Time to build fairer system

THE building sector’s habit of “robbing Peter to pay Paul” has to end, according to an industry veteran who last year headed a Federal Government inquiry into security of payment for subbies.

John Murray AM, an experienced building adjudicator, made more than 80 recommendations for new laws to ensure subbies received more timely payment from builders.

The recommendations included a system of cascading statutory trust accounts, which would work similarly to trust accounts set up by solicitors and travel agents to hold money for their clients.

“At the moment, a head contractor who receives payment from a client can use that money to fund other projects, pay its own creditors or buy vehicles,” Mr Murray said.

“The days of subcontractors giving such interest-free loans to contractors has to stop. This is an industry known for being undercapitalised with lots of phoenixing,” he said.

Phoenixing is the creation of new companies to avoid paying creditors.

Current laws to protect subbies from being exploited by construction companies are a “dog’s breakfast”, according to the Australian Subcontractors Association (ASA).

ASA director Louise Stewart said there was a need for uniform laws across Australia to ensure payment for subbies in the event a building company collapsed or unscrupulous behaviour by a builder.

Ms Stewart said a priority reform should be the introduction of cascading statutory trusts as recommended by the Murray inquiry.

“(Housing and Public Works Minister) Mick de Brenni has been exceptional in pushing through reforms for subbies but it only applies to the top subbie,” she said.

“Cascading trust accounts would apply to anyone who collected money for work completed by others and if you spent that money you would go to jail.”

Australian Building and Construction Commissioner Stephen McBurney said late payment or non-payment of subcontractors’ money was widespread and had resulted in many viable businesses going to the wall and jobs being lost.

editorial@cairnspost.com.au facebook.com/TheCairnsPost www.cairnspost.com.au twitter.com/TheCairnsPost