Subcontractors' pay key focus of new report

The Legislative Assembly Environment and Planning Committee has made 28 recommendations in a bid to ensure subcontractors are paid for completed works.

An eight-month parliamentary inquiry found longstanding poor payment practices in the construction sector are having serious impacts on subcontractors, their employees and families.

‘Payment issues can also lead to the closure of businesses, affect the quality of a build and have negative flow on effects for the broader state economy,’ Committee Chair Juliana Addison said. 

The inquiry also determined up to 30 per cent of adjudications are not complied with each year, leaving claimants out of pocket.

Ms Addison said reform of the legal framework, to bring it into line with other jurisdictions is long overdue.

‘Victorian security of payment law is more than two decades old and has only been substantially reviewed and updated once since it was introduced in 2002,’ she said.

‘We heard the effectiveness of this legislation has declined over time and it needs to be simplified to increase industry awareness and understanding.

‘We believe these proposed reforms will help subcontractors be paid properly for the work they complete, in a timely manner.’

The key recommendations are:

• Enable subcontractors to claim all the value awarded by a construction contract
• Limit the use of unfair clauses in construction contracts
• Extend the time for which a subcontractor can claim payment for their work from three to six months
• Make the adjudication process fairer for both subcontractors and head contractors

As part of the inquiry, the committee received 46 submissions and held public hearings.

‘Thank you to the many peak bodies, unions, trade associations, law experts, academics, adjudicators and government departments who provided evidence,’ Ms Addison said.

To read all of the report’s recommendations and findings go to the Committee’s website.