Win for dudded subbies as payments protected

The West Australian, August 12, 2016:

Subcontractors on mid-sized State projects will have the peace of mind of being paid from a government-controlled bank account under reforms to the volatile construction industry.

From September 30, project bank accounts will be in place on all Building Management and Works projects worth between $1.5 million and $100 million after a successful three-year trial involving seven government contracts.

But the biggest government construction jobs, run by Treasury’s Office of Strategic Projects, will not adopt them.

PBAs involve a client depositing funds into a trust account rather than relying on a head contractor to distribute them and they are popular among subcontractors stung by frequent non-payment.

They are among measures to be announced by Small Business Minister Sean L’Estrange today after damaging headlines this year about subbies being dudded on government projects, including the collapse in May of head contractor CPD Group.

Other elements of the package include a contractors’ code of conduct, beefed-up powers for the Small Business Commissioner to request documents during payment disputes and a new building and construction compliance unit within the Department of Commerce to monitor the code.

The code prohibits collusive tendering, price-fixing and sham contracting, failure to make payments and unfair contracting terms. Subcontractors and head contractors who flout it will risk being blacklisted.

But the absence of PBAs on major projects is a key point of policy difference with Labor, which is going to the March State election promising similar “project trust accounts” for all government construction contracts.

Mr L’Estrange said if the Liberals were returned at the election they would consider the move, but they wanted to make sure the Building Management and Works system worked.

Subcontractors on all projects would benefit from legislation reducing their deadline for payment from 50 days to 30 days and increasing the application period for adjudication of pay disputes from 28 days to 90 days, he said.

About 30 Building Management and Works projects valued at $250 million are in the pipeline between September 30 and the end of the financial year.

Mr L’Estrange said the measures were aimed at combating so-called phoenix activity by head contractors who stripped assets from those further down the chain before entering into administration.

“This activity is extremely stressful for small businesses,” he said.

Mr L’Estrange said he aimed to pass the legislation in the remaining nine sitting weeks of Parliament with the support of Labor.