NSW mulls payment rules for contractors

25 January 2021

The New South Wales state government is considering forcing contractors to pay their suppliers within 20 business days.

Damien Tudehope, NSW finance minister, tweeted a new pilot programme would aim to make life easier for small businesses. 

Although Tudehope’s tweet gave no more information about the new programme, NSW is reported to be trialling the policy with two large businesses.

The pilot is due to end in June and then likely become policy, the Australian Financial Review reported.

Earlier this month Tudehope said in the first year of the NSW government’s Small and Medium Enterprise (SME) and Regional Procurement Policy, spend with regional suppliers had increased by 19.6% or $255m. Spend with SMEs increased by 3.8% or $337m on the previous year.

Tudehope said: “We introduced the policy to encourage NSW government departments to keep SMEs and regional suppliers front of mind when making procurement decisions.

“These businesses are the backbone of their communities and by giving them the opportunity to supply to government we are helping support sectors hit hard by natural disasters, such as drought, bushfires, floods, as well as Covid-19 in the past year.”

The NSW government contracts more than 52,000 SMEs and more than 24,000 regional businesses a year.

The policy, introduced in February 2021, requires government agencies to consider buying goods and services from an SME or a regional business as a priority for all direct procurements up to $250,000.

The policy’s small business exemption allows agencies to buy directly from small businesses for any purchases up to $50,000, even if there is a mandated whole-of government contract in place.

In January 2020 the NSW government introduced a policy encouraging its agencies to pay registered small businesses within five days.

Invoices in Australia are now being paid 1.8 days faster than they were before the pandemic, according to Xero.

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