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23 July 2018

Subcontractors on HMAS Albatross project need to be paid

The Australian Small Business and Family Enterprise Ombudsman, Kate Carnell, welcomed the NSW Government’s leadership in resolving outstanding payments to subcontractors caught in the Pacific Highway project, with around $7.3 million being owed by a contractor that went into administration.

“Unfortunately this practice is endemic in our building and construction industry, and a government funded project is no guarantee that a subcontractor will be paid,” Ms Carnell said.

“Subcontractors involved in a project at HMAS Albatross, an Australian government funded venture in Nowra, are in the same position in that they have not been paid.

“This issue was raised with us by local Federal MP, Ann Sudmalis, who has been working hard for the local subcontractors.

“In this case, the contractor was in financial trouble prior to signing the project contract and was possibly trading insolvent at the time.

“Within a few months of signing the contract, the contractor went into voluntary administration, leaving its subcontractors owed significant monies for work completed.

“We know the construction industry in Australia has a track record of poor payment practices and insolvency.

“We reiterate our support for the recommendation in the Murray Review of Security of Payment Laws, that a statutory trust be set up for construction projects over $1 million, so money is quarantined to pay subcontractors what they are owed if a contractor becomes insolvent.

“However this does not fix the Nowra subcontractors being paid on the HMAS Albatross project. We have conducted an investigation and submitted a report, and held meetings with senior personnel at the Department of Defence recommending the outstanding payments for these subcontractors is dealt with immediately.”