Slow payers are benefitting from the COVID-19 crisis
From May 1 this year the Victorian Owner Drivers and Forestry Contractors Act changed to directly impact on payment terms for owner-drivers. The Victorian legislative change requires payment by customers and others within 30 days of receiving an invoice from an owner-driver. Additionally, a written contract is required and its absence can attract a penalty for owner driver engagement.
All owner-drivers engaged for work with no fixed duration or more than 30 days must have a written contract or the customer/contractor could be penalised.
The 30 day invoicing period as a minimum has raised its head again in the midst of the COVID-19 pandemic. Many companies are using COVID-19 as an excuse to push payment times out further than 30 days. In the face of this trend, it is hoped that the changes in Victoria can help reduce the uncertainty and inconsistency of payment times for small transport owner-operators but more needs to be done and similar changes should be introduced nationally.
Payment code ineffective
NatRoad has made renewed submissions to the Federal Government recently to ask that this matter be legislated nationally across the road transport industry.
Our push was assisted recently when the Australian Small Business and Family Enterprise Ombudsman Kate Carnell recommended that the Federal Government should adopt a maximum 30-day payment regime. The Federal Government took a small step in the right direction by passing its Payment Times Reporting legislation. But NatRoad’s assessment of that legislation is that it is unlikely to result in useful change because it is not legally binding.
The current Business Council of Australia voluntary supplier payment code that requires signatories to pay smaller suppliers within 30 days has proven to be ineffective, with no compliance or audit processes.
NatRoad’s messaging to the Federal Government calls for a national mandated change. The federal adoption of 30 day payment terms is a critical issue for NatRoad as members struggle through the effects of COVID-19.
In fact, NatRoad and other industry associations have been asking the Federal Government to address this issue for a considerable period. The best means of assisting industry and all owner-drivers would be for the federal Government to introduce a compulsory Code for the industry under Part IVB of the Competition and Consumer Act, 2010 (Cth) (CCA). The Code would regulate payment times, permitting a maximum of 20 or 30 days from date of invoice, as well as containing a prohibition on set-offs and pay-when-paid arrangements.
These are major and long-standing issues affecting the road transport industry that should be fixed now before they get more life breathed into them on the back of ways for others to get better cash flow at the expense of operators.
The proposed Code would be an industry code regulating the conduct of road transport companies in their dealings with one another, as well as binding customers who wanted to engage a road transport operator. This Code would be overseen by the Australian Competition and Consumer Commission and would bring in enforceable market restraints.