New laws to target dodgy builders
CONSTRUCTION industry subcontractors have been promised better protection from rogue builders and phoenixers with the Queensland Government introducing new legislation into Parliament that seeks to wind back Newman-era amendments that have led to a spate of company collapses.
The new legislation will tighten financial reporting requirements for building companies, from January next year begin the rollout of project bank accounts to quarantine money owed to subcontractors for work done and materials supplied and introduce tough new penalties for non-payers.
The Subcontractors Alliance formed after the Walton Construction collapse in 2013 estimates more than 4000 small businesses have been left unpaid more than $200 million as a consequence of amendments passed in December, 2014, which allowed principal contractors the right to self-report their financial position.
At the same time the ability of subbies to chase money they were owed was severely diminished through the abolishment of the professional network that assisted their filing of claims.
Housing Minister Mick de Brenni told Parliament a significant power imbalance in the construction industry for decades that has seen the majority of the risk for building and construction projects shift to the shoulders of subcontractors.
"And as a result of this imbalance lives have been destroyed," he said. "Businesses have been ruined through non-payment. And confidence across small and medium businesses in the industry has been shot."
Mr de Brenni said the government's Building Industry Fairness laws would return balance to the system.
He said a comprehensive package of reforms would address "the injustices of the previous LNP government's disastrous changes by reforming the adjudication system".
The Minister told Parliament the industry regulator the Queensland Building and Construction Commission had been left blind to the financial situation of builders because of minimum financial reporting that allowed self-assessment in the name of red tape reduction.
"It was red tape reduction that has sent family subcontracting businesses to the wall," he said.
The government would introduce new mandatory reporting requirements with the policy taken out of the hands of the regulator and returned to parliament which was accountable to Queenslanders.
"We are also expanding the financial investigation powers of the QBCC, allowing the regulator to proactively intervene to properly protect subbies," Mr de Brenni said.
The new legislation also aims to crack down hard on phoenixing that shifts assets ahead of a planned insolvency event and would sets new interpretations to detect people banned from the industry continuing to be an "influential person".
"Anyone who receives a ban under the new laws will face major penalties if they try to run another building company, either in their own name or by once again giving secret directions from behind the scenes," Mr de Brenni said.
"The new regime will allow someone to be declared an 'influential person' even if they have no obvious paid role in a company or even if they are given a job title which is a disguise, designed to provide false reassurance that the person isn't actually in charge.
"You shouldn't be running a dud business under your nanna's name, or anyone else's. You shouldn't get away with running under the radar.
"Lumping others with your debts, deliberately sinking your old company and secretly slinking away to a new business is disgraceful, base behaviour. It's a low act."
The legislation seeks to introduce from January 1, 2018, project bank accounts on government projects and across the board from 2019.
Mr de Brenni said while project bank accounts would not in themselves stop insolvencies they would stop a dodgy builder from using funds from one project on another project or spending it on jetskis, helicopters or a retirement unit.
The scheme would be compulsory from January 1, 2019, for all private sector construction projects over $1 million but could be expanded down beyond the first tier of subcontractors.
"We have listened to industry and under our new laws we will also have the ability to expand PBAs down beyond the first tier of subcontractors - to protect subcontractors and suppliers further down the line," he said.