Employers and Contractors Who Refuse to Pay Their Subcontractors for Completed Works – Environment and Planning Committee

Juliana ADDISON (Wendouree) (10:14): I have the great honour to speak to the Legislative Assembly Environment and Planning Committee report that I had the honour of presenting to the house yesterday, Employers and Contractors Who Refuse to Pay Their Subcontractors for Completed Works.

We are really proud as a committee of this report. The terms of reference for the inquiry asked our committee to examine employers and contractors who refuse to pay their subcontractors for completed works, and that is exactly what we have done with this report.

It was clear from the outset of our inquiry that the focus would be on the payment of subcontractors in Victoria’s construction sector. The report makes 28 recommendations to ensure that subcontractors are paid properly for works completed and that this happens in a timely manner, which is so important. We know that payments that are delayed can have very negative impacts particularly on our small businesses, our small contractors and our small subcontractors, who make up the majority of the sector.

Following evidence that was received through submissions from stakeholders and experts from across Victoria’s construction sector, the inquiry found that we need to modernise Victoria’s security of payment laws, making it simpler and easier, and that is what we would like to do through these recommendations.

To do this we have recommended that the Victorian government consider the following: broaden the types of payments that can be claimed, because we heard that was a real issue, the categorisation of those claims; we need to limit the use of unfair clauses in construction contracts; and we need to extend the time that a subcontractor can claim payment for their work within. Currently it is at three months, and we really do need to extend that to six months. That is fair. We know that often families have got their shoebox and they are paying things and they are trying to organise things to keep the business afloat, and sometimes three months can fly past, so we really need to extend that to six months. And we need to make the adjudication process fairer not only for our subcontractors but for our head contractors, and we know that this will improve things.

Of particular significance is the issue of the operation of the Building and Construction Industry Security of Payment Act 2002, and the fact that that act is actually 20 years old is a part of the problem. It is not fit for current industry standards. The act provides subcontractors with the right to claim regular payments for their work and establishes an adjudication process to resolve payment disputes quickly. The legislation is simply known as the security of payment laws. This is not where it needs to be, and that is what a lot of our recommendations really focus on.

This report can be accessed in full via the Parliament of Victoria website, and I am going to talk about it a number of times because it is a really great report. But before I talk anymore about that, I really think it is so important that I acknowledge the individuals, the businesses, the unions, the professional bodies, the government agencies and the adjudicators who gave up significant time to provide evidence to the inquiry. Their expertise has been invaluable in helping the committee form its recommendations.

I would particularly on behalf of the committee like to acknowledge the contribution and the evidence of Mr John Murray AM, who led a comprehensive review for the Commonwealth government in 2017 and shared all his learnings with us. Mr Murray’s depth of experience allowed the committee to ask questions and develop a stronger understanding of what was happening in other jurisdictions and the challenges of different models and approaches.

Very importantly, I want to thank the committee members, including my friend the deputy chair the member for Morwell – what a great support – the member for Bass, the member for Croydon, the member for Monbulk, the member for Nepean, the member for Ripon and our most recent recruit the member for Warrandyte.

This is the Parliament working at its best to be able to work together as a group with a really strong focus on delivering meaningful outcomes for Victorian subcontractors. We had genuine interest in the topic, and most importantly we had such a collegiate and respectful approach to our work.

This has been an absolute highlight for my first year in the second term, and I really want to encourage people on committees to work closely together to really deliver great outcomes across the Parliament for Victoria.


You can take a look at more of my speeches to Parliament here.