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From the Desk of the Executive Director

Ken Phillips is co-founder and Executive Director of Independent Contractors of Australia. He is a published authority on independent contractor issues and directs research on related commercial and trade practices issues. Through his numerous articles in newspapers and think-tank and academic journals, Ken is known for approaching issues from outside normal perspectives and is frequently sought out for media comment.

At last a fair deal for hard-working subbies

Saturday, December 10, 2016

In the commercial construction sector the people who always get it in the neck are the small subcontractors — the subbies — the people who actually do the real work on the ground.

This newspaper, The West Australian, has run a long and deserved campaign demanding action. But where’s the State Government response?

Well, finally, we have seen some action.

On Monday the Barnett Government announced a new Construction Code. It’s targeted specifically to protect small business construction subcontractors from unfair contracts and from non or underpayment by big builders. It is intelligent policy because of a neat trigger.

Normally governments try to fix things through laws involving piles of paperwork, bureaucracies and the courts. Lots of expensive lawyers and it is very slow.

This time the Barnett Government is using its commercial power to defend subbies.

The smart trigger is that if big construction firms mistreat subcontractors, the firms will be denied access to State Government construction work. That should get the big construction bosses focused.

In the construction sector normally about 40 per cent of work is government.

The Barnett Government has announced it is going to sell 51 per cent of Western Power and after paying off debt will have about $3 billion to spend on new schools, hospitals, rail and roads. That’s a big bucket of money and big construction firms will want “in”.

But firms will need to demonstrate fair dealings with subbies if they want the work.

There will be teeth to this because Mr Barnett has extended the powers of the West Australian Small Business Commissioner to investigate and mediate on unfair treatment against subcontractors. If firms refuse to be fair, the commissioner can report to the new code compliance unit and firms risk being denied the ability to tender or contract for State Government work.

Construction firms also have to show fair dealings in all their private sector work to be eligible for that work.

What is also important is that the Small Business Commissioner will be able to carry out investigations but will protect the identity of subbies where necessary.

Construction subcontractors are routinely subjected to bullying and harassment by unions.

Head contractors do deals with construction unions where costs and risks are pushed down to the subcontractor. It has been claimed the big construction contractors pay unions to keep subbies under control. It’s a form of anti-competitive collusion between big unions and big construction firms. This is a big claim to make but this industry reality was exposed in last year’s royal commission into union corruption.

The new WA code has provisions that ban head contractors colluding with unions. For example, head contractors cannot force subcontractors to have union agreements. If they do, the head contractor will be blocked from doing State Government work.

The Barnett Government has also recently introduced security of payments laws for subcontractors. This is also tied to the construction code. Failure to pay subbies risks denial of State Government work.

What the Barnett Government has put together is an important process for addressing the power imbalance between big business, their big union “partners” and small business subcontractors.

WA construction subbies should check out their new rights with the WA Small Business Commissioner.

The code starts on January 1.


[First published in The West Australian, December 2016]

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