Government paid just $39 penalty for $500m late payments to South Australian businesses
BUSINESS owners who were kept waiting for more than half a billion dollars in late payments from the State Government in the past year received just $39 in penalty payments.
BUSINESS owners who were kept waiting for more than half a billion dollars in late payments from the State Government in the past year received just $39 in penalty payments.
Figures published by the Government show it paid at least $561 million worth of bills after their due date in the 2015-16 financial year.
More than $98 million of its payments were more than 30 days overdue, making them subject to penalty payments under new regulations.
Businesses say the Government’s failure to make payments on time can seriously harm their cashflow and leave owners struggling to meet their own expenses, including wages, while the Opposition warns that late payments can have a “disastrous effect” on small firms.
In 2014, the Government responded to industry anger by introducing penalties for departments which pay their bills 30 days or more after the due date.
Following requests from The Advertiser on Tuesday, it confirmed only two payments, totalling $39, were made in 2015-16.
Opposition Leader Steven Marshall said the performance exposed a double standard because businesses and households were hit for being late on their bills but the Government was not.
He pledged the Liberals would make penalty payments automatic if they won the next state election.
Business SA spokesman Anthony Penney said the system placed the onus on business owners to apply to the Government for penalty interest.
“Cash flow for any business, especially small business, is critical for the ongoing operation and ultimately success of that business. Businesses should not have to wear the additional time and cost burdens of having to chase Government departments for late payments,” he said.
“In our recent state pre-Budget submission, we highlighted that no small business had yet claimed interest for a late payment and that the Government should look at how it can improve the awareness of small businesses who have a right to claim.”
The Government says it now pays 95 per cent of its two million-plus invoices on time.
Businesses can currently apply for a 6.5 per cent annual penalty, calculated on a daily basis.
Mr Penney said he recognised the Government had improved on its poor past performance, when bills totalling more than $1.5 billion were paid late, but was disappointed that it remained “lacklustre”.
The figures published by the Government also do not yet include late payments made by SA Water, Adelaide Convention Centre or Renewal SA. All are large consumers of local suppliers.
The worst reported offender was the Department of Planning, Transport and Infrastructure. It paid $91 million of its bills late but within a month. Another $24 million worth were settled even later.
Several divisions of SA Health reported late bill payments in excess of $1 million.
Mr Marshall the Government had failed to fix its bad track record of late bill payments.
He said the Liberals would make departments pay automatic penalty interest to businesses for any contract worth up to $1 million, if they won the next state election.
“Every business has to pay its bills on time and are penalised when they fail to do so. The Government should not be different,” Mr Marshall said. “Late payments can have a disastrous effect on small businesses, many of whom are already doing it tough in South Australia.”
Treasurer Tom Koutsantonis said there were many reasons why invoices could be paid late, including that they require clarification or that goods didn’t arrive or were faulty.
“Because of this interest payments must be dealt with on a case-by-case basis, which is entirely consistent with normal business practice,” Mr Koutsantonis said.
“Mr Marshall’s policy of automatically paying interest on late invoices would be impossible to implement and lead to interest being paid erroneously, wasting taxpayer money. Consultation on the State Government’s late payment arrangements was conducted with relevant stakeholders, including with the Office of the Small Business Commissioner who supported the arrangements.”