In a joint submission to the Victorian Government’s, inquiry into employers and contractors who refuse to pay their subcontractors for completed works, industry associations representing the states subcontractors have joined forces with unions to plead for urgent reform, including:
- National Electrical and Communications Association
- Master Plumbers and Mechanical Services Association of Australia
- Refrigeration and Airconditioning Contractors Association
- Airconditioning and Mechanical Contractors Association
- Institute of Electrical Inspectors
- Electrical Trades Union
- National Fire Industry Association Australia
- National Electrical Switchboard Manufacturers Association
- Australian Cabinet and Furniture Association Civil Contractors Federation.
The group are jointly requesting the urgent enactment of stronger security of payment laws, a review of unfair contract terms, and enhancements to the government’s procurement practices to support fair contracting throughout the construction supply contractual chain.
“Almost 360,000 Victorians are employed in the construction sector, with up 90% being subcontractors,” National Electrical and Communications Association (NECA), Executive Director, Pawel Podolski said.
“The current inadequate laws, unfair contract terms and inefficient procurement practices are leaving these workers exposed, especially when a builder goes bust. Subbies are too often being left out of pocket for work they have completed once the administrators move in. Almost every week we’re hearing stories of subcontractors chasing thousands of dollars of debt while the construction industry sits back and watches as more and more businesses go to the wall. The situation is affecting countless families and is a significant contributor in the construction industry posting the country’s highest rates of suicide and substance abuse”.
The subcontractors and unions are calling on the Victorian Government to urgently implement reforms in line with the Federal Government’s pre-election promise to enact stronger security of payment laws and adopt the recommendations of John Murray’s Building Trust and Harmony Review.
The introduction of cascading statutory trusts as recommended in the Murray Review would ensure that money received by a builder for work undertaken on a project would be held in trust for the payment of those who had completed work on that project. This would ensure that funds are not being used by builders to bankroll other jobs, leaving the coffers dry should the builder become insolvent.
In a March 2023 survey conducted by the National Subcontractors Forum, 54% of respondents reported being owed amounts of greater than $10,000, whilst 74% of respondents said that non-payment was impacting their personal lives. “These are small business owners, and the problem is huge. There are more than 45,000 electrical contractors alone in Victoria, not to mention the other trades. These business owners are often forced into taking out personal loans in order to pay their creditors and staff,” said Mr Podolski.
“Alarmingly, 84% of survey respondents reported not receiving any form of government support in the last 12 months, and it’s continuing to get worse. It’s just not good enough to continually see subbies being driven to the wall through no fault of their own.
“This needs to be addressed and it needs to be addressed now. Whilst the Federal Government await the formation of a National Construction Industry Forum to debate an issue they already promised to implement, the Victorian Government have the opportunity to lead by example and introduce legislative changes right now, and protect the hardworking subcontractors providing much needed infrastructure and housing for our state”.