NECA, together with representatives from union and other peak building and construction industry subcontractor associations, are calling on the Commonwealth Government to honour its pre-election promise to immediately implement payment protection policy as recommended in the Review of Security of Payment Laws: Building Trust and Harmony report by John Murray AM.

Meeting with John at the recent Security of Payment Industry Forum, held at Parliament House in Sydney, the industry representatives signed a Statement of Agreement outlining key actions to address the inconsistent and inadequate regulations that do not equally protect the rights of all industry participants.

The call comes as small and medium businesses are in financial crisis as larger building companies balance on the edge of insolvency, placing the payments of the approximately 1.2 million Australians and 350,000 businesses within the $360 billion construction sector at risk.

NECA chief executive, Oliver Judd, comments that the Commonwealth Government must implement reform to stop unnecessary insolvencies, job losses and economic hardship for Australia’s small and medium building and construction businesses and their families: “As a country, Aussies believe a hard day’s work deserves a fair day’s pay. However, previous Commonwealth Governments have let the mixed bag of Security of Payment laws continue. This Government committed to implementing policy reform immediately, and with the storm clouds surrounding our sector it has to be done now before more honest tradies lose their livelihoods and their homes.

“Some state governments are beginning to take steps to improve the situation, but we need a comprehensive federal approach that provides consistency and confidence to subcontractors and protects them from the potential to get burnt when they enter a contract.”

He adds that the subcontractors are in crisis, adding that: “Subbies are taking on a disproportionate amount of risk on construction projects, but many of the measures to mitigate these risks are outside of their control. Hardworking family-owned companies are sick of being ripped off by unscrupulous or incompetent construction companies that don’t know how to run their own business and impose unfair contract terms and payment practices to use the bank accounts of tradies to bankroll their mistakes. Tradies must be protected.

“Because governments haven’t listened to us individually, union and employer groups representing their trades, workers and businesses came together at our industry forum and agreed as one on how to fix this mess. Now we need the new Commonwealth Government to deliver their commitment. National legislation is overdue,” he says.

The Security of Payment Industry Forum representatives agreed to call on the Federal Government to take three key actions:

1. Urgently enact federal Security of Payment laws to implement the Murray Report

• Remove the confusion and inconsistency between current laws by enacting a single framework for security of payment that will apply consistency across Australia.
• Within three months, prepare the draft legislation for consultation with industry and other stakeholders.
• Ensure that the draft legislation reflects the recommendations in the Murray Report including provision for cascading statutory trusts in favour of sub-contractors and sub-sub-contractors.

2. Strengthen prohibitions for unfair contract terms

• The use of unfair contract terms in construction subcontracts is strongly linked to security of payment issues and greater protection against unfair contracting are urgently required.
• In addition to immediately implementing the recommendations stated in the Murray Report in relation to unfair contract provisions, the federal government must urgently progress the enhancement of business-to-business unfair contract laws under the Australian Consumer Laws (ACL). However, these enhancements must go further for the construction industry.
• The federal government must also prohibit the use of specified types of unfair contract terms which have become common in the construction industry to make it clear that the use of such terms will not be tolerated.

3. Ensure the government procurement practices support fair contracting down the construction supply contractual chain

• Procurement policy and procedure for government construction projects must be reviewed and enhanced to proactively require head contractors to strictly comply with security of payment and unfair contract laws.
• Government must take steps to ensure that the content of head contracts is not contributing to unfair payment practices down the sub-contracting supply chain.

“It’s high time that the immoral payments culture that pervades the construction industry is properly addressed so that payment that are rightfully due to tradies can appropriately ringfenced through deemed statutory trusts,” John Murray says.

“The meeting of the key subcontractors’ groups was a defining moment in the security of payments debate. The Commonwealth should place greater weight on the views expressed by this group as their members are not only the true employers of the employees within the construction industry, but they also carry out 85% of the construction work on construction sites.”

Michael Wright, acting secretary of the Electrical Trades Union of Australia adds: “Implementing the Murray Report is fundamental to driving cultural change in our sector. Too many workers and subbies are being left in limbo through no fault of their own.

“Delivering security of payments will simply create a better, fairer industry where subbies can rely on the commitments made to them and employees can have certainty that their job will be there tomorrow.”

The National Fire Industry Association’s director of member workplace support, Shannon Fogarty, says the association has consistently called for improvements in the laws that govern the building and construction industry: “We fundamentally believe that people must be paid for the work they perform.

“The need for national security of payment reforms goes hand-in-hand with the urgent need for the Government to respond to the rampant use of unfair contract terms in the industry. With Building and Construction Industry costs rapidly rising, now more than ever, it’s critical that the Government acts.”

Specialist Contractors Association secretary, Larry Moore, says that national adoption of the Murray Review recommendations is well overdue and governments have been dragging their feet on this issue for far too long, as more and more subcontractors are being severely impacted by unfair contracts and the insolvency of large building firms.

“We urge the Federal Government to implement the Murray recommendations in full, to help protect subcontractor businesses and secure the livelihoods of thousands of Australian families,” he says.