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A new bill that aims to ensure large companies pay smaller suppliers on time has been introduced to the Australian parliament, and includes provisions that will lead to the public exposure of late payers.
The Payment Times Reporting Amendment Bill 2024 was introduced to the Australian parliament last week and was moved to a second reading on the same day.
The government bill aims to simplify the reporting of payment times, reduce regulatory burdens on reporting entities and increase pressure on slow-paying large businesses.
It seeks to influence the behaviour of large businesses and encourage “fair and improved” practices in their dealings with small businesses.
One of the key provisions is a new power that would allow the minister of small business to name and shame slow payers.
As proposed, if a reporting entity is found to be among the slowest 20 percent of payers to small businesses — either overall or by industry — the minister can order that entity to publish its poor record on its website and in other materials.
The entity would also be labelled a “slow payer” on the Payment Times Reporting Register, which is administered by the Payment Times Regulator, an arm of the Treasury.
“These new reforms will be a shot in the arm for small businesses, with faster payment times improving cash flow, alleviating administrative burdens and reducing financing costs,” said Julie Collins, minister of small business.
“Better payment times benefit everyone, with resulting gains to productivity, supporting higher wages and profits, and expanding employment opportunities.”
The bill would also give new powers to the Payment Times Reporting Regulator to undertake research and publish analysis of reporting entities’ payment terms, times and practices.
The Payment Times Reporting Regulator oversees the Payment Times Reporting Scheme, which was introduced by law in 2020. The scheme requires large businesses and certain government enterprises to publicly disclose their payment terms and times for small business suppliers.
The main task of the Payment Times Reporting Regulator is to receive payment times reports from large businesses every six months and publish information on the Payment Times Reporting Register.
The bill will provide the regulator with new data and tools to assist users of the register and improve the effectiveness of the Payment Times Reporting Scheme.
For example, the bill introduces clearer and more effective criteria and processes for entry and exit from the scheme for reporting entities.
It also allows controlling entities of corporate groups to provide single payment time reports on behalf of the entire group. Similarly, it allows a reporting entity to nominate another entity to report on its behalf.
Its compliance and enforcement mechanisms include new information-gathering powers for the Payment Times Reporting Regulator.
These powers would enable the regulator to issue notices to legal persons to produce documents and provide information that is relevant to the aims of the amended legislation.
The regulator will be further empowered to investigate and publish on the register an entity’s non-compliance, and enforce civil penalties.
Background to the bill
The bill represents the latest attempt by Australian lawmakers to ensure that larger companies pay their smaller suppliers on time.
It seeks to amend the Payment Times Reporting Act 2020, which was Parliament’s first attempt at finding a solution to the payments headaches of small businesses.
At the 2022 election, Labor committed to improving payment times to small businesses, emphasising that payments to small businesses should be made within 30 days or less.
As part of delivering on that commitment, the government commissioned a review of the Payment Times Reporting Act 2020, which it responded to in December 2023.
“The review finds that payment times reporting has generated confusing, clunky and cluttered datasets and has not resulted in large businesses materially improving payment times to small businesses,” the government wrote in its response.
“These, and other findings, highlight the need for an overhaul of the scheme that includes significant amendments to the act to ensure reporting is meaningful and useful for identifying and putting pressure on large businesses with poor payment practices.”
Small businesses in Australia employ more than 5m people and contribute more than $500bn to the country’s GDP, but are often the last to get paid, the government said.
