6th Oct 2020, 4:28 PM – Representatives Payment Times Reporting Bill 2020 - Second Reading - Fail-safe mechanism

The majority voted in favour of disagreeing with amendments introduced by MP for Burt Matt Keogh, which means they failed.

Mr Keogh explained that his amendments:

... seek to amend the amendments passed by the Senate, to include Labor's fail-safe mechanism. For the benefit of the House, Labor believes that this complementary backup measure is necessary to ensure the Payment Times Reporting Scheme improves general payment times for small business. Our amendment would introduce a fail-safe mechanism. This means that over the next few years, if the government scheme does not broadly improve payment times to small businesses to 30 days or less, then the mechanism will be triggered. The fail-safe mechanism can be triggered after three years of the scheme operating and will allow the regulator to force large businesses not paying small businesses on time to pay them within 30 days or face hefty fines. This will provide an incentive for reporting entities to collectively improve their payment practices or run the risk of more stringent regulation.

The fail-safe mechanism has the following features. The regulator will be required to report to the minister after each reporting period, with the reports being tabled in both houses of parliament. This will start after the first three reporting periods of the scheme—18 months after the commencement. The payment time fail-safe mechanism is triggered if, after the first six reporting periods of the scheme, the representative time to pay small business reported by all reporting entities is more than 30 days. The regulator must report this fact to the minister. Once the payment time fail-safe mechanism has been triggered, the regulator must declare any reporting entity that had a median payment time for small business invoices of more than 30 days for that reporting period to be a recalcitrant reporting entity. A recalcitrant reporting entity is required to pay all small business invoices within 30 days for two years and is liable for a civil penalty if it fails to do so. The rules may provide for exemptions from this requirement.

Read more about the bill in its bills digest.