Union urges construction trusts to protect sub-contractors from COVID-19 pay delays

subcontractors construction

Sub-contractors in NSW are being ripped off at “record rates” during the COVID-19 pandemic, as building companies and developers extend payment times for work that’s already been completed, the construction union says.

The Construction, Forestry, Mining and Energy Union (CMFEU)’s NSW branch has urged the Berejiklian government to implement statutory trust reforms as soon as possible, amid a torrent of extended payment terms in the construction industry.

Darren Greenfield, the CMFEU’s NSW construction secretary, says the union has been speaking with businesses owed “massive amounts” by developers.

“It is a chronic issue in the industry that has been growing worse for years, and which is now a significant risk to the viability of many smaller operators who do the bulk of the work and employ most of the workers,” Greenfield said in a statement.

“Payment disputes in the NSW construction industry have almost doubled in the June quarter, with figures reported today showing claims for adjudication jumped from $114 million to $225 million over that time.”

The union is supporting the introduction of statutory trust laws, which would effectively require building companies to put money aside to pay sub-contractors.

The reforms, which have the support of small business ombudsman Kate Carnell, were recommended as part of the Murray Review into the security of payments, which was put to the NSW state government in 2017.

There has been widespread concern that payment times for sub-contractors have worsened during the COVID-19 pandemic, with a mix of commercial pressures and insolvency protections making it more difficult for creditors to chase up debts.

“The State Government has been sitting on recommendations to fix the problem since 2012.

“They need to start protecting small business operators and the workers who build this state and stop listening to the NSW Master Builders and their donor mates in the property industry who oppose these changes,” Greenfield said.

NOW READ: ‘Struggling to pay debts’: Construction woes highlight need for sub-contractor protections

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