Who's going to build the 1.2 million homes? Pocock calls on government to protect subcontractors

ACT Senator David Pocock has joined union leaders in penning a letter to federal ministers calling for action to help subcontractors after a disastrous couple of months for the ACT building industry in which four firms have folded.

The building industry crisis is nationwide, with developers and builders facing escalating material and labour costs and shrinking profit margins in a tightened lending environment.

However, sub-contractors are often left out of pocket when a building company goes into administration.

The letter to the Minister for Employment and Workplace Relations, and the Arts, Tony Burke, and Science and Industry Minister, Ed Husic, calls on the Federal Government to implement the recommendations of the 2018 Murray Review of Security of Payment Laws to protect the interests of subcontractors.

Senator Pocock also held a press conference at Parliament House flanked by subcontractors.

He accused the government of lacking the political will to stand up for subcontractors who were doing work and not getting paid.

“The government is making bold statements about 1.2 million homes over the next five years,” he said.

“Well, who’s going to build them? Who’s going to build them if we aren’t looking after tradies in this country?”

Senator Pocock said Labor needed to step up and introduce security of payment laws.

One partner in a small concreting business, Leanne Foresti from Foresti Pty Ltd, said developers and contractors consistently and deliberately pushed back payment times from 30 days to 40, 50, and even 90 days.

“This forces us into precarious positions with our suppliers, employees and the ATO,” she said.

“But it is the families that bear the brunt of the impact on our mental, emotional and physical health.”

Ms Foresti said legal action was costly, stressful and time-consuming.

“So we hang on, counting on the developers, builders and contractors to do the right thing, and right now they’re not,” she said.

She said that with tight profit margins, companies should manage their finances more cautiously.

“But in reality, they’re caught in a cycle of robbing Peter to pay Paul,” she said.

“Many are trading while insolvent and go bankrupt owing millions of dollars to subcontractors.”

She said subbies were tired – tired of being forgotten.

“The government must, as a matter of urgency, do more to protect subbies, their families and the future of the construction industry in Australia,” she said.

The letter is also signed by CFMEU Construction & General Division National Secretary & ACT Branch Secretary Zach Smith, Electrical Trades Union of Australia Secretary Michael Wright, and Oliver Judd, CEO of the National Electrical and Communications Association.

It says insolvencies are increasing, subcontractors are missing out on huge sums of money and the results can be devastating, even to the point of some taking their own lives.

“In the second half of last year we witnessed a 37 per cent increase in insolvencies with more than a quarter of those being construction businesses,” the letter says.

“This trend has continued this year. It is particularly acute here in the ACT. Since 2021-22 there has been a sharp increase in insolvencies, both generally and in the construction sector.

“In the 12 months to February this year, 146 companies have gone into administration and 48 of those have been in the construction sector.”

The letter says the Murray Review sets out a blueprint for reform and implementing its recommendations must be a priority.

“We urge the Federal Government to end years of inaction and urgently step in with stronger national security of payment laws to finally put an end to tradies being left out of pocket.

“These and other reforms contained in the Murray Review will help put the construction sector on a more sustainable footing going forward.”

The Federal Government says it is working with the states and territories to implement the laws in each jurisdiction.