Good News For Building & Construction Subcontractors
Solution Announced For Getting Retention Money Back
Minister for Fair Trading Matthew Mason-Cox, NSW Minister for Fair Trading has announced that A new trust-fund scheme will be created to ensure construction companies that collapse are prevented from keeping money that is owed to subcontractors after they complete a job.
The initiative is in response to an inquiry the state government commissioned in response to Glenn Bower Of RECOUP Contractor Debt Recovery push for fairness and justice for subcontractors in 2012 to look at the causes of insolvency in the $40-billion building industry. Bruce Collins QC chaired the inquiry.
Today, Matthew Mason-Cox, will announce the new retention trust scheme – the first of its kind in Australia – which will require construction companies to hold retention money in a trust fund to protect payments for subcontractors. Head contractors who fail to comply with new requirements will face fines of up to $22,000.
Up to 5 per cent of the cost of a contract is generally retained by the contractor until the subcontractor has completed a job and corrected any defects. The new trust scheme will ensure that contractors who become insolvent cannot use the money for their own purposes.
“This will end the widespread industry practice of using subcontractors’ trust money for the head contractor’s working capital purposes. At the end of the day, this money belongs to subcontractors and it’s about time it was protected as such.”
Big End Of Town Supportive : St Hilliers Building & Construction Boss Tim Casey:
St Hilliers managing director Tim Casey says that while scheme will protect smaller subcontractors it could lift building costs.
St Hilliers managing director Tim Casey, said the government had been talking about the scheme for 12 months.
Mr Casey, who managed to trade out of the collapse, said the new scheme could hike building costs. “(But) it’s probably not a bad thing for the industry, it protects the smaller subcontractors who don’t have the facilities to put up bank guarantees.”
Tim Casey is one of the more ethical players in the building & construction industry, however there is bound to be some resistance from the ones with little or no conscience.