Master Electricians Australia (MEA) has called for a national ‘FEG-like’ scheme to deliver the necessary protection for electrical subcontractors when a head contractor goes bust.
Over the weekend, the Master Builders Association announced it would team up with a platform called Paid to manage payments between builders and subcontractors. However, MEA CEO Kate Raymond said it would not solve all the issues that see subcontractors out of pocket when a builder goes insolvent and a better solution is to strengthen protections by establishing a scheme to protect subcontractor payments.
“MEA is deeply concerned about the increasing number of insolvencies that are occurring in the building industry and the number of electrical subcontractors not receiving payment for work conducted,” Ms Raymond said.
“What is required is a better system and assurance of payment to subcontractors who have undertaken work but not been paid following builder insolvency. A contractual payment platform will not provide subcontractors with the payment protection they need.
“Nothing yet has worked to secure payments to subcontractors following builder insolvency. Project trust accounts in Queensland have not resulted in full payments flowing to subcontractors when an insolvency occurs.
“There are a multitude of payment apps and platforms, but many require subcontractors to pay a percentage of their payment through the platform. People shouldn’t have to forego their margin just to get paid.
“These platforms typically see payments only flow through if the owner pays the builder and the builder verifies the payment as owing to the subbie.
“MEA is concerned that the MBA approach could lead to a ‘pay when paid’ scenario, leaving subcontractors waiting months for owner milestone payments to become due to be paid what they’re owed.”
Ms Raymond said MEA supported the Federal Government coming to the table to provide a harmonised system in line with the Murray Report recommendations and more effective security of payment measures.
“MEA supports the Federal Government developing a scheme similar to the Fair Entitlements Guarantee which protects workers when an employer becomes insolvent.
“A FEG-like scheme for payments following insolvency, combined with a retention trust scheme with rapid adjudication frameworks and a harmonised set of security of payment legislation that is consistent across Australia would go a large way to addressing the very serious issue of subcontractor non-payment.”
Earlier this year MEA released a policy paper named ‘Security of Payment: Bigger Steps and Better Ways’ and a full copy of the document can be found here.
