New powers given to the state’s building and construction regulator have seen more than $122 million worth of capital injected into the industry after financial reviews of only 269 licensees.
Minister for Housing and Public Works Mick de Brenni said the capital increase comes from companies which were found to be operating with insufficient assets to support their turnover.
“The Queensland Building and Construction Commission (QBCC) has been compelling companies to raise and maintain an adequate level of working capital, in a step to reduce the risk of instability,” Mr de Brenni said.
“The new laws brought in by the Palaszczuk Government in January have given the QBCC the power to lift the lid on licensees operating with unhealthy financial circumstances.
“The QBCC has prioritised companies which appeared to be most likely at risk, with 765 major building companies set to have their financials assessed.
“Most have been found to be operating with adequate financial reserves, but a number were not.
“While the audit continues, these results, before we’ve even reached a half way mark, demonstrate the importance of obtaining these safeguards.
“There is no law that can provide an iron clad guarantee against business failure or financial mismanagement, but people who invest in Queensland and workers who establish their career in Queensland need to be given the highest possible security that Queensland has a strong, stable building industry,” he said.
Mr de Brenni said that since 2015 the Palaszczuk Government has generated 199,000 jobs for Queenslanders.
“Regulatory action like this by the QBCC helped improve stability within the industry.
“If a licensee doesn’t have the asset base to support its turnover, we know that can be a recipe for disaster,” he said.
“The QBCC has told me they will take swift regulatory action against any licensee failing to meet the financial requirements.
“I am committed to continue to ensure that Queensland’s building and construction industry supports thousands of jobs, and is safe, stable and sustainable.”
The five laws aimed at protecting security of payment
Payment provisions – commenced on 17 December 2018 and lays down that anyone engaging a builder or tradie must pay on time and pay in full, or provide a payment schedule which is a written plan of their intention.
Adjudication – commenced on 17 December 2018 and provides quicker access to adjudication, with every invoice being automatically recognised for adjudication if a dispute arises. There are also new requirements that mean amounts must be paid within five business days (or another time decided by the adjudicator), and there is a new maximum penalty of $26,110 for failing to pay within the required timeframe. This is the first time that a penalty like this has existed.
Retention amounts – commenced on 17 December 2018 and require that retention amounts or security held under a contract must be released. There is an automatic 12 month defects liability period if the contract is silent or doesn’t provide one.
Contractors are required to provide sub-contractors with notice of the end of the defects liability period, so they know to come back and collect the money.
Minimum Financial Requirements (MFR) – changes that commenced on 1 January 2019 promote stability in the industry and protect subcontractors from working for contractors who utilise unsustainable business practices. A key part of these particular reforms is that the big players have to provide the QBCC with audited financial information annually. This ensures that the QBCC know on at least a yearly basis how those entities are tracking and whether they have the capital to operate a financially sound business.
Project Bank Accounts – promote the security and peace of mind of subcontractors by safeguarding progress payments, protecting retention monies and allowing for more timely payments to subcontractors. Having these accounts will mean that if a company goes into liquidation, the last unpaid invoices to sub-contractors will be retained in a trust account and safe from the liquidation event.
Currently, project bank accounts only apply to Government projects, but they will be extended to the private sector on a date yet to be announced by the Queensland Government.