The New South Wales Government has released its official response to the Inquiry Into Construction Industry Insolvency.

The Inquiry was initiated by State Minister for Finance, Greg Pearce, after a spate of building company collapses left thousands of subcontractors more than $1 billion out of pocket.

“These reforms are aimed at providing better protections for builders, subcontractors and suppliers working in the industry,” Mr Pearce said.

“The Inquiry received numerous submissions from builders claiming their payments are often withheld or retention sums misused by head contractors yet they are the ones that suffer.

Key reforms include:

  • Establishing a cash retention trust scheme for subcontractors.
  • Introducing prompt payment provisions to enhance cash flow and address the serious issue of delayed payment to subcontractors and head contractors.
  • Enacting a legal requirement for written statements by head contractors to ensure all subcontractors are paid and allowing authorised officers to investigate and prosecute offences.
  • Implementing a trial of Project Bank Accounts on Government construction contracts where Government will directly pay subcontractors as well as revamped and more frequent financial assessments of contractors.
  • Establishing an Industry Advisory Taskforce to develop an education program targeting subcontractors to improve business and financial management skills in the industry.

The full Collins Report recommendations can be found at: http://www.services.nsw.gov.au/sites/default/files/pdfs/IICII-final-report.pdf