Rio Tinto’s doubling of their stated payment time has drawn attention from state and federal government, and may elicit a legislative response.
Earlier this week Rio Tinto CEO Sam Walsh announced the company would no longer pay its bills within 45 days, instead doubling the time to 90 days to resolve account invoices, which would see some suppliers and contractors waiting up to 120 days for payment.
WA premier Colin Barnett has urged the company to reverse the decision, while Commerce minister Michael Mischin has stated the state government is considering a legislative proposal.
“With respect to other sectors, the Government calls upon companies to use their market power responsibly and ethically to ensure that contractors are paid in a timely manner,” Mischin said.
Prime Minister Malcolm Turnbull has stated he will also raise the matter with Rio Tinto.
At present in WA construction contracts are required to be paid within 50 days, however resources projects are exempt.
Small business and family enterprise ombudsman Kate Carnell has also considered holding an inquiry, which would be the first of her term.
“We will monitor developments in this area and will legislate to address any misuse of market power if required,” she said.
“I am seriously looking at conducting an inquiry to see how widespread this is and looking into Rio Tinto and BHP and others — and there could easily be others — who have seemed to be using small business to improve their cash flow.”
“Small businesses simply aren’t in a position to be able to wait for their money. They need to rely on being paid on time, within 30 days or 45 days at the outside.”