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Back to basics for the construction industry

Michael Chesterman
Michael Chesterman September 4, 2022

No licence = No work = No payment!

There are two subtly different ways in which to look at the actual meaning behind this heading:

Section 42 of the QBCC Act sets out the legal obligations in this regard.

As I have stated on numerous occasions in previous articles, I am not a lawyer. Anybody wanting legal advice in this regard should contact one of our excellent Helix lawyers.

The point I am making is that acquiring and maintaining appropriate licence coverage is very important for a contractor’s business. It ensures that contractors lawfully tender all building work.

Don’t let anything distract you from achieving these goals!!

I want to give contractors a single piece of practical and important guidance. In these challenging times, it is important to largely ignore all the current ‘white noise’ about the QBCC. Of course, contractors should stay informed on the current raging debate about the role the QBCC played in the collapse of Oracle Homes. My plea is for contractors not to get distracted from ensuring that they obtain and retain necessary licence coverage. It is especially important in these challenging times.

For the foreseeable future, the fact of the matter is this. It is a reality that all (approximately 93,000) licensed contractors in Queensland will be subject to its current legislative and policy framework. I know for a fact that many contractors have grave concerns about the effectiveness of the minimum financial requirements (MFR). This includes the cost burden they impose on them in having to always satisfy them.

However, ‘no licence, no work, no payment’ is a phrase that should be front and centre of all contractors’ minds for the impending future. It should also be a phrase that all insolvency practitioners and turnaround specialists pay heed to.

I write many articles about these topics and always try to bring it back to basics for the construction industry. As you can see below, I have written 14 previous articles that cover:

Michael's previous articles

View interactive version with links here

Minimum Financial Requirements for Licensing 

Coming back to the MFR, I note that:

  • The MFR and the significance of contractors being aware of the serious possible consequences of always failing to satisfy them;
  • While I am a strong supporter of the MFR, they do have limitations. For example, they do not guarantee that all licensed contractors are always solvent;
  • Anti-phoenix licensing measures and how they are now in my view, unfairly impacting security of payment (SOP) victims; and
  • The extent of these initiatives has not reduced the incidence of insolvency in the industry. See below ASIC insolvency statistics for companies entering external administration or controller appointed since 2013.

Financial year companies entered external administration or controller appointment (2013-2021)

Note: For the Financial Year 2020/2021, the number of companies entering external administration or controller appointed was affected by several COVID-19-related issues. The main factor in the record low level of industry insolvencies for this financial year, I believe, is linked to the ATO commencing very few court actions to recover debts.

There is an urgent need for new measures and strategies to address insolvency in the construction industry.

Final thoughts.

In a series of subsequent articles, I will be outlining my views on what contractors should be doing when they become aware of their business commencing to suffer financial distress.

As I will continue to point out at the commencement of all these subsequent articles, I am not a lawyer or accountant. My views should be seen through the prism of my learnings as a result of working for the industry regulator for 22 years and then subsequently for the following 5 years, assisting contractors in my various roles at Helix.  

In the meantime, if you have questions about complying with the MFR or other QBCC regulatory measures, please reach out to our Helix Compliance team.

Not intended as legal advice. Read full disclaimer.
Michael Chesterman
Michael Chesterman September 4, 2022

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