Sharon Bird (Cunningham, Australian Labor Party) Share this | Link to this | Hansard source

I rise with regret this evening to criticise BlueScope Steel. On 26 September BlueScope Steel’s chief financial officer, Mr Paul O’Malley, wrote to suppliers of his company and calmly advised that BlueScope would be moving to a new 62-day payment of invoices. Payment would be calculated as due at the end of the month in which the invoice was received. He also said, according to a letter which was reported in the Australian Financial Review on 9 October:

With annual purchases of over $5 billion … securing cost-effective and reliable supplies is of critical strategic importance to the financial wellbeing of BlueScope Steel.

That statement is most disappointing and most disingenuous. What are the small businesses and contractors who actually supply BlueScope Steel, who are of such ‘critical strategic importance’, supposed to think of this? Are they—more than 20,000 small businesses and contractors in the BlueScope supply chain—supposed to financially starve? Are they supposed to tell their workers and their own suppliers that they are also supposed to financially starve?

BlueScope Steel is a very big business. Its steel-making operations are, as is known, located in Wollongong and Port Kembla. The most efficient and cost competitive integrated steel-making plant in the Southern Hemisphere is found in my region. It exports to the world. For a very long time it was said that, if the then BHP sneezed, Illawarra caught a cold. Indeed, the same could have been said of Newcastle before BHP pulled the plug on that place. Over the last 20 years Wollongong has diversified its economy to move away from this overwhelming reliance on the steel and coal industry. In that time we have broadly succeeded in the fundamental task of economic restructuring—all of it painful to many thousands of people, it should be acknowledged. We have a world-class university and TAFE system, giving our students skills and training. We have broadened our service economy into tourism, financial and property services and cultural industries.

BlueScope used to employ nearly 20,000 people 20 years ago. As part of the Hawke government’s steel industry plan the industry was saved but the workforce was reduced to stand today at about 5,000. Many of those former workers are now tradespeople or contractors in their own small businesses. They and other supplier businesses make up the ‘critical strategic importance’ of BlueScope. All of these small businesses—an overwhelming majority in the Illawarra—have commitments. They have mortgages, overdrafts, workers to pay and fleet vehicles to run—not to mention their own families to financially support. A delay in their payment from BlueScope Steel can absolutely cripple them.

If BlueScope Steel is permitted to get away with this outrageous abuse of its market power, I am afraid other steel industry players will also move in the same direction. Already the financial press have indicated that Smorgon and OneSteel may move in the same direction. This will devastate small businesses and perhaps do serious damage to a critical supply chain in the nation’s economy. This decision, if permitted to stand, is estimated by industry sources to have already cost at least $100 million. That is $100 million sitting in BlueScope’s bank account earning interest at the expense of those small businesses and contractors, who are expected to wait, begging bowl in hand, for 62 days—and indeed perhaps longer if BlueScope can tweak the date it received the invoice from the small supplier.

I am certain that BlueScope representatives in the company’s Port Kembla headquarters would have put up a good fight in the boardroom to argue forcefully against this decision in support of the region they operate in. They are locals, based in Wollongong, living amongst us. They know exactly what the effect of this decision will be on local small business suppliers in Wollongong, Port Kembla and Unanderra. In the end, their strong voice in favour of standing up for local small businesses was defeated by the BlueScope chiefs in Melbourne. This corporate giant in making this decision has crushed through the goodwill that BlueScope Steel should and did enjoy and worked hard to receive in the Illawarra.

On 14 September BlueScope started its contribution to water saving by commissioning its tertiary treated water supply to BlueScope. That is 20 million litres a day to BlueScope, saving fresh water for other purposes. A week later BlueScope sent this pitiful letter to suppliers advising them that they would be paid effectively when BlueScope decides it is appropriate. (Time expired)