CEO of Master Builders, Grant Galvin, says it’s not just subbies who have been affected by a lack of payment security.
CEO of Master Builders, Grant Galvin, says it’s not just subbies who have been affected by a lack of payment security.

Subbie crisis: ‘Not the time for mudslinging’

IT'S not just subbies that deserve to be paid.

And, as a membership association that represents more than 8000 members of the building industry, almost 50 per cent of whom are subbies, Master Builders are intent on holding the Government to account and ensuring their tough new building laws deliver on their promises and don't inadvertently make the situation worse.

Security of payment is an issue in our industry which has been around since the dawn of time. This doesn't make it any less serious, but it does signify that it's a tough nut to crack, and many governments have tried to get it right.

The other factor that remains the same is that it's not just an issue for subbies - issues of payment on time run right through the construction supply chain and no one is immune.

It's not just subbies who have had times when they've not been paid or getting paid has been difficult.

The broader issue is timely payment from owners, right down the supply chain to suppliers.

And unfortunately, focusing on one small part of the supply chain might suit politicians, but this approach hurts the very people it is designed to help, and it won't fix the root cause of late payments and ultimate business failures.

Over the years, governments of every persuasion have introduced measures to fix the problem. Although, these have clearly not worked, as we sit here today still debating the age-old problem.

It's our view that introducing more legislation on top of legislation that was already complex and not understood properly or followed by many builders or subbies is not the answer. It's not the time for political mudslinging, and a police taskforce is certainly not the answer either.

Here's what we know …

Last year in Queensland, the Queensland Building and Construction Commission's records show that 191 contractors (a combination of builders and subbies) lost their licence or had it immediately suspended because of financial failure.

While even just one financial failure has devastating consequences for those involved, this represents just 0.18% of the 105,000 licensed contractors, many of whom are doing the right thing - so we need to keep this issue in perspective.

The Queensland Government is currently in the midst of implementing these new laws.

We've got issues with some parts of the new legislation and agree with others, however, there are some things we know will make a difference.

The government has a big role to play in improving the business skills of builders and subbies.

They need to know their rights and responsibilities and what tools are currently at their disposal to address late and non-payments.

This can be achieved by introducing a mandatory CPD (compulsory professional development) scheme. It wouldn't necessarily be a popular move, so we can understand the government's hesitation on this one, but it would help.

Minister Mick de Brenni has already flagged introducing a CPD scheme into Queensland. In our view, this needs to be sooner rather than later.

Licensing is also a big issue, and we believe the bar should be raised here. In addition to achieving the technical skills required, education on how to manage contracts, cashflow and general business acumen should be included for builders and subbies as part of the licensing requirements.

The government only just recently announced the re-introduction of annual reporting on Minimum Financial Requirements (MFRs) along with some improvements in the system.

We support MFRs and believe they go a long way to ensuring that both builders and subbies have the financial capacity to run their businesses. It's impossible to say if introducing these requirements earlier would have made a difference in these scenarios, but we do believe they'll have a positive effect.

Finally, developing a regulatory environment that ensures builders can also get timely payment will have a major impact on the industry. Unlike many in this debate, we do not accept that all builders are bad and that the only problem lies between builders and subbies.

The majority of builders and subbies are mums and dads who run small businesses and always attempt to do the right thing - the statistics back this up. By focusing on removing the few rogue operators at all levels and making sure that payments flow from owners through to suppliers, we will go a long way to addressing this issue.

We've often said there is no silver bullet to solving security of payment within the building industry.

But, wasting tax payer dollars on a police taskforce combined with adding more legislation that even lawyers struggle to understand is just political point scoring.

Those dollars are better spent educating and effectively regulating an industry where the majority want to do the right thing. It might not be a "sexy" response to a complex problem, but just maybe, combined with sensible laws that builders and subbies can understand, it might just work.

Most who work in our industry will know it's far more complex than is regularly reported and that and if we strive to work together on solutions, everyone will be better off.

Grant Galvin is the CEO of Master Builders