❓ Opposition questions the Finance Minister about unpaid subcontractors on government projects following the insolvency of CPD Group Pty Ltd, pressing for details on the number and value of outstanding payments and the effectiveness of existing protections.
AnsweredQoN 414Legislative Assembly
QuestionView source ↗
CPD GROUP
PTY LTD — INSOLVENCY
414. Ms
R. SAFFIOTI to the Minister for Finance:
I refer to systemic issues with the non-payment of
subcontractors on government projects and the minister's answer
yesterday that the value of payments to subcontractors of CPD Group are still
being finalised.
(1) Has the
minister been briefed on this issue and exactly how many subcontractors are
owed payments from CPD and what is the current estimated value of those
payments?
(2) Given that
the government committed in March 2013 to implement all recommendations in the
final report of the construction subcontractor investigation by the Small
Business Commissioner, why are these problems still occurring three years
later?
PTY LTD — INSOLVENCY
414. Ms
R. SAFFIOTI to the Minister for Finance:
I refer to systemic issues with the non-payment of
subcontractors on government projects and the minister's answer
yesterday that the value of payments to subcontractors of CPD Group are still
being finalised.
(1) Has the
minister been briefed on this issue and exactly how many subcontractors are
owed payments from CPD and what is the current estimated value of those
payments?
(2) Given that
the government committed in March 2013 to implement all recommendations in the
final report of the construction subcontractor investigation by the Small
Business Commissioner, why are these problems still occurring three years
later?
AnswerView source ↗
(1)–(2)
I thank the member for the question. There
were four questions, so I will try to remember all of them. The first
one —
Ms R. Saffioti :
Have you been briefed on the issue?
Mr W.R. MARMION : I
had been briefed quite some time ago—some weeks ago, in fact. The
member has the answers to the questions in the other house. When the department
became aware, it ceased any interaction with the company involved. We are
obviously aware. As I mentioned yesterday, there is no contractual relationship
between Building Management —
Ms R. Saffioti : I understand
that.
Mr W.R. MARMION : I
am answering the question.
There is no contractual relationship between Building
Management and Works and the subcontractor, so there is no immediate
availability or access to ascertain those numbers because there is no
contractual relationship. The contractual relationship is with the contractor.
It is obviously now in liquidation and is going through a process
under commonwealth powers. I have received advice that in situations like this,
which the previous government would have received when it was in the same
situation, once a company is in liquidation, the liquidator has to distribute
the assets that are available in a systematic way under the law. In terms of
the last question —
Ms R. Saffioti : No—what
is the value of the contractors and how many subcontractors?
The SPEAKER : Member
for West Swan!
Mr W.R. MARMION :
The member has this information. Seventeen contracts had not been completed at
the time.
Ms R. Saffioti : No—subcontractors;
how many subcontractors?
Mr W.R. MARMION : I
just told the member that we do not have the information on subcontractors
because we have no relationship with them. We only get that information if a subcontractor
rings up and tells us.
Several members interjected.
The SPEAKER :
Through the Chair, please. Answer the question as best you can and let us move
on.
Mr W.R. MARMION :
Thank you, Mr Speaker. There were four questions, not one. What happens when
subcontractors are in this —
Mr P. Papalia interjected.
The
SPEAKER : Member for Warnbro, I call you to order for the second time.
Mr
W.R. MARMION : There are currently 17 contracts that have not reached
practical completion. There are obviously a number of subcontractors under
those 17 contracts. For every one of those 17 contracts, we will have to get
information, and then the member will have that information. We do not have
that information at the moment so I cannot categorically tell the member for
West Swan how many there are and what the quantum value is. Even if someone
said they had an issue, the process would be we would have to verify whether
that is a legitimate claim.
Another question was: how do we
protect subcontractors? There have been a number of recommendations in the
past. Apart from assessing their economic capability at the time the contract
is awarded, the last contract awarded was way back last year, I think in August;
so we have not awarded a contract this financial year. The last time we awarded
a contract to this particular contractor, which was last year, the assessment
was that they were solvent. We had no information to say they were trading
while insolvent.
Getting back to the final question
about what we are doing to try to protect subcontractors, we are trialling
project bank accounts at the moment to see if we can put a certain amount of
money in a trust account. We are talking with industry about this. They are not
very keen on that particular aspect. One possibility is that a percentage of
project payments be put into a trust account. If a company goes into
liquidation or becomes insolvent, there would be money available to be distributed
through a process to subcontractors. We are still looking at that. That is
probably the best thing.
We are also looking at the actual
construction contractors at the same time. Is there a clause we can put in that
protects subcontractors? I am also seeking legal advice on that. That is where
we are at the moment. It is a very difficult situation to solve because there
is no contractual relationship with subcontractors, but indeed it is a problem.
Mr
F.M. Logan : It is your government's problem!
Mr
W.R. MARMION : It was also the previous government's problem.
I thank the member for the question. There
were four questions, so I will try to remember all of them. The first
one —
Ms R. Saffioti :
Have you been briefed on the issue?
Mr W.R. MARMION : I
had been briefed quite some time ago—some weeks ago, in fact. The
member has the answers to the questions in the other house. When the department
became aware, it ceased any interaction with the company involved. We are
obviously aware. As I mentioned yesterday, there is no contractual relationship
between Building Management —
Ms R. Saffioti : I understand
that.
Mr W.R. MARMION : I
am answering the question.
There is no contractual relationship between Building
Management and Works and the subcontractor, so there is no immediate
availability or access to ascertain those numbers because there is no
contractual relationship. The contractual relationship is with the contractor.
It is obviously now in liquidation and is going through a process
under commonwealth powers. I have received advice that in situations like this,
which the previous government would have received when it was in the same
situation, once a company is in liquidation, the liquidator has to distribute
the assets that are available in a systematic way under the law. In terms of
the last question —
Ms R. Saffioti : No—what
is the value of the contractors and how many subcontractors?
The SPEAKER : Member
for West Swan!
Mr W.R. MARMION :
The member has this information. Seventeen contracts had not been completed at
the time.
Ms R. Saffioti : No—subcontractors;
how many subcontractors?
Mr W.R. MARMION : I
just told the member that we do not have the information on subcontractors
because we have no relationship with them. We only get that information if a subcontractor
rings up and tells us.
Several members interjected.
The SPEAKER :
Through the Chair, please. Answer the question as best you can and let us move
on.
Mr W.R. MARMION :
Thank you, Mr Speaker. There were four questions, not one. What happens when
subcontractors are in this —
Mr P. Papalia interjected.
The
SPEAKER : Member for Warnbro, I call you to order for the second time.
Mr
W.R. MARMION : There are currently 17 contracts that have not reached
practical completion. There are obviously a number of subcontractors under
those 17 contracts. For every one of those 17 contracts, we will have to get
information, and then the member will have that information. We do not have
that information at the moment so I cannot categorically tell the member for
West Swan how many there are and what the quantum value is. Even if someone
said they had an issue, the process would be we would have to verify whether
that is a legitimate claim.
Another question was: how do we
protect subcontractors? There have been a number of recommendations in the
past. Apart from assessing their economic capability at the time the contract
is awarded, the last contract awarded was way back last year, I think in August;
so we have not awarded a contract this financial year. The last time we awarded
a contract to this particular contractor, which was last year, the assessment
was that they were solvent. We had no information to say they were trading
while insolvent.
Getting back to the final question
about what we are doing to try to protect subcontractors, we are trialling
project bank accounts at the moment to see if we can put a certain amount of
money in a trust account. We are talking with industry about this. They are not
very keen on that particular aspect. One possibility is that a percentage of
project payments be put into a trust account. If a company goes into
liquidation or becomes insolvent, there would be money available to be distributed
through a process to subcontractors. We are still looking at that. That is
probably the best thing.
We are also looking at the actual
construction contractors at the same time. Is there a clause we can put in that
protects subcontractors? I am also seeking legal advice on that. That is where
we are at the moment. It is a very difficult situation to solve because there
is no contractual relationship with subcontractors, but indeed it is a problem.
Mr
F.M. Logan : It is your government's problem!
Mr
W.R. MARMION : It was also the previous government's problem.
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