Housing Minister Mick de Brenni to table laws to protect sub-contractors from builder collapse

NEW laws to protect sub contractors from illegal phoenixing and unscrupulous builders have been introduced to Queensland Parliament this afternoon. This is how they’ll protect subbies.

Games Village sub-contractors out of pocket after collapse of site contractor Ware Building meet at Oxenford Tavern to discuss their next move. Pictured are builders (L to R) Frank Cairns, Emanuel Ibrahim, Dale Martin, Perry Richardson, Shane Tanner, Patrick Ashton, Melissa Slattery, David Mawhinney (red), Norbert Vigh (back Grey shirt), Bruce Alker Jrn, Brian Pollock with lawyer James Loel (foreground). Photo: Steve Holland

NEW laws to protect sub contractors from illegal phoenixing and unscrupulous builders have been introduced to Queensland Parliament this afternoon.

Minister for Housing and Public Works Mick de Brenni MP said the Building Industry Fairness (Security of Payment) Bill 2017 would establish a regimen to help ensure small and medium construction businesses were paid in full, on time and every time.

“For too long the building and construction industry has operated by pushing the majority of the risk for projects onto subcontractors — often family run businesses,” Mr de Brenni said.

INSIDE STORY OF HOW CULLEN GROUP COLLAPSED

Queensland Minister for Housing Mick de Brenni.

The changes have been brought forward in the wake of two major collapses in recent weeks

These were the latest in a string of construction company failures in the past three years.

Queensland One Homes are in liquidation owing 133 creditors more than $3.4 million while a related company, Empire Construction Pty Ltd is under investigation for alleged illegal phoenix activities.

This week, Commonwealth Games Village contractor Ware Building went into administration, owing 13 subbies up to $1 million.

Ware collapsed while town houses were under construction at the Parklands Commonwealth Games village. Picture Mike Batterham

The new laws would reverse changes make by the Newman Government that took away mandatory reporting for building companies and allowed them to self report their financials.

Currently a construction company can be financially unstable for years, potentially shifting assets to related companies, and still retain a QBCC licence.

The building regulator would have new powers to search sites and other premises, to conduct financial investigation and require financial documents be handed over by a builder.

The laws will now go to the parliament’s Public Works and Utilities Committee for consideration.

Boheme Apartments at Robina were left unfinished after the Cullen Group collapse. Photo: Steve Holland

Mr de Brenni said the reforms would simplify the payment system, take action against illegal phoenixing and introduce project bank accounts to help ensure money owed to subbies was available to them.

“The LNP’s absurd changes to financial self-reporting opened the door to abhorrent practices in the industry,” he said.

“We are expanding the financial investigation powers of the QBCC, allowing the regulator to intervene more strongly to protect subbies.

“Our new laws will bring back financial standards to the industry. It will give the building regulator the QBCC a line of sight to companies that may be in trouble.”

Subbies were left chasing money after Cullen Group went under leaving Boheme Apartments at Robina. unfinished. Photo: Steve Holland

The new laws would also clampdown on ‘shadow directors’ and corporate ‘phoenixing’ in the building and construction industry, allowing the Government to ban anyone who has been secretly involved in running a construction company that goes bankrupt or has its building licence revoked.

Anyone who receives a ban under the new laws will face major penalties if they try to run another building company, either in their own name or by once again giving secret directions from behind the scenes.

“We have seen recent cases across the state where companies appear to have been designed to fail,” Mr de Brenni said.

“You shouldn’t be running a dud business under your nanna’s name, or anyone else’s. You shouldn’t get away with running under the radar.

“Lumping others with your debts, deliberately sinking your old company and secretly slinking away to a new business is disgraceful, base behaviour. It’s a low act.”

The project bank accounts would see Project Bank Accounts introduced on Government projects between $1 million and $10 million from January 1, 2018.

“Project Bank Accounts are not designed to stop building industry insolvencies on their own,” Mr de Brenni said.

“But they will stop a dodgy builder from using funds from one project on another project. They will prevent dodgy operators from siphoning subbies funds for personal use.

“From January 1 2019 Project Bank Accounts will be expanded to all private sector construction projects over $1 million.”

The accounts will extend beyond the first tier of subcontractors to others engaged by subcontractors on a job.

In tomorrow’s Gold Coast Bulletin — reactions to the reforms, plus another Gold Coast company in the spotlight.