‘Poorly defined’: Industry group slams ministerial powers to name slow payers

The payment times reforms introduced into Parliament adopt sensible changes, but further system changes are needed, according to the Australian industry association.

Australian Industry Group (Ai Group) welcomed the introduction of the Payment Times Reporting Amendment Bill 2024 into Parliament last week but says that system reform should remain the top priority for improving outcomes for small business.

Ai Group chief executive Innes Willox said 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,” Willox said.

Willox said Ai Group welcomes changes that introduce industry-specific approaches to assessing payment times performance, limit the circumstances in which application fees can be charged, and does not proceed with the contemplated sharing of protected business information with unrelated regulators without an enforcement action.

“The introduction of a route to seek review of ministerial directions on slow payers to the Administrative Appeals Tribunal also adds transparency to the new PTRS framework,” Willox said.

However, Willox said the new ministerial powers to designate some reporting entities as ‘slow payers’ is not the right answer.

“These powers are poorly defined, too discretionary, and don’t fix the actual problem,” he said.

Ai Group noted that the 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,” Willox said.

“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.”

Willox said businesses also want to see 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,” he said.

“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.”