The peak body for subcontractors – the Australian Subcontractors Association (ASA) – has called for urgent government intervention after the collapse of RCR Tomlinson has left thousands financially devastated in the lead up to Christmas.
The ASA says thousands of Australian subcontractors continue to be forced into insolvency due to building and construction companies that are failing to pay, despite government attempts to address the issue. They’re calling for the Federal Government to take responsibility.
ASA spokesperson Louise Stewart says when it comes to the collapse of companies that rely on subcontractors to undertake the work, the domino effect can be devastating.
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“When companies fail to pay subcontractors for work done, the subbies still have to pay employee entitlements and taxes,” she said.
“Sadly, non-payment issues have long plagued the industry – as evidenced by the subcontractor to RCR Tomlinson that has lost $9 million due to the company not paying for work done.
“We have been advised by subbies that RCR has been delaying payments as far back as 12 months in order to prop up its own cash flow. And it’s unlikely any of these subcontractors will see their money.”
The ASA has called on the Federal Minister for Small Business Michael McCormack to take action to protect subcontractors.
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“The Federal Government review by John Murray [in a review of security payment laws] has already made recommendations for cascading statutory trusts to be rolled out across the industry; however, there has been no further action,” says Ms Stewart.
“When Craig Laundy was Minister for Small Business, he said if state governments did not act before the end of the year, the Commonwealth would take action. We are still waiting for that to happen.”
Ms Stewart says national legislation is needed and either cascading statutory trusts or cascading project bank accounts must be mandated.