On the back of a policy announcement by Opposition leader Bill Shorten, QMCA has questioned the need for trust accounts to be established for major Commonwealth projects in a bid to fix the problem of firms illegally phoenixing their business following a collapse.
QMCA CEO Jon Davies welcomed the focus on industry insolvencies, but questioned the effectiveness of the proposed policy “The policy put forward from the leader of the opposition misses the point – phoenixing does not occur on major civil infrastructure projects because the barriers to re-entering the market cannot be overcome by companies rising from the ashes.
“Phoenixing occurs on smaller projects where barriers to re-entry into the market are extremely low. When a small homebuilder collapses, they can easily set up a new building company and start touting for work in their community. A major contractor cannot simply collapse and then reappear the next day with the capacity and capability to win and deliver a multi-billion-dollar projects. It simply does not and cannot happen.
“Unfortunately, the proposed policy, although well intentioned, will not achieve the desired outcome because it is aimed at the wrong tier of the market. At QMCA we want to make sure that every level of the supply chain is protected and are as dismayed as everyone in the community at the plight of subcontractors who do not get paid what they are owed, but trust accounts on major Commonwealth projects is not the answer.
“This policy will not help in any of the cases that have been highlighted in the recent media campaign and QMCA encourages all levels of government to work with industry to look at more practical measures which will help make the whole of the industry more sustainable, such as a partnership based approach to risk allocation, as a thriving construction industry would be able to invest in people and innovation for the benefit of the workforce and the economy as a whole.
“The policy put forward will simply add to project costs, administration and unnecessary red tape.” said Mr Davies.
