The roll-out of Project Trust Accounts in Queensland, announced last week, will force major changes in the building and construction industry in that state – and now’s the time for other state and territory governments to follow suit, urges Louise Stewart, building and construction fair payment advocate.
“I applaud the Palaszczuk Government for its Building Industry Fairness Bill,” says Stewart, former chair of a Australian subcontractors’ association and creator of the ProjectPay payments platform. “This is a huge step forward and, combined with technology, trust accounts will be hugely beneficial in transforming and protecting payments in the industry, which will benefit everyone down the supply chain.”
As previously reported in Better Building Daily, Stewart has long campaigned for cascading trusts or Project Bank Accounts (PBAs) to be introduced in Australia, following a federal government review and recommendation by industry veteran John Murray AM that trust accounts should be legislated on all projects across Australia. She says it’s now even more important than ever for builders to embrace new technology to help facilitate the requirements of cascading trusts and PBAs, designed to address the delayed and non-payments issue plaguing the construction industry.
“To overcome the barriers of use, such as high levels of manual administration, the combination of technology and trust legislation that cascades down the supply chain is the answer,” she says. “The Queensland Government knows it, as does the WA Government, which is due to release a new bill in April for industry consultation, requiring cascading trusts to be used on all government and private building projects over a certain threshold. Now it’s up to other governments to follow their lead.
“Real estate agents have adjusted to using trust accounts – and the construction industry now needs to do the same.”
Designed for industry
The ProjectPay platform has been purpose built to comply with the requirements of cascading trusts and PBAs. It is Australia’s only construction payment system designed for subcontractors, builders and project owners on commercial and residential projects. “It’s a low-cost solution and ensures all project participants in the supply chain are protected against business failures and insolvency. This means the people who have done the work get paid,” Stewart says.
ProjectPay is undertaking an education campaign for SME subcontractors about how they can use the platform to comply with new trust requirements across public and private projects. ProjectPay is also currently working with Findex Australia to provide a cashflow finance offer for SME businesses, that will disrupt supply chain finance and reverse factoring, which has recently attracted negative publicity.
“Construction businesses should pay on time – and not rely on supply chain finance that the SME pays for in order to get paid on time,” says Stewart. “However, we recognise that the implementation of trust accounts will constrain access to working capital for the industry. That’s why a new type of cashflow finance is vital, so it can be provided to the industry as a result of new supporting trust legislation. This enables ProjectPay to de-risk payments for users, which allows for working capital shortage (well known for causing high rates of business insolvency) to be addressed.”
ProjectPay is currently in talks with financiers in Australia and the UK in order to provide debt capital that can cope with the scale of payment transactions on its platform.
Top image: By Figaro at en.wikipedia