Late Payment of Government Debts (Interest) (Automatic Payment of Interest) Amendment Bill

September 18, 2018

The Hon. J.A. DARLEY (18:23): This bill will amend existing legislation with regard to the circumstances in which interest is payable by government to businesses if the government does not pay invoices on time. I understand that in 2014 the government of the day introduced interest payments for any government invoices that were paid 30 days after they were due. However, a business needed to make application for the interest payment rather than having it apply automatically if payment was late.

 

The bill will amend the existing provisions so that interest is paid automatically if the invoice is not paid within 30 days and the invoice does not exceed $1 million. Interest will be calculated daily and will be paid at around the same time as the outstanding invoice is paid. In 2016, it was reported that notwithstanding the new interest penalties for late payment, the government had only paid $39 in penalties for invoices that were still unpaid beyond 30 days. This is despite $561 million worth of invoices being paid late in the same period, with $98 million of that being paid late beyond 30 days.

 

I have been contacted by small business owners who are owed money by the government, who have outlined the issues these delayed payments can have on their livelihood. Late payments can cause significant cash flow problems for businesses and, in the worst-case scenario, can result in businesses closing because they are waiting for payment from the government. This is unacceptable. The government should always be the model citizen. After all, there are countless examples of individuals or businesses being slugged late payment fees by the government if they are late with their payments.

 

It stands to reason that if the government are late, then they will be liable to pay a penalty too. The government currently publishes their outstanding invoices online. The raw data indicates that most of the agencies have a pay-on-time rate of 95 per cent or more, but there are a few with time frames that extend beyond this. These time frames indicate that there has been a significant improvement on this issue in the past few years. Whilst I am supportive of this measure, I have to say that I was initially sceptical as it sounded like taxpayers would have to foot the bill for bureaucrats not doing their jobs properly.

 

I understand that no additional monies will be given to departments if a plethora of interest payments needs to be made. This is comforting; however, perhaps the incidence of interest payments made should be taken into consideration when the contracts of CEOs are extended. I am glad the government has decided to act on their promise and look forward to seeing how this will operate in the future.

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