I welcome the news that from the start of 2022, businesses that engage in illegal activity can be banned from tendering for State Government projects, or have current contracts cancelled, under a new debarment regime.
The activity that can see them cut out of lucrative Government work ranges from fraud to safety breaches, and importantly also includes poor payment practices such as not paying their subbies or workers what they are owed.
The debarment regime is part of State Government procurement reforms that will be in place next year. Together with the new Security of Payment legislation that comes into force on 1 August 2022, and the national introduction of Company Director IDs to put a stop to the practice of illegal phoenixing, it’s another positive step towards increasing protection for subcontractors and suppliers.
Small businesses in the construction sector represent the largest category of small businesses in WA. When these businesses (including sole traders) work on large projects, they are exposed to significant risks if the head contractor either falls into financial difficulty or is a dodgy business that thrives on poor practice such as not paying tradies.
With the local construction sector in the midst of a building boom, it’s essential that we strive to eliminate poor business practices and unfair competition which ultimately damages small businesses and our economy.
While the new legislation delivers very important protections, I’m also focused on changing the culture of some parts of the industry to ensure that tolerating late payments is no longer part and parcel of working in construction.
Through our experiences at the SBDC, we have learned that slow and late payments to subbies are often red flags for the future collapse of a contractor. Sadly, when a company goes under it’s common that the smallest businesses in the chain take the biggest hit and are unable to recover payment for work done and materials purchased. This can have devastating business and personal impacts.
If you are a subcontractor working in construction who has experienced systemic late payments, you can make a confidential report to the SBDC by calling 1300 110 232 or by completing our contact form (and selecting Subcontractor support as the query type). This allows our agency to build up intelligence about contractors doing the wrong thing and work with our colleagues across Government to act before it’s too late.
To learn more about the debarment regime, read the frequently asked questions provided by the Department of Finance.