employer. There are people in the government today who believe that that can happen, that that's a genuine, fair relationship. I didn't realise that the government believed that small businesses had the ability to do the same. It is not that way in reality.

The government also contends that greater transparency on the payment practices and performances will create pressure and a culture for change to improve payment times. Again, we've not seen that at all from the Fair Work Ombudsman—this idea of shifting culture. You ask the Fair Work Ombudsman—and this has come up several times; this is in relation to wage theft—'How do you get cultural change that is lasting?' And they've always gone along the way of: go after a few, make it public, embarrass them, get some big names, and that will drive cultural change. That has not happened. In fact, it rarely happens. It rarely happens when it comes to workers, and it will not happen when it comes to forcing big companies. It will not see them change their culture when it comes to big companies paying little companies on time. The only way that you can do that is to have tough penalties, to have it mandatory, and not to have this soft self-regulation approach. I argue that the penalties in this bill are light and they will probably take a long time to prove. Desperate to be paid on time, a lot of small businesses may not even go down the path of reporting that they believe that their particular customer has not reported properly. The system itself looks like it is going to create a lot of bureaucracy and not deliver the genuine justice that so many small businesses are seeking.

I mentioned earlier the alarming practice of charging fees if small-business suppliers want to be paid on time. I was even more alarmed to learn that there is actually a term for it: supply chain financing. It's been recognised in several forums as being an issue—it's almost got a hashtag and trending. You would think that this government would act if it's coming up time and time again. You'd think that they'd actually do something to help out small businesses. They don't miss a beat when they're talking about how many small businesses are in their electorates or how many small businesses there are in Australia. They say that they're the great friend of small businesses. Yet with this critical bill they've failed to deliver a genuine reform that would have helped small businesses. Instead, they've dressed it up and called it self-regulation.

I was talking about this bill to a couple of the businesses in my electorate who have been hurt by supply chain financing, and I asked them what they thought about self-regulation. They laughed and said: 'You've got to be kidding! That's just a cop-out.' That is what one business, a concreter, said to me. It is still waiting to be paid for several jobs. Now when they go to do work they check the risk factor: 'Do we think this company will pay? Do we think this company will pay on time?' It's a question that they genuinely ask. They actually think, 'Will I actually go for this job?' They decide based on whether they think the company will pay, which is outrageous in the first place, and on whether they think it will pay on time. That is something this bill could address if it actually had some teeth in it.

To understand supply chain financing properly—and I know that people on my side have tried to point this out to people in the government—is it fair to ask a small business to pay, say, a $1,000 fee to be paid on time? Sometimes it's $9,000; sometimes it's a percentage. One of the businesses in my electorate was charged 1.5 per cent. That's a lot if you're owed $50,000 or $60,000 in supplies. These supply chain financing arrangements seem to be popping up in lots of different industries. They're popping up in the cleaning industry, in the building supplies industry, in the manufacturing industry—small guys who just want their fair share of the pie and, just like every other worker, to be paid on time. These are businesses that are quite often family operations, started by somebody in a family who then employs the rest of the family. They may or may not have employees, but they are desperate to keep the business going. As I said, cash flow is king, particularly at this time.

This bill has weaknesses, and I call upon the government to really take on board some of the suggestions that are being put forward. Look at some of the better practices overseas. Look at what New Zealand is doing. It is legislating a 20-day payment time. They are looking at it; we should too.