The State Government has announced a major review of payment practices in the building industry.
Works and Services Minister Rob Johnson has established a Security of Payment Taskforce to examine the payment of subcontractors and suppliers.
He said the taskforce would recommend options to strengthen the financial stability of subcontractors and suppliers.
“The building and construction industry contributes significantly to the State’s economy and the core of the industry is comprised of specialist subcontractors ranging in size from single tradespeople to substantial companies,” Mr Johnson said.
“The future of the industry and the interests of the community are heavily dependent on the viability and financial stability of these businesses.”
Mr Johnson said the success of subcontractors and suppliers was directly linked to the promptness and certainty of payment.
He said building owners or head contractors who delayed payment at the beginning of the contracting chain could trigger severe problems for businesses at the end of the chain.
However, Mr Johnson said ensuring security of payment without adversely affecting the flexibility and efficiency of the industry was not an easy task.
Investigations in both Australia and overseas have identified a number of possible approaches.
New South Wales and Queensland, for example, have adopted different legislative approaches and the Victorian Government recently established a taskforce to review security of payment.
“In Western Australia, we are currently reviewing building industry legislation under the National Competition Agreement,” Mr Johnson said.
“Cabinet has approved the drafting of a new Building Act to cover building standards and legal liability in the industry.
“It is now timely to review strategies for security of payment so that appropriate provisions can be integrated into the new and reformed legislative environment.”
Mr Johnson said Joondalup MLA Chris Baker would chair the Security of Payment Taskforce, which also featured representation from key industry groups and Government agencies.
The taskforce will consult widely and report by March, 2001.
Fran Hodge (08) 9215 4800