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Taxpayers could be slogged $10 million after Pindan collapse
The collapse of WA construction giant Pindan could cost taxpayers up to $10 million as the state seeks to help new home builders left in the lurch, the state government has revealed.
The liability comes from the state’s underwriting of home indemnity insurance, which is a requirement on all residential building work valued over $20,000.
The man behind a report into payments to subcontractors has decried new legislation he says misses the mark. Credit: Louie Douvis
In response to questions from upper house Liberal MP Steve Thomas on Tuesday, Regional Development Minister Alannah MacTiernan said there were about 100 incomplete homes impacted by Pindan’s move into voluntary administration.
She said it was estimated the maximum number of claims from the home indemnity reinsurance account would be about $10 million.
Ms MacTiernan said Pindan had paid just $501,000 in premiums into the account over the past 12 months.
Subbies payments bill not good enough
Pindan’s collapse has shocked both customers and subcontractors.
The company owes more than $70 million to creditors, with much of that owed to hundreds of subcontractors who are scratching their heads over whether their next invoice will be paid.
Proposed laws reintroduced to Parliament this week aimed at protecting subcontractors have failed to hit the mark with the author of a 2018 national report into security of payments.
WA construction veteran John Murray wrote the report into the security of subcontractor payments for the Turnbull government.
He recommended government introduce ‘cascading trusts’ that would force builders to pay money down the subcontractor chain as work progresses; rather than a client dumping cash into builders’ accounts, who are then left to their own devices to pay subbies.
A separate report for the WA government by barrister John Fiocci came to the same conclusion and Attorney General John Quigley publicly announced his support for cascading trusts last year. But when the bill was first introduced to Parliament in September cascading trusts were omitted.
The building industry also opposes cascading trusts, claiming they would impose too great of an administrative burden on individual projects.
The bill does include a trust scheme for about 5 per cent of payments, but Mr Murray said that was just a ‘pimple on the pumpkin’.
“One would have thought that ... there may have been a realisation by the government that only the introduction of [cascading trusts] will provide subcontractors, who carry out 85 per cent of construction work, with the necessary protection,” he said.
“I don’t know who they’re listening to but surely they should be listening to those parties who are most adversely affected.
“I’m bewildered and astonished and so disappointed it’s not happening.”
Commerce Minister Amber-Jade Sanderson told Parliament on Tuesday there was a divergence of opinion on cascading trusts and raised concerns that it would impact industry cash flow.
“We felt that that would be a bridge too far for a sector that has just come off what have been a number of years of flatness, essentially. It is a very volatile sector,” she said.
“Our bill will bring us in line with the rest of the country, and it will provide protections for subcontractors along the entire chain of the contracting process – that is, the point of the bill – and with the rapid adjudication process resolve those disputes as they occur.”