The Australian Constructors Association says the industry is no worse than any other at paying its bills, but the author of a key 2017 report disagrees.
Big construction companies, fighting a federal government commitment to protect payments for subcontractors, say their industry suffers relatively fewer insolvencies than others, and should be treated no differently from other sectors of the economy.account for nearly one-third of the national total, the near-0.5 per cent rate of insolvencies among businesses operating in the sector was less than the 1.2 per cent figure of utility services and the near 1.7 per cent of mining services.
“PBAs distort normal market mechanisms,” the report says. “In effect, PBAs compulsorily acquire a builder’s legal property and reduce that property to the status of trust money.”In the low-margin contracting world, builders routinely use payments received for general cashflow, effectively using subcontractor payment terms as a form of credit. If a builder goes under, that money is lost to the subcontractors owed it.
If they’re trying to put an argument as to why PBAs should not be embraced – that wasn’t what I recommended.The ACA report, which also cited data from accounting platform Xero showing construction payment times were on par with other sectors, said the federal government-commissioned Murray Review inaccurately painted a picture of the sector as having poor payment practices.
“If they’re trying to put an argument as to why PBAs should not be embraced – that wasn’t what I recommended.”
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