No joy for subcontractors left without payment

The West Australian on June 29, 2016

The State Government has cited an aversion to red tape as the reason it has failed to introduce a measure it promised three years ago to guarantee payments to subcontractors when a building firm goes bust.

As Premier Colin Barnett declared it was difficult for government to regulate the treatment of subcontractors on public projects, Labor leader Mark McGowan accused him of doing “bugger all” to protect them.

Finance Minister Bill Marmion confirmed 13 subcontractors have raised concerns about money they are owed by the CPD Group, which went into administration last month with $17.6 million of Government contracts.

He said the Government had conducted trials of project bank accounts, which subcontractors say would have protected tradespeople, some of whom have lost hundreds of thousands of dollars from the collapse of CPD.

The measure was first flagged three years ago after more than 100 tradespeople lost millions of dollars following the implosion of seven building firms working on schools and police stations

Subcontractors say the project bank account trials have gone smoothly, but builders are not keen on the measure, which involves the Government paying subcontractors’ fees into a trust account rather than to the head contractor on a public construction project.

“They are quite complex,” Mr Marmion said.

“We’re going to run three or four more trials to make sure we can actually reduce the red tape because we don’t want to increase the cost of a project, the burden on subcontractors and also the burden on a contractor.”

He acknowledged there was an expectation in the community that subcontractors would be paid for work on Government projects and it was a big problem if they were not.

But Mr Barnett said it was “impossible” for the government to regulate contracts between private businesses.

“Our relationship is with the prime contractor and we try and ensure through that, the prime contractor does the right thing, but there’s a limit to how far the government can go,” he said

Mr McGowan said a range of things could be done to ensure greater protection and accused the Government of a “lazy, slack approach”.

“The government should not just surrender on this,” he said.