GEA call on Central Queensland’s resource sector to fight for 30 day payment scheme
THE Gladstone Engineering Alliance (GEA) is calling on Central Queensland’s resource and METS sector to make a submission into a Parliamentary Inquiry into Mining Industry Support for Regional Businesses before close of business Friday August 10.
The GEA represent over 200+ businesses working in the supply chain in the Central Queensland resources sector and have been working with industry to gain improvements to the payment terms of resource companies which can be up to 90 days.
GEA Acting Chief Executive Officer Julie Gelder said there is concern from the supply chain about the potential adverse impact of extended payment terms on businesses who may need to carry the cost of work-in-progress for several months before receiving revenue for their work.
“The ongoing viability of businesses may be threatened by extended payment terms if they are unable to secure finance for their operations to cover their regular and unavoidable outlays such as wages, superannuation, and taxation payments,” Ms Gelder said.
“Extended payment terms impose additional finance costs on SMEs and increase the risk of insolvency. The risk to financial viability increases sharply for those firms with lower turnover and cash reserves, which may find themselves having to carry the cost of work-in-progress before related revenue comes in.”
Ms Gelder said larger businesses, especially those with turnover of $25 million or more, appear more able to adjust to extended payment terms than smaller businesses.
“Extended payment terms have been estimated to have an adverse impact upon the regional economies of the Central Queensland region. If payment terms were restored to 30 days, an additional 250 jobs could be generated in these regions in firms directly impacted by extended payment terms.”
Ms Gelder said businesses can make a confidential submission to the Parliamentary Inquiry and put forward the impact extended payment terms are having on their business.
“An inquiry into how the mining sector can support businesses in regional economies has been launched with the Chair, Hon Barnaby Joyce MP, saying the inquiry would consider how businesses in regional economies can benefit from the development of the mining sector.
“The Committee will look at a range of issues that affect landholders and businesses in mining regions including the payment and royalty terms offered by mining businesses, barriers to involvement in mining industry procurement processes, and opportunities for suppliers to diversify into other locations and industries.”
Submissions can be made confidentially and the GEA is encouraging members and the wider industry network to make a confidential submission by Friday’s deadline.