Dudded subbies: Building group met ‘all financial criteria’

The West Australian, June 28, 2016

Subcontractors across WA are being driven into debt and increasingly face payment disputes for work done on private and public projects such as schools and police stations.

An investigation by The West Australian has revealed the State Government risks a repeat of the 2012 debacle when tradespeople lost millions of dollars after seven companies with government building contracts imploded.

Last month, construction company the CPD Group, which had 17 State Government contracts worth $17.6 million, collapsed and subcontractors are complaining they have not been paid.

“It’s devastating,” cabinet-maker Darren Barnes said.

He claims to be owed more than $300,000 for work on CPD projects including Hillcrest Primary School and Tambellup Health Centre.

“Even the supervisors said, ‘You don’t need to worry — it’s government work and we’re going to be paid for it’.”

Administrators Ferrier Hodgson wrote in a report to creditors on June 3 that preliminary investigations showed the company was cash-strapped since at least October, just two months after the State Government awarded its final contract.

The report, obtained by The West Australian , says the company “may have been insolvent from March 31, 2016, or an earlier date”. It went into administration on May 11 and has since gone into liquidation.

Projects the company was working on include Lake Grace Hospital, Coodanup Community Centre, Muresk Institute Homestead, Bassendean Primary School and Perth Police Centre.

Finance Minister Bill Marmion said he was disappointed at the collapse of CPD but his department had vetted it rigorously before awarding a final contract in August.

“My department conducted a comprehensive building risk assessment last July and found at the time that CPD met all financial criteria and had sufficient capacity to complete the works for which it was being assessed,” he said.

“However, the department closely monitored the company from late 2015 following several allegations of non-payment. A number of these complaints were resolved shortly after being raised with the department, while others were not pursued at the request of the subcontractors concerned.”

The Government said that since 2012 it had introduced protections for subcontractors but could not prevent insolvencies.

The changes included strengthening risk assessments of businesses before they were awarded contracts and “spot checks” to ensure subcontractors were being paid.

Roger Ward, from Subcontractors for Fair Treatment, said it was disappointing the Government had not widely adopted a recommendation for project bank accounts to improve the security of payment.

Labor MLC Kate Doust, the shadow minister for commerce, accused the Government of taking a “hands-off” approach that allowed the exploitation of subcontractors.

As of last week, almost $16 million had been paid by the State Government to the CPD Group for its 17 projects.