Transcript – 2GB – Paying Small Business on Time, Cutting Red Tape

Monday, 29 December 2014

Subjects: Pay on Time, Red Tape Repeal


We obviously have fallen at the last hurdle here before, with government paying Small Business on time – so important. What have you been able to do to get this 12 year record going?


Well, a couple of things.

We have got this 12 year record which reflects the Government’s view that the Government should not be improving our cash flow at the expense of small business customers and contractors.

So what we have set is a new benchmark that is pay the bills on time – that is within 30 days – or penalty interest will apply.

We have changed some of the payment options so that payment cards can be used for smaller amounts, and all these actions are focussed on making sure the government is doing the right thing by paying all bills on time is paying dividends to the small business that are providing goods and services to the Commonwealth.


So obviously with cash flow flowing back to small business, that keeps the sector a bit safer than it might normally would be. Is there another dividend here? The ability to employ people? Is there any way that flows through?



We know that most businesses that find the going tough, it is not because of bad profitability in many cases. It is because of cash flow.

You might have contracts, you might have customers – and there is no substitute for customers – but you need to get the money coming in to pay your own bills and to keep your business afloat.

We take this very seriously. That is why we are trying to lead from the front.

Not only achieving this 12 year performance record of paying bills on time but we have actually upped the ante. In the past if a small business was not being paid after 30 days, it had to go back to the government – another action step , more red tape – to get some penalty interest and also risk incurring the wrath of whoever acquired their services in the first place, maybe making them less attractive for follow on work.

We think that is wrong – so now there is an automatic interest payment applied after 30 days if payment hasn’t been made. And the agencies that are a bit tardy in making those payments don’t get their budget supplemented.

They have to get themselves organised, just like small businesses need to get themselves organised and pay the bills on time.


I know you have, for many years been talking about you might do in Government when elected for helping small businesses and we hear yourself, we’ve heard Josh Frydenberg and others talk about red tape.

For many of us – you would understand this – we think “oh gee, that’s nice, but what really does it actually mean?” Can you give us a practical example of how the cutting of red tape, which might even be this example here, has given significant benefit to small businesses?
How are they better off today than before you were elected a year ago?


Well the essential issue is that they are now more than two billion dollars better off across the economy in terms of red tape and compliance burden.

Put simply Luke, that means a business can spend more time on growing their business, rather than doing the business government requires of them.

For many smaller business we know, as my wife and I knew when we had our small business, you do a lot of the paper work on the weekends. It wold be time away from family. It would be a further imposition on what is an ongoing focus of your thoughts and of you efforts which is making your business work.

So getting this red tape reduction delivered, which we have done. We promised a billion dollars. We have overshot. We have got more than two billion dollars’ worth of savings already.
More to come, some changes in the way the tax system interacts with new computer systems and bill payment systems, so that the burden of the BAS – for instance – can be greatly reduced.

These are practical measures that are designed to get small business people, back working on their business and actually save some time on the weekends, so they can have a rounded life and catch up with friends and family as well.


So that two billion dollars then is time, that equates to time that would have been spent by the business operator doing things other than growing their businesses.



It is not only the time, but also direct costs as well Luke.

Some of these requirements that government impose seem to have been dreamed up by Big Government, talking to Big Business and Big Unions. No small business I have ever met has got a dozen people in a compliance department just busting to read hundreds of pages of regulations.

So getting those regulatory requirements rightsized so that a small business, a mum and dad operation or a family enterprise knows what is expected of them. It is a reasonable requirement, in that it is proportionate and it is justified and can be easily implemented. That is the focus that we bring. And where there are nonsense red tape requirements, let’s get them out of the road.

When the Abbott Government was elected, the world economic forum Luke, said we were 128th in the world in terms of the red tape and compliance burden on our economy.

Let me put that another way. Only 127 other economies, less gummed up than ours, trying to battle for those jobs and economic growth opportunities that we want. So we think if we can take lead out of the saddlebag of those business people who are creating jobs and opportunity in our economy – this is good for our nation.

We have got to get up that league ladder. 128th is pathetic. That is why we have got such a commitment. And the whole of the Abbott Ministry, the whole of the team is working on this every day and if someone comes up with a new compliance burden, it has got to be absolutely justified and they need to find offsets.


That figure, 128. I was looking around here, and everyone else was going “Gee, that is unbelievable” because we are seemingly at the top of the table in so many other areas. I imagine we didn’t just do that over the last couple of years, and with the coalition comprising more small business owners, farmers and the like, we surely have drifted to that position over some time.

Could the Howard Government have done more?


Yes. I think so.

On reflection, I mean we were mid-table. When the Howard Government left office, we were a pretty ordinary 68th, so mid-table.


So we went 68th to 128th in what? Six years?


Yes that is right.

Under the Rudd Gillard Rudd Government there were 21,000 new and amended regulations introduced.

And this is what happens, when the community is saying we want action taken on Issue A or Worry B, politicians like to be seen to be responding to that call, now as we found out with the Rudd Gillard Rudd years, when you run out of money, when you run out of the savings, the surpluses that the Howard Government had left, throwing money at every problem couldn’t be the solution.
So what is the next solution, the next reaction? Well it is more regulation. So we have seen this growth in regulation, which partly reflects we are a sophisticated community, that we like things to be in their proper order and the like but having excessive regulation comes at a cost.

It makes us less competitive and you know, let’s think about our sporting greats, if they were having to run a race with an extra ten or 15 kilograms more than someone else, that limits their capacity to win, just like excessive regulation limits our capacity to win new jobs and grow the economy, when all these other economies want to take advantage of the opportunities that we see.

So that’s why it is so important. It is unnecessary; it drives small business people mad. It is a burden on our economy. It displaces their effort and resources that could go in to growing their business, and that is why it is such a priority for us.

Paying our bills on time is part of that. Getting reforms through such as single touch payroll and using modern technology to make the task of communicating with government easier. The government getting its own act together Luke, where if you tell the government in one part of its operations that you may have changed your address or if there are new directors in your business, well why on earth doesn’t that just work its way through all the other areas where that information? That is the kind of change. It’s not super sexy, but it is transformational, but gee it is necessary and that is the way we work.