Timmy Dooley (Clare, Fianna Fail)
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31. To ask the Minister for Jobs, Enterprise and Innovation if payment times by State agencies will be reduced in a way that improves cash flow to businesses; and if he will make a statement on the matter. [24413/13]

Richard Bruton (Dublin North Central, Fine Gael)
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Prompt payment for goods and services rendered is critical to the effective working of any economy and is an issue to which this Government is committed. The reduction in the number of late payments in commercial transactions is of vital importance to business, particularly SMEs and is one of the ten principles cited in the Small Business Act for Europe as a means to help SMEs to deal with the difficult market conditions currently being experienced. It is a principle to which this Government is also fully committed.

The Late Payment Directive which established EU law in the area of prompt payments was originally introduced in 2000 and was recast in 2011 to modernise the law in this area. The Recast Directive (2011/7/EU) came into effect across the EU on 16 March 2013. The issue of prompt payment is now covered in Irish law by the European Communities (Late Payment in Commercial Transactions) Regulations 2012 (S.I. No. 580 of 2012). My Department continuously promotes improved payment practices and monitors the operation of the Prompt Payment of Accounts Act, 1997 and the Late Payment in Commercial Transactions Regulations, 2012.

Under these Regulations, it is an implied term of every commercial transaction that where a purchaser does not pay for goods or services by the relevant payment date, the supplier shall be entitled to interest (late payment interest) on the amount outstanding. This legislation acts as a deterrent to late payment and as a driver for payment on time by establishing a clear expectation in law that payment will be made according to agreed terms.

In addition to legislating for prompt payments, since 2009, Central Government Departments have been improving their respective payment times and are now obliged to pay their suppliers within 15 days of receipt of a valid invoice. This 15 day prompt payment rule was introduced by the Government on an administrative basis and Departments are required to report Quarterly to my Department on their performance in meeting this target. The last full year report shows that in 2012, 93% of payments made by Government Departments, valued at €3.32bn, were paid to suppliers within 15 days.

On 2 March 2011, the 15 day prompt payment rule was extended beyond central Government Departments and rolled out to the Health Service Executive, the Local Authorities, State Agencies, and all other Public Sector Bodies, (excluding Commercial Semi-State bodies), in respect of valid invoices received, on or after, 1 July 2011. As part of this new extended arrangement, parent Departments are required to publish on their respective websites Quarterly composite reports covering those bodies under their aegis. The individual bodies covered by this arrangement are also required to publish their own Quarterly reports on their respective websites. These new reporting arrangements will ensure that Ministers will be able to monitor the performance of the bodies under their aegis and will enable them to address any issues with those bodies who are not meeting obligations in respect of prompt payments.

This Government continues to pursue work in this area which is critically important to the cash requirements of business. The Action Plan for Jobs 2013 is a key element in the Government's policy approach to rebuilding the economy and getting people back to work. It builds on recent achievements by driving the 15 day payment period across the public sector and enhances the ability for business to attach officially new payment requirements to relevant invoices. It will also deliver on enhanced working relationships with representative bodies to ensure that business is fully aware of developments in this area.

The Government has decided not to stop there and the Action Plan for Jobs 2013 contains commitments in respect of a Code of Conduct on Prompt Payments to improve cash flow for business and to take steps to enhance awareness of the need for prompt payments by all elements of business. These commitments are for delivery in the latter part of 2013.