Collapse of PBS Building to become first test for Queensland’s ‘property trust account’ system

Queensland’s landmark construction industry reforms to ensure tradies get paid is facing its first major test amid the collapse of national builder PBS Building Group.

A workman arrives at the Shoreline tower construction site on the Gold Coast to find it locked up. Picture: Glenn Hampson

Queensland’s landmark construction industry reforms to ensure tradies get paid is facing its first major test amid the collapse of national builder PBS Building Group — the first company to go under with state-sanctioned trust accounts in place.

The state government in 2017 passed reforms designed to ensure tradies were paid “in full and on time” amid growing controversy around dodgy builders phoenixing – or going bust and popping up again – and leaving subcontractors in a financial lurch.

Part of the new rules was an industry-wide staged implementation of “project trust accounts”, which involves a head contractors opening up an account for each project.

Since January 1, 2022, private building projects worth more than $10m required a trust account – with money filtering through to the head contractor and on to the subbies strictly through the account.

Award-winning builder PBS this week abandoned its building projects across the country and called in administrators, leaving 80 projects unfinished with an estimated $25m owed to creditors.

The Queensland Building and Construction Commission’s public project trust account register revealed PBS had two set up – one for the $90m Latitude25 project in Hervey Bay and another for The Curl at Bokarina on the Sunshine Coast.

PBS also had a retention account, used for holding cash withheld until it is due to be paid.

If the system functions the way it theoretically should, money owed to subbies on the Latitude25 and The Curl projects will be held securely in those trust accounts ready to be paid out.

If the PBS Building test case goes a different way, it opens the system to major criticism from detractors including peak body Master Builders.

A QBCC spokesman confirmed a situation where a “licensee with an active trust account has entered into administration” had never happened until Wednesday this week.

Administrators RMS Australia were unable to provide further detail than their statement on March 7.

Master Builders Queensland chief executive Paul Bidwell said the peak body “long supported dealing with the issue of security of payment” but were sceptical of the project trust account mechanism, as the system was complicated and convoluted.

He said there was a high incidence, despite the best efforts of builder, of noncompliance on administrative requirements.

Mr Bidwell said the administrative burden of the mechanism was unwieldy, and the next phase of project trust accounts from April 1 when the size of contracts is dropped to $3m will have major impacts on smaller builders.

Public Works Minister Mick de Brenni said Queensland’s security of payment regime was the most sophisticated in the nation for protecting consumers and tradies.

“Compliance with all of those measures occurs on an ongoing basis so that consumers and tradies aren’t left exposed,” he said.

“Adherence to those compliance obligations is a matter for the QBCC.”

Originally published as Collapse of PBS Building to become first test for Queensland’s ‘property trust account’ system