Probuild subbies owed up to $300m left ‘whistling in the wind’

Subcontractors could be owed up to $300m from the collapse of building giant Probuild and have once again been left without proper payment protections, industry leaders say.

Probuild signage on their construction site at the MLC building in Martin Place, Sydney CBD. Picture: NCA NewsWire / Damian Shaw

Subbies owed up to $300m from the collapse of building giant Probuild have once again “left whistling in the wind” because of lack of payment protections.

Former Master Builders Australia chief executive John Murray, who conducted a Federal Government inquiry four years ago into insolvency in the sector, said governments are not looking after the interests of subbies.

Mr Murray’s report released in May 2018 called for a suite of protections including statutory trusts that “ring fenced” funds for subbies in the event a builder collapsed.

Financial accounts filed by Probuild last year show it owes more than $300m in trade receivables, meaning subcontractors could be on the hook for hundreds of millions of dollars.

“These trust funds would impute monies that builders receive from clients as monies held in trust for the benefit of subcontractors, who carry out around 85 per cent of construction work,” said Mr Murray. “If this measure had been implemented, then subcontractors’ monies would be ring-fenced from a liquidator in circumstances of a builder becoming insolvent.”

Probuild has plunged into administration with over $5 billion in building projects around Australia now under a cloud.

Trust accounts for subbies are progressively being introduced in Queensland but not as a federal level. “The current federal government have not indicated its position on this recommendation, but the ALP at last year’s federal conference resolved that it would implement all my recommendations including in relation to the implementation of statutory trusts.”

Mr Murray added the pressure confronting the construction industry was not solely attributable to the impact of COVID 19 shutdowns and supply chain disruptions.

“The mere fact that the Senate conducted an inquiry into insolvency in the construction industry in 2016 should put that argument to rest,” he said.

“What is disconcerting is the efforts that some governments have made to not look after the interests of tradies and subcontractors who are once again left whistling in the wind.”

Insolvency specialist firm Jirsch Sutherland Queensland partner Chris Baskerville said the Probuild collapse would have a huge fall out with many subbies already under pressure.

“The subbies who walked off the Queens St project have to put food on the table for their families,” said Mr Baskerville, who has heard of one subcontractor owed $800,000.

He said any attempt to sell the business would have to find a buyer prepared to recapitalise the company and get workers back on sites to complete projects.

Originally published as Probuild subbies owed up to $300m left ‘whistling in the wind’