GEA calls out for submissions to cut pay lag
GLADSTONE Engineering Alliance is calling on Central Queensland's resource and mining, equipment, technology and services sector to fight for a 30-day payment scheme from the resource industry.
GEA has called for submissions to a Parliamentary Inquiry into Mining Industry Support for Regional Businesses, due by close of business today.
The GEA represents over 200 businesses working in the supply chain in the Central Queensland resources sector and has 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 ... 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, with turnover of $25 million or more, appeared more able to adjust to extended payment terms.
"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," she said.
Ms Gelder said businesses can make a confidential submission to the inquiry
"An inquiry into how the mining sector can support businesses in regional economies has been launched with the chair, Barnaby Joyce, 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."
To submit, go to aph.gov.au/Parliamentary_Business/ Committees/House/Industry _Innovation_Science_and_ Resources/MiningSector