Trial for scheme to ensure subbies get paid every time

A new trial system to ensure construction sector subcontractors are paid on time, all the time, will be introduced on State Government projects from March 1 in Queensland.

The 12-month trial, to be conducted on government projects valued from $1 million to $10 million, would be followed by the project bank account scheme also being rolled out across the private sector.

It follows the passage of legislation in the last weeks of the previous Labor Government after state-wide industry consultation by Housing Minister Mick De Brenni.

A spokesperson for the minister confirmed the start of the trial had been delayed from January 1 following the late November state election.

The legislation will eventually require all money paid by a client to a principal contractor to be held in a bank trust account specific to the project for which it was intended.

Money would then be dispersed from the account to subcontractors under the payment terms of their contracts for work done and materials supplied.

At the moment principal contractors can use funds from a client as cash flow to sustain other projects.

This can lead to late payments to subcontractors and an increased rate of insolvency in the industry.

The push for improved security of payment for small construction businesses increased in the wake of the 2013 collapse of Walton Constructions and Walton Queensland leaving debts in excess of $80m.

Subsequent Newman Government changes to the Building and Construction Industry Payments Act coincided with a further run of insolvencies that left debts in excess of $240m.

Mr De Brenni’s spokesperson also confirmed an investigation launched by Queensland Police in 2017 into the issuing of false statutory declarations by principal contractors was ongoing.

Under the existing system, before further funds were released by the client, principal contractors were required to provide a formal declaration that their subcontractors had been paid monies due for work done.

Subcontractors Alliance spokesman Les Williams said false declarations potentially facilitated the greater crime of fraud.

He said rogue builders were able to enter insolvency having already corralled at least two months of payments owed to small businesses whose lines of credit had effectively financed the project.

Source: Sunshine Coast Daily