Over the past 10 years the building and construction industry has contributed approximately 10 percent of Australia’s GDP and accounts for nearly the same proportion of employment. However, over the same period the construction industry has experienced nearly one quarter of all insolvencies in Australia. There is a culture of non-payment of subcontractors in the construction industry, as well as serious allegations that phoenixing activity has become an acceptable way to make a profit.
We successfully negotiated for changes to legislation to enhance protections for subcontractors in the building and construction industry. We also negotiated a comprehensive review into security of payment laws, which commenced on 21 December 2016. This review is being undertaken by Mr John Murray AM and will be concluded by the end of 2017.
The review will:
- examine security of payment legislation of all jurisdictions to identify areas of best practice for the construction industry
- take into account any reviews and inquiries that have recently been conducted in relation to security of payment, including the December 2015 report by the Senate Economic References Committee on insolvency in the Australian construction industry and the draft legislation developed by the 2003 Cole Royal Commission into the Building and Construction Industry
- consult with business, governments, unions and interested parties and the Security of Payments Working Group
- consider how to prevent various types of contractual clauses that restrict contractors in the construction industry from obtaining payments for work that has been completed
Examples of what needs to be done:
- Implementation of all of the Senate Economics Committee’s recommendations in their report on insolvency in the construction industry
- National legislation for a security of payment regime, and rapid adjudication processes in the commercial construction industry, in line with the recommendations from the review being conducted by Mr John Murray AM
- Close the legal loopholes that allow phoenixing activity to take place