Moral cop-out on subbies

Alack of moral and political leadership is leaving honest, hard-working men and women facing financial hardship, and even ruin, after working on ‘‘safe’’ government projects. It doesn’t have to be this way. It’s outrageous that it is.

When the Stanley Group, which was building projects for Housing New Zealand (HNZ) and KiwiBuild, went into liquidation on September 5, it became clear again in the collapse of a large construction group that the big losers were the sub-contractors, sparkies, hammer-hands, plumbers, plasterers, labour hire companies.

Hired by Stanley Group companies, they’d done their work well, but hadn’t been paid what they were owed, and found themselves as unsecured creditors, way down the queue of who gets paid from whatever can be salvaged by the liquidators.

Don’t think of subbies as businesses. Think of them as ordinary men and women with their families’ futures tied up in their businesses, and employees depending on them.

Karl McGhie of Wall 2 Wall, which is owed over $200,000, braved Stuff’s cameras to put a human face to the stress and trauma of being a subbie on Stanley Group’s HNZ projects. He hopes that by doing this the Government and public will realise how unfair practices in the sector are.

The response from politicians after the Stanley liquidation (with the exception of Auckland mayoral candidate John Tamihere) roughly translates as ‘‘oh, that’s business’’, or ‘‘business is risky’’, or ‘‘there’s not much government can really do’’. That’s a gigantic moral cop-out.

Business risk should not be egregious, or a result of dysfunctional law, or government practice, or a broken civil courts system where the grim reality is that he or she who has the most money, and biggest lawyers, wins.

Here’s the fairly simple truth: on government projects, subbies should be paid directly by the government and council agencies like HNZ.

What’s the problem there? The subbies do the work. The economic value of the work passes to the government agency – in the case of Stanley, that’s HNZ. So let HNZ pay direct, instead of pouring money into opaque construction groups that successfully tendered for the project, and relying on them to pay.

State and council building is the biggest game in town, and on their projects the big construction companies need to be treated for what they really are: project managers which are paid a margin, but don’t get to go slow on paying anyone, or, when they hit trouble, pass their financial woes on to innocent men and women.

And retentions – subbie money held to be released later once their work has proven sound – need to be held in government trust accounts, just like residential tenancy bonds are. It’s morally repugnant that subbies are left guessing whether their money is being held in a segregated account.

Let’s finally recognise what we used to understand, before the Rogernomics law reforms in the 1980s. Subbies cannot protect themselves.

They can’t see whether the main contractor who hired them has under-bid for a contract, or has problems in other parts of its business that will bring it down.

So if the Government feels it has any moral duty at all to subbies and their families, it needs to protect them in the simple ways it can on its own projects.

It can start right now by doing the right thing on the Stanley Group collapse.