Big businesses should be penalised for paying smaller firms later, and it’s time to legislate, the small business commissioner says
Small businesses should not be used as “banks” by bigger firms, the small business commissioner says.
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Small business commissioner John Chapman has called for national legislation to compel big businesses to pay their smaller counterparts within 30 days, saying the latter “should not be banks for big business’’.
Mr Chapman’s office released its annual report today, with Mr Chapman taking the opportunity to press for legal protection for small businesses owed money.
The commissioner was involved in a high-profile case early this year, when it was revealed Sanjeev Gupta’s Liberty Group, which owns the Whyalla steelworks, had let some supplier payments to slip beyond 100 days.
Mr Gupta apologised and promised to speed up payments, putting the issue partly down to legacy systems.
Mr Chapman said asking small businesses to wait more than 90 days for payments from any large business was “simply unacceptable’’.
“There are more than 143,000 small businesses in South Australia and my office consistently deals with issues around delayed payments,’’ he said.
“Unfortunately we need legislation to ensure fairness and to address the imbalance of power between big and small business – 30-day terms as a legislated maximum would be a good start.’’
Mr Chapman has urged the State Government to take up the issue through the Council of Australian Government (COAG) process.
He pointed out the federal Government was already seeking to enshrine better payment terms for small businesses as part of new tender arrangements, and the State Government itself is committed to paying interest on late payments.
The office’s annual report also warns that large businesses should not ignore calls to comply with its requests.
Mr Chapman said the builder of the new RAH, Hansen Yuncken, “chose to disengage from communication with my office, preferring lengthy arguments through its legal representatives” over complaints about retention payments for subcontractors being held up.
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Hansen Yuncken was eventually fined $1800 and had to pay the commissioner’s costs.
“I expect all businesses to respond fairly and positively to my office when dispute arise,’’ Mr Chapman says in the annual report.
The Commissioner’s office cost $2.007 million to run in 2018-19, coming in $230,000 under budget.
It dealt with 3383 inquiries, 262 new cases and closed 260 cases.
The state and federal governments have been approached for comment on the late payments issue.