"The Government's proposed changes to the Payment Times Reporting Act risk being heavy-handed and need more balance if they are to genuinely improve outcomes for small business," Innes Willox, Chief Executive of the national employer association Ai Group said today.
"The Payment Times Reporting Scheme (PTRS) is an important part of Australia's 'business-to-business' infrastructure. Its public data register allows small businesses to better understand payment practices and provides incentives for a culture of prompt payment among all players.
"The Government's proposed amendments to the Act need further refinement to get the balance right between carrots and sticks.
"Ai Group welcomes changes to clarify which businesses need to report, streamline the reporting process, and remove unnecessary administrative obligations on the PTRS Regulator.
"The Government's decision not to mandate specified payment times is a common-sense move that recognises the commercial reality of complex modern supply chains.
"However, new Ministerial powers to designate some reporting entities as 'slow payers' is heavy-handed and not the right answer. These powers are poorly defined, too discretionary, and don't fix the actual problem.
"An independent review of the PTRS conducted by Dr Craig Emerson found the main challenge was its unwieldy legislative requirements. These overburdened the Regulator, made the reporting system burdensome for large businesses, while small businesses struggled to use the 'confusing, clunky and cluttered' dataset.
"The Government has committed resourcing to fix these known problems with the PTRS. These fixes should be attempted first, then given time to work, before any new and highly discretionary Ministerial powers are contemplated.
"We also need reforms that provide support for prompt payments across all players in the supply chain. Efforts to drive the uptake of e-invoicing – one of the surest ways to cut both the time and cost involved in payments – are an obvious way forward.
"Ai Group looks forward to working with the Federal Government on its commitment to develop a strategy to promote the uptake of e-invoicing across all businesses.
"A balanced mix of incentives, that offers support to businesses large, medium and small, is the sensible and best way to improve payment times in Australia," Mr Willox said.
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