Labor will ensure small businesses in the commercial construction industry get paid for work they have completed, the Member for Ballarat, Catherine King, said today.
Ms King said it was concerning that around $3 billion in unpaid debt in the commercial construction industry occurs each and every year.
“This debt is mostly owed to small and medium sized businesses in the construction subcontracting chain,” Ms King said.
“There are small companies around Ballarat which know only too well the dramatic and occasionally tragic consequences these debts have. If a small family business is forced into insolvency or bankruptcy, it has a horrible impact on individuals and families,” she said.
“The construction industry suffers more than most from phoenix operators – those who won’t pay their debts, strip valuable assets from their companies and then send them into liquidation, only to rise from the ashes debt-free and at liberty to inflict further financial damage on the industry, Ms King said.
“In our local construction industry, far too many sub-contractors have outstanding invoices that are often months overdue or simply never paid. This situation creates spiralling debt problems, cash flow problems and in the worst cases, insolvency,” she said.
Ms King said in recent years, over one in five companies entering external administration were construction-related.
“Labor has consulted with subcontractors, sole traders and other small businesses in the construction industry and the message is clear that a new approach is required,” Ms King said.
“If Labor is elected, we will introduce a federal Security of Payments framework as recommended by numerous inquiries, including the Cole Royal Commission and a recent Senate Economics References Committee report. Rapid dispute resolution for payment adjudication will ensure small construction businesses receive income that is rightfully theirs,” she said.
“Reducing insolvency and improving cash flow is good for small businesses, good for workers and good for the economy,” Ms King said.