Subcontractors concerned about delayed or non-payments may find relief in a recent push for builders to establish project bank accounts.
At a time where even well-established construction companies are collapsing under the pressure of industry downturn, cases in which workers are being paid intermittently or not have are on the rise. In response, both the Queensland and West Australian governments have introduced legislation that will expand the use of project bank accounts (PBAs) to safeguard project funds and ensure they are being properly used.
PBAs are a set of three bank accounts that operate as a trust.
- The general trust account receives payment from the principal and is used to pay subcontractors from
- The retention trust account holds the subcontractors' retention money, and
- The disputed funds trust account holds funds related to payment disputes until the issue is resolved.
The moves have been met with disapproval from industry groups, including Master Builders, but advocates for subcontractors are calling the legislation an important step forward.
Louise Stewart, a former board member of the Australian Subcontractors Association and previous Chair of Subcontractors WA is one of those advocates. By combining PBAs with technology, she says payments will be protected across the industry like never before.
"It’s vital that PBAs or cascading trusts are used for private projects, because that’s where most of the criminal behaviour and unconscionable conduct occurs," says Stewart.
"And 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. The Queensland and WA governments know it."
She points to the payment platform she created, ProjectPay, as one solution.
"ProjectPay 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, liquidation and bankruptcy. This means the people who have done the work get paid."
Stewart is in the process of an education campaign, which she hopes will help SME subcontractors understand the benefits of both the technology and trust legislation.
For more information on ProjectPay, visit projectpay.com.au
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