By Paul Hemsley
Sub-contractors may be protected from bankruptcy through a NSW Government inquiry into construction industry finances.
The inquiry follows the collapse of hundreds of companies in NSW between 2009 and 2011, where up to 24000 creditors including suppliers and sub-contractors were short of millions of dollars.
As a consequence of these collapses, thousands of workers were out of jobs and many sub-contractors were close to failing with bills of more than $100000 left unpaid.
The crumbling of the businesses threatened the accrued entitlements of building workers including holiday pay and superannuation.
Minister for Finance and Services, Greg Pearce said this "slammed the brakes" on vital projects and investment.
“The Commonwealth regulates insolvency and company practices, but the NSW Government won’t walk away from its responsibility to address this issue,” Mr Pearce said.
According to Mr Pearce, the inquiry will examine how to resolve these issues in the absense of policy direction from the Commonwealth.
He said the government will begin a taskforce to make sure that government agencies are managing construction risks.
With barrister Bruce Collins QC appointed to chair the inquiry, Mr Pearce said it will look at the extent and causes of insolvency in the NSW construction industry.
The inquiry will also look into reforms needed to lower the adverse effects on sub-contractors.
“The NSW Government has outlined an infrastructure program to get the state moving again, but this relies on a strong construction industry,” Mr Pearce said.
Initiatives such as insurance plans, trust arrangements or mutual funds to help secure sub-contractors will be included in the terms of reference for the inquiry.
The Construction Forestry Mining and Energy Union (CFMEU) has announced its intention to work with Mr Collins to ensure the changes needed for sub-contractors are made.
CFMEU NSW state president Rita Mallia said the union sees the inquiry as a positive step as long as there is a genuine look into the problems to make legislative and policy changes happen.
Ms Mallia told Government News the inquiry means there should be greater transparency and accountability.
Decent procurement policies should emerge to the extent that government can influence the way contracts are administered and maintained in accordance with proper rules, Ms Mallia said.
In terms of how the inquiry will directly affect contractors, CFMEU is hoping the terms of reference are broad and will look at the practices of what the developers require from the builders and what the builders require of the contractors.
Ms Mallia said the CFMEU wants the inquiry to examine the tendering processes, the payment processes, issues around the security operation, security of payments and the legislation that regulates that area.
“We’d like to see a broad set of terms of reference that would look at all of those issues,” Ms Mallia said.
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