NECA calls for contractor protection

NECA is calling on the Victorian Government to protect electrical and communications contractors caught up in the alarming number of insolvencies that have been occurring in the state’s construction industry recently.

NECA wants the Victorian Government to hold an inquiry into the rising level of insolvencies in the state similar to the one currently being conducted by the NSW Government or at the very least to commit to giving genuine consideration to the recommendations coming out of the NSW inquiry and to work with industry to address the problem.

In letters to the Victorian Government’s Finance Minister Robert Clark and Planning Minister Matthew Guy, NECA Victoria Executive Director Philip Green warns of the damage construction industry insolvencies are having on electricians and other subcontractors in Victoria.

“These insolvencies have a devastating impact on subcontractors within the construction industry, the majority of whom are small family owned businesses,” said Green.

“Often the insolvency of a head contractor will cause the insolvency of a number of its subcontractors. Unfortunately, the reported insolvency statistics are only one manifestation of the ongoing fragility of the construction industry.

“Our members are in contact with us on almost a daily basis over payment issues and disputes - these range from slow payers to underpayments through to non-payment of such things as final progress payments and retentions.”

Green said that the reported number of insolvencies in Victoria was second only to NSW and that it was now time for the Victorian Government to act.

“While there have been some high-profile cases, such as the collapse of the Hastie Group and of the consortium building the Ararat Prison, there have been numerous other insolvencies within the Victorian construction industry,” he said.

“The impact on many Victorians should not be understated. NECA is therefore calling on the Victorian Government to launch a similar inquiry to the one currently underway in NSW. At the very least we are seeking a commitment from the government that it will engage with the industry over the issues and be prepared to give genuine consideration to implementing the recommendations that come out of the NSW inquiry.”

In NSW, NECA, in a submission to the inquiry there, is calling for the introduction of a number of measures to protect subcontractors including legislation that requires clients or head contractors to establish retention payment trust accounts to safeguard these payments to subcontractors in the event of insolvency and elevating the status of subcontractors to preferred creditors so that they are in the same position as employees of businesses that become insolvent.