2016-02-11
4691. MS DUNN — To ask the Minister for Agriculture: In relation to the 2014–2015 VicForests Annual Report under “Receivables” in which the average timeframe for payment in 2015 was reported to be 62 days:
(1) What are the trading terms for VicForests customers;
(2) What is the criteria and/or policy in place to stop supply to customers who go beyond trading terms;
(3) Why were amounts due to VicForests being withheld by its customers for long periods of time;
(4) Has this beneficial treatment towards VicForests customers been approved by you;
(5) If this beneficial treatment towards VicForests customers has not been approved by you, on what basis does it apply;
(6) Does VicForests continue to supply customers with lumber if they have a poor payment history;
(7) Has the Minister considered improvement on reporting amounts due, given the unclear nature of some of the contracts in place; and
(8) Are the payment terms due to old Legislated Agreements that were negotiated badly.
ANSWER:
Despite the question's assertion, the VicForests Annual Report 2014-2015 does not report that the average payment timeframe is 62 days.
(1) VicForests' timber sales agreements trading terms vary according to the commercial arrangements negotiated within those contracts. This practice is set out in Note 1 (j) on page 30 of the VicForests Annual Report 2014-15: “A range of trading terms are in place but do not normally exceed 30 days from date of invoice rendered. Special trading terms have been granted to selected customers in line with VicForests' Customer Credit Policy”.
(2) VicForests' timber sales agreements contain a range of mechanisms for VicForests to manage payment risk. These generally include the capacity to:
a. charge interest on overdue amounts;
b. suspend supply;
c. request bank guarantees; or
d. alter trading terms (for example, up-front payment).
(3) There are a range of reasons why VicForests' customers may not make payments by the due date. VicForests actively manages these issues to ensure that payments are made in full for timber delivered. As outlined in Note 1 (j) on page 30 of the VicForests Annual Report 2014-15, interest is levied on overdue accounts under the Penalty Interest Rate Act 1983.
(4 & 5) I do not agree with the notion that VicForests provides “beneficial treatment” towards its customers. VicForests is an autonomous commercial entity governed by an independent Board of Directors. It is responsible for managing commercial arrangements with its customers in a commercially prudent manner. These commercial arrangements are not a matter for my approval.
(6) VicForests' timber sales agreements and Customer Credit Policy contain a range of mechanisms for VicForests to manage payment issues. VicForests implements these mechanisms in a commercially prudent manner to ensure payment is received for timber delivered.
(7) VicForests timber sales agreements are detailed contractual agreements with clearly defined responsibilities. VicForests reports receivables information to its Board, which is responsible for managing VicForests commercial affairs.
(8) No.
Hon Jaala Pulford
Minister for Agriculture