Allegra Spender (Wentworth, Independent) | Link to this | Hansard source

I move:

That this bill be now read a second time.

It has been an incredibly challenging few years for Australia's small-business community.

We've had the COVID lockdowns. We've had high inflation. We've had high interest rates. We have a fuel crisis and sluggish consumer demands. We in this place need to be doing everything we can to build and grow and support our small- and medium-business areas. And so I want to talk about one of the issues most important to small-business owners, and that is cash flow.

I've run a business. I ran a family business for 10 years, and I know how vitally important cash flow is.

It is the lifeblood that keeps a business running, and any blockage is the thing that can send a business to the wall.

According to ASIC, cash flow management is the No. 1 cause of insolvency among Australian small businesses.

Payment Times Reporting Scheme

Let's talk about payment times now, because the failure of customers to pay their suppliers on time significantly contributes to headaches around cash flow for small businesses. I know I've met small businesses who have actually sold the work. They can actually run on the basis of the profit that they can make. But, because they're not being paid on time, at a certain point they go to the wall because of those cash flow issues. It's those payment times I want to address in this bill.

Indeed, according to the ASBFEO quarterly report Q1 2026, around 35 per cent of disputes that came to them in Q1 this year related to payment disputes.

Slow payment can sometimes be honest miscommunication. But in some cases, the ombudsman argues, it can be an exertion of market power from large participants to manage their own cash flow, effectively using delayed payment as a cheap form of credit.

Since 2020, Australia has operated the Payment Times Reporting Scheme as the primary tool for setting higher expectations around acceptable payment times and processes. This scheme requires large reporting entities with consolidated revenue of more than $100 million to report their payment times and terms to the payment times regulator in six-monthly reporting cycles.

Under this scheme, the regulator can designate 'slow payers', determined as the slowest 20 per cent of all reporting entities for a given reporting cycle. These businesses face no strict consequences besides naming and shaming on the register.

Emerson review

This scheme has noble intentions of trying to make it easier for small businesses, but it just isn't working. A review of the scheme, conducted in 2023, known as the Emerson review, found no evidence that the scheme was causing the kind of behavioural change it set out to achieve nor any evidence that small businesses had the luxury of choosing their large-business customers based on their payment time status.

Basically, let's be real—a small business can't say no to a big customer just because they know they go a bit slower in terms of their payment times.

Analysis of the last payment times reporting cycle, ending December 2025, shows that the average proportion of payments made within 30 days was 70 per cent. That leaves 24 per cent of payments between 30 and 60 days and six per cent over 60 days.

These averages mask the extent to which slow payment is rife in Australia. From the same reporting period, only four per cent of businesses had all their payments made within 30 days, and just as many businesses had at least one payment over 100 days.

These numbers are not widely different to what the ASBFEO reported back in 2023, indicating that behaviour has not improved. It's not getting better.

Regulation and red tape

And, while these stats are concerning, the scheme is not costless as it is. It's not meeting its outcomes. But reporting in itself is a significant cause of frustration from those reporting entities, with regular and onerous reports. If—as the review found—the scheme is not working, we need to either improve it or remove it.

In fairness to the government, in 2024, some of the more administrative recommendations of the review were implemented. However, it did very little to change incentives on businesses to improve their payment times.

This bill

So this is what this bill does.

It picks up on recommendation 14 of the Emerson review and recommendation 6 of the ASBFEO review of 2017 to link payment reporting times to government procurement.

The bill amends the Public Government Performance and Accountability Act to prevent Australia's slowest payers from accessing government contracts. This would not create any additional reporting requirements—it would use the existing data we already collect.

The bill uses a different definition of 'restricted payer' than the 'slow small business payer' concept in the Payment Times Reporting Act. Under this new approach, a business will be considered a restricted payer if, over the three most recent reporting cycles, they consistently either had an average payment time exceeding 30 days or failed to report altogether.

This standalone test focuses on consistent performance and compliance, rather than relative peer comparison, to prioritise real-world impacts on small businesses. However, it still allows for flexibility—if a business has a reporting cycle with an average payment time under 30 days, they are not a restricted payer.

Exemptions

While this bill will create a bigger stick, the bill acknowledges that the primary purpose of procurement is not enforcement, but value for taxpayers' money. That's why there'll be some important exemptions that protect unintended consequences while preserving the intention of this bill.

There'll be four exemptions in this bill that will require written acknowledgement by the finance minister.

1. Firstly, that there is a 'critical national interest' consideration.

2. Secondly, that there is no viable alternative provider.

3. Thirdly, that exclusion doesn't result in significant deterioration in value for money.

4. Finally, that the slow payer has a credible, achievable remediation pathway.

This bill has a commencement date of 1 July 2027, giving businesses 12 months to make adjustments to payment practices before facing potential exclusion

Conclusion

In a productivity crisis, we need to be seriously evaluating reporting and red tape requirements that we have put on businesses and, if they're not achieving their objectives, either improve it or remove it.

Small businesses deserve to be paid on time. We have the mechanisms, we have the reporting in place to put real impetus behind this, but the government hasn't acted. What we have imposed is red tape without outcomes. We must stop this, and we need to get small businesses paid on time. This is a sensible, real-world amendment that can start to use the power of government procurement to get better outcomes for small business, and I urge the government to accept it.

Milton Dick (Speaker) | Link to this | Hansard source

Is the motion seconded?

Kate Chaney (Curtin, Independent) | Link to this | Hansard source

I second the member for Wentworth's motion. I'm pleased to support this bill, the Public Governance, Performance and Accountability Amendment (Supporting Small Businesses To Be Paid On Time) Bill 2026, which tackles one of the corrosive pressures facing small businesses: not getting paid on time. Late payment by large businesses to their small suppliers is one of the biggest drivers of small business financial stress, and inadequate cash flow remains the single most reported cause of small business insolvency.

The mechanism in this bill is elegant. We already require large businesses to report their payment times. This bill simply says that if you consistently pay your small suppliers late—averaging more than 30 days across three consecutive reporting cycles—you should not be eligible for the largest Commonwealth contracts. That's a powerful lever. Large businesses make up around 79 per cent of the Commonwealth's $71 billion procurement program. Tying access to that program to fair payment creates a real, ongoing incentive to pay promptly. It's measured and fair, with sensible exemptions, and it's self-correcting: pay on time and the restriction falls away.

A fortnight ago I sat down with hospitality owners in Curtin running some of the best venues in Perth—venues like Lulu La Delizia, Monsterella Pizza, Juanita's and Kith. The clear message was that it's getting harder just to stay afloat. Rents and insurance have gone up 20 per cent in a year. Credit card surcharge changes are costing a single venue about $25,000 annually. Wage and superannuation increases are adding up to $50,000 more. And as those wages rise, state payroll tax thresholds stay frozen, so businesses are taxed more simply for paying their staff properly. There is cost after cost, with no-one asking how it all adds up.

That's the context for this bill. These small businesses are price takers at both ends, squeezed by rising costs on one side and customers whose own spending is under pressure on the other. There is very little room to support another hit, so when a large customer or supplier pays late, using a small business as a cheap form of finance, it's one more pressure on an operator already stretched to the limit. One owner put it plainly: it feels like small businesses are left to pay the bill, while big businesses have their accountants and leverage to avoid carrying their share. These owners weren't asking for a free ride. As one put it, they just want to make it 'a little bit easier to do what we love'.

This bill is one concrete way that we can make it easier. It doesn't cost the budget a cent. It doesn't add a reporting obligation. It just says that if you want public contracts, you have to treat the small businesses in your supply chain fairly. In Curtin, these small businesses are the fabric of our community. They create the jobs, take the risks and bring our neighbourhoods to life. The least we can do is make sure they get paid on time. I commend this bill to the House.

Milton Dick (Speaker) | Link to this | Hansard source

The time allotted for this debate has expired. The debate is adjourned and the resumption of the debate will be made an order of the day for the next sitting.