Leave a light on for Builders

Michael Chesterman August 30, 2018
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The 1989 hit by Belinda Carlisle comes to mind as the new anthem for builders left in the dark by SOP reform in Queensland.

While I have raised many implementation concerns in previous articles on the Building Industry Fairness (Security of Payment) Act 2017 (BIFA), it is apparent that the Government is fully committed to attempting to address the scourge of late or non payment of subcontractors by builders through such legislative means.

It is evident that the Government has also successfully sold BIFA to subcontractors as the solution to payment problems in the industry. For example, I regularly note reference to Project Bank Accounts (PBA’s) by subcontractors commenting in the media on current non payment problems impacting them.

However, an issue of concern in this regard is that in many such instances the work being done by these subcontractors would not be captured by PBA’s because of their limited jurisdictional reach, a fact I pointed out in an article entitled ‘Project Bank Accounts are happening but will your job have one?‘.

Another issue that could be best summed up by the saying “the devil is in the detail” is that a lot of crucial details are yet to be disclosed in relation to the operations of BIFA. In an article dated 18 July 2018 entitled ‘SOP questions you should be asking‘, I posed 9 questions that contractors should be asking in relation to BIFA. As of today contractors have not been provided with answers to any of these questions.

The above mentioned article has links to a number of other articles I have done in relation to BIFA so I would encourage readers to ‘take a deep dive’ and find out all the relevant information in relation to these very important industry issues.

However, I will highlight one outstanding issue that I believe the industry deserves to urgently have clarity on, namely what will be the new Minimum Financial Requirements for Contractor Licensing?

I first drew attention to the Government’s intentions in this regard in an article almost 12 months ago entitledCrystal-balling the Minimum Financial Requirements for Contractor Licensing’.

I followed that up with another article dated 9 March 2018 entitled The new min is the old max? where I speculated that the current, tougher financial requirements imposed on contractors wanting to do Government work may become the new contractor financial requirements for licensing.

In a press release dated 12 June 2018 the Minister for Housing and Public Works, the Hon Mick de Brenni stated:

“an approved regulation for Minimum Financial Requirements will operate from 1 January 2019”.

My thoughts

All contractors deserve to have an opportunity to provide feedback to the Government on the new Minimum Financial Requirements for Licensing and all other BIFA requirements not yet fully revealed, and also sufficient time to make any necessary changes to their businesses operations as a result of their introduction.

While others may disagree, it is my experience that payment problems for subcontractors in the building and construction industry is best summed up by the “80/20” rule. A minority of builders, approximately 20%, either fail to pay subcontractors at all or have a propensity on occasions to invent bogus reasons to delay payment to subcontractors.

On the other hand the vast majority of builders, approximately 80%, never partake in such insidious activities. However, regardless of this fact, as a result of BIFA they are going to have to comply with new measures such as the introduction of Project Bank Accounts and tougher Financial Requirements for Licensing.

In my opinion the Government must engage with these builders and provide them with comprehensive details as to how BIFA will affect their daily business operations. These builders should be given an opportunity to have a respectful conversation with Government on a package of reforms so substantial in nature that I believe will cause many to rethink their future in the industry.

In an article entitled ‘I have just about had enough, I am getting out of the building game’, a builder friend of mine expressed frustration with all aspects of BIFA. He stated:

“We have a successful business model and don’t need any government of any persuasion to mandate some sort of acceptable behaviour that we must adopt. The industry needs regulation but it should be focused on those contractors who do the wrong thing. Businesses like us who have a demonstrated record of doing the right thing over a long period of time should not be treated the same as these people.”

I believe that this would be a similar view of many decent and law abiding builders in the industry and that the onus is on the Government to allay their concerns.

If you feel like Belinda, in the dark, then let’s have a coffee and talk about what we can do together to improve your business for the better. Contact michael@helix.legal.

Not intended as legal advice. Read full disclaimer.
Michael Chesterman August 30, 2018

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