ACT Independent Senator David Pocock maintains the Federal Government must strengthen security of payment laws to stop subcontractors being left out of pocket when construction companies collapse.
“Subbies can’t keep coming last and missing out on millions of dollars for work done but not paid for when big builders go bust,” Senator Pocock said. “Big builders are bankrolling themselves off the back of payments due to subcontractors. People are losing their livelihoods, and – in the worst cases – sometimes their lives.”
There had been a “particularly acute” increase in insolvencies in the ACT since 2021–22, Senator Pocock, adjudicator John Murray AM, and union leaders from the Electrical Trades Union of Australia, CFMEU Construction and General, and the National Electrical and Communications Association stated in an open letter to government ministers.
Two companies – Voyager Projects and Project Coordination – “collapsed” in the last week, while between February 2023 and February 2024, 146 companies went into administration, 48 of them in the construction sector, the writers stated.
Across Australia, insolvencies increased by 37 per cent in the second half of last year; more than a quarter were construction businesses.
“With creditors receiving between 0 and 11 cents out of every dollar owed in 96 per cent of cases, subcontractors are missing out on huge sums of money that’s not being paid for work completed,” the letter stated.
“In many cases, the losses to subcontractors are devastating, and can lead to those subcontractors facing a complete loss of livelihood, and in some cases bankruptcy and the loss of assets like their family home. In some cases, it has even led to subbies taking their own lives in the face of financial ruin through no fault of their own.”
The group urged the government to implement Mr Murray’s recommendations in his 2018 Review of Security of Payment Laws, commissioned to improve consistency in security of payment legislation and to enhance protections to ensure subcontractors get paid on time for their work. They believe the government must “urgently step in with stronger national security of payment laws” to recompense tradies, and put the construction sector on a sustainable footing.
“We urgently need to see faster progress on tougher legislation,” Senator Pocock said. “These changes will make the construction industry more sustainable, and is vital if the government wants to meet its target of building 1.2 million new homes over five years.”
The group appreciated the government setting up the National Construction Industry Forum last year, a statutory advisory body to advise on issues relating to work in the building and construction industry. It was tasked with examining security of payments as a priority.
Senator Pocock will hold a community meeting about the issue at 8.30am on Thursday, at Assembly in Braddon.
