IR reforms could not have come at worse time: builder

Perth builder Robert Shaw is concerned Labor’s latest round of workplace changes, mooted as forcing subcontractor tradies onto inflexible award conditions, couldn’t have come at a worse time.

23/5/2023 Chippee Hannah Motterham cutting of WA Carpentery Company , Owner of Perth-based construction company Daly & Shaw, Robert Shaw (black t shirt) inside his construction at Waterford Pic Colin Murty

Perth builder Robert Shaw is concerned the Albanese government’s latest round of workplace changes, mooted as forcing subcontractor tradies on to inflexible award conditions, could not have come at a worse time.

As new figures show the highest number of building company collapses for almost a decade, Mr Shaw says the industry is already struggling with soaring cost of supplies and worker shortage.

Mr Shaw, a Master Builder’s Association board member and owner of David & Shaw Building, said any move to force “subbies” on to awards could prove the ­single biggest threat to the ­viability of contractors and subcontractors in decades, only after Covid-19.

“It's a whole cultural change,” he said. “You’re trying to take the workforce which is predominantly subcontract and turn them into working for employers, which technically they’re not designed to do. That’s why they’re a subcontractor.”

The changes, flagged as bringing subcontractors and tradies forcibly on to awards, will put businesses under further pressure in an industry already reeling from hits to its bottom line, with insolvencies over the year to date hitting a decade high.

New figures from the Australian Securities & Investments Commission show more than 1800 insolvencies in the construction industry in this financial year to date – already the highest annual figure in data going back to 2013-14. The weekly data, which extends into May, has found the number of failures in the building sector in 2022-23 so far is 25 per cent higher than the 1460 annual average insolvencies in the industry over the three financial years leading up to the pandemic.

There have been 50 per cent more failures in 2022-23 than in 2021-22, the figures reveal.

The explosion in failures in the construction sector is not part of an economy-wide trend.

CreditorWatch chief economist Anneke Thompson said smaller businesses were at greater risk of falling over in this environment. “We're seeing payment arrears getting worse, particularly for smaller businesses,” she said. “The slowdown in demand and housing starts in the second half of this year is only actually going to make things worse.”

Mr Shaw’s business employs 12 people full-time, with about 400 subcontractors on hand to call in across its worksites when needed.

He believes the burden of higher overheads and more employees on the books will be too much for small businesses to handle. “That whole disruption would just about finish us off on the back of Covid when we’re trying to find our feet,” he said.

“What this bill is saying is technically they need to roll into small mum-and-dad businesses and become an employee. It’s a burden for small business.

“They don’t want the red tape, they don’t want the hassles. To culturally change that overnight, even if it was accepted, it would stop our industry, absolutely.”

A spokesman for Workplace Relations Minister Tony Burke on Tuesday said the government would not be deterred from introducing the legislation to fulfil its election promise to “get wages moving” by closing “loopholes.”

Due to be introduced to parliament later this year, primary reforms including “employee-like” and “same job, same pay”, would allow the Fair Work Commission to set minimum standards for independent contractors, and establish the need for employers to pay into union-linked entitlement funds to provide access to sick and holiday leave.

Additional reporting: Patrick Commins