The proposal by Labor to establish cascading statutory trusts for government construction projects, ensuring that all subcontractors get paid for work completed, was welcomed today by the Australia Small Business and Family Enterprises Ombudsman, Kate Carnell.
"Our working paper on cascading deemed statutory trusts in the construction sector, released in November last year, recommended these trusts to help protect small businesses," Ms Carnell said.
"The Murray Review also recommended these trusts as a way to protect payments to subcontractors in the construction supply chain in the event of an insolvency.
"We also support the proposal to create Tradie Litigation Fund for subcontractors to access justice. However with the industry's track record of poor payment practices and insolvency, the $7 million will disappear quickly.
"In the past few years there has been a marked increase in Australian construction industry insolvencies and small business subcontractors are the hardest hit when this happens.
"Subcontractors perform more than 80% of all work in the Australian construction industry and small businesses with less than five employees make up 64% of all construction sector insolvencies.
"Statutory trusts for government construction projects will go some way to alleviate the problem of subcontractors not being paid as the result of illegal phoenix activity.
"We encourage all levels of governments to work collaboratively and explore ways to improve the protections for small businesses in the construction and other industries."
