Australian Small Business and Family Enterprise Ombudsman Bruce Billson interview with Leon Delaney.
2CC Radio Canberra
Subjects: Small business headwinds and need for right-sized regulation, payment times, Commonwealth procurement.
Leon Delaney
The Albanese Labor Government is today trumpeting the passage of its legal measures, its legislation to improve small business payment times. Now, getting small businesses paid on time has been quite a considerable challenge for those businesses for a long period of time. In fact, that is one of the issues that the Australian Small Business and Family Enterprise Ombudsman, Bruce Billson, has been addressing for quite some time now, including this week in the Senate Estimates. Bruce joins me now. Good afternoon.
Bruce Billson
Leon, great to be with you and your listeners.
Leon Delaney
What was your message to Senate Estimates this week?
Bruce Billson
It was actually a message saying not all small businesses are okay right now. It's a challenging time. You and I have spoken about this before, that what we know in households, the cost-of-living pressures are actually cost-of-doing-business pressures for small and family businesses. But as household budgets are tightened, expenditure, particularly discretionary expenditure, is really contracting. That's really hard for some small businesses at a time they're contending with higher costs for those inputs, energy costs, rents are up, insurance is up, staggering amounts.
It's a pretty challenging time. That was my message to the Senate, along with a plea, I would suggest, to not simply address those headwinds and hopefully take some of the strength of those headwinds out, but to actually put wind in the sales of small business. Think deeply about what could be done to advantage those job-creating, opportunity creating, enterprises that are right throughout our communities.
Leon Delaney
Now, you've addressed a number of issues when you faced the Senate Estimates committee hearing, but amongst them were your concerns about a flurry of new workplace rules and obligations. I'm constantly hearing from organisations such as the Council Small Business Organisations of Australia about their concerns about the red tape tangle faced by many businesses. Of course, we hear from governments repeatedly, Yes, we're cutting red tape, but it seems like they don't ever really manage to cut it very far because it's still a problem, isn't it?
Bruce Billson
Well, we're really trying to get governments, lawmakers, regulators, to think about these regulatory impositions in terms of something that's right-sized for a small and family business. What we've seen is some of Australia's largest corporations and even government departments themselves that write the rules, struggle to implement them effectively. There's now stronger penalties for those that intentionally do the wrong thing, yet we're saying it's hard for some small businesses to often know what the right thing is and that we should be thinking about the regulatory imposition in terms of time poor, cash-constrained, small businesses that aren't shrink-wrapped versions of major corporates. There are people trying to create opportunities and forge out some livelihoods, and they do a lot of their compliance work at 10 o’clock at night. Think about these people. Think about this experience and those challenges when we're coming up with what are increasingly complex and sophisticated regulatory requirements that even well-resourced organisations struggle to navigate. Think about how challenging and confronting that is for a smaller business.
Leon Delaney
You also went on to address the issue of timely payments for small businesses. Of course, Julie Collins, the Minister for Small Business, has today distributed a media release, Passage of reforms to improve Small Business Payment Times. What has the government actually passed, and will it be enough to actually improve that situation?
Bruce Billson
Well, it's got partway through the Parliament. I think what the Minister's press release was welcoming was its passage through the House of Representatives. There's still the Senate to deal with the matter, and they sit again around the 24th of this month. What that aims to do is improve the way what's called the Payment Register operates. The Payment Times Reporting Framework, it's about 7,000 of the biggest companies in Australia who are obliged to report on the terms that they offer small and family business suppliers, and then talk about the performance that they actually have in making those timely payments.
What you and I have spoken about before is that that performance is best characterised as woeful. There's still one in 10 businesses waiting over 120 days to be paid. There's about a third that get paid within 30 days. Cash flow, Leon, it's vital for business. It's the oxygen that they trade on. It's no good having a paper profit if you're not getting paid. What the minister's welcomed, and we think this is a step in the right direction, is improvements to that register to make it easier to get data in, but also to get data out, so that you and I might be able to talk about who's doing the right thing and paying their small and family business suppliers well and why others in that industry are really letting the side down.
It's also making sure the data that goes into that register actually means something, and it's not just a whole bunch of fog and confusion. It also gives the regulators some new powers, including to call out those people that are doing well in payment times and those that really need to pull their socks up.
Leon Delaney
On the question of timely payments, when you're at the Senate committee at the Estimates hearing, you pointed out that in many cases, the party that is slow to pay is either a big business or a government department. Now, yes, we understand that big businesses might be tempted to take advantage of their market power and beat up on the little guys. We shouldn't condone it, but we understand why they might be tempted to do that. But a government department is meant to be held to a higher standard of accountability and honourability, isn't it?
Bruce Billson
That’s why we've been urging these considerations to be part of the government being a good customer to the people that are its suppliers. You and I have talked about procurement improvements that we think are necessary. There's a lot asked of businesses that supply to the Commonwealth. We think Commonwealth departments paying in a timely way is not too much to ask in return. In fact, there are mechanisms where late payments are supposed to be recognised with interest to the person that's been paid late. But again, people are concerned about flagging this as maybe having them identified as a problem child, and they don't want to compromise that relationship.
This is an area where hopeful things can improve. But I should also say, Leon, most of the disputes that come to my agency to help to resolve, where they involve payment disputes - and that's 40% of the matters that come through my agency - often it's one small business to another small business as well. We need to just realise that a delay in paying a business may cascade through to that business then delaying its payment to someone else. You and I have talked about how that's caused such mayhem in the construction sector, and we just need to stay on this.
Good business pays. They pay their bills on time, they pay the tax that they owe, and they pay their people correctly, and we should make that a cultural expectation of all those involved in commerce, including where government's dealing with business.
Leon Delaney
The other thing that you raised with the Senate Estimates committee was your recent inquiry into the impact of reforms to Commonwealth Procurement Rules. You said that the response from the government to your recommendations was, well, you described it as a missed opportunity. What has the government got wrong?
Bruce Billson
Well, basically, it would have been nice for them to pick up our recommendations. Government procurement, particularly in this town, Leon, is a very hot topic, and it doesn't take long if you're talking around in Canberra and greater region to have a business that's had a poor experience dealing with government.
It's good if you're part of the in-crowd, if you know how the system works, you know where to look for opportunities. But if you and I were a small IT firm with some really good capacity we wanted to see if we could supply to the government, how would you know where those opportunities were? Are what's asked of us reasonable expectations? Do the officials handling those procurement processes actually know how the rules work? Are we actually bringing meaning to slogans like Future Made in Australia and the Buy Australian Plan? All very worthwhile objectives. But are we actually backing that up with procurement processes that actually give small and family businesses half a chance to win that work. Or are people going to always play safe and go to the big end of town? That's what we were addressing. We put forward a number of recommendations. The response from government was tepid at best, shall we say, and basically saying, look, we think we've got all this sorted. A little tweak there, a little tweak here. It'll be right. It'll be great. No, it won't. We were looking for a more decisive response from government. We didn't get.
Leon Delaney
Bruce, as always, a great pleasure. Thanks very much for chatting today.
Bruce Billson
Thanks, Leon.
