The competition watchdog, ACCC, has put those in the big end of town on notice that it will take them to court if they refuse to pay subcontractors, amid growing complaints on major projects in Western Australia.
Complaints about late and nonpayments are rampant in WA’s building industry and the state government has been criticised for not protecting subcontractors, some of whom had been ripped off on government projects as lead contractors refuse to or simply can’t pay.
Multibillion-dollar major public and private projects such as the new children’s hospital, Perth airport extension and Elizabeth Quay riverside development have been notable for subcontractor complaints over massive amounts of unpaid work.
The issue was raised in parliament last week by Opposition Leader Mark McGowan, who named the owners of six small businesses owed massive amounts of money, including Ross McGinn, who took his own life last year.
Laws that protect consumers from unfair contracts will be changed in mid-November to protect subcontractors from unfair contracts used by big businesses.
The effects should include helping stop big businesses unilaterally changing prices and striking unfair terms out of contracts and ensuring dispute mechanisms are not lopsided, said the Australian Competition and Consumer Commission’s acting chairman Michael Schaper.
“This speaks to a much bigger issue, the massive power imbalance that exists between big business and small business often reflected in the contracts imposed effectively on small businesses,” he told 6PR radio.
“This is not going to give universal protection for every situation but goes a long away to rectifying what is clearly a very substantial imbalance. In WA the issue about subcontractors is the one that’s most obvious.
“We do carry a big stick. The ACCC doesn’t take things to court lightly but when we do our success rate is in the vicinity of 90 to 95 per cent … The large end of town needs to be on notice we really are serious.”
Acting Finance Minister Sean L’Estrange said the government had improved payment security for subcontractors and had implemented 14 recommendations from a 2013 Construction Subcontractor Investigation report.
It was also exploring a NSW-style scheme involving project bank accounts so if the contractor went bankrupt, there was money to pay out subcontractors, he said.