Wednesday, 10 September 2025

Environment and Planning Committee

Employers and Contractors Who Refuse to Pay Their Subcontractors for Completed Works

Ella GEORGE (Lara) (10:26): It is a pleasure to rise today to speak on the Legislative Assembly Environment and Planning Committee’s report on its inquiry into employers and contractors who refuse to pay their subcontractors for completed works. Unfortunately I can take no credit for this report, as the member for Warrandyte pointed out, but I would like to thank the chair, the member for Wendouree; the deputy chair, the member for Morwell; along with committee members and the secretariat for their hard work in conducting this inquiry and compiling this report. I would also like to take this opportunity to thank all those who attended hearings or made a submission to this inquiry. Everyone in this place who works on committees understands the importance of having a thorough evidence base and the value of lived experience when we are working on inquiries such as this that impact real people. So to everyone who made a submission about their own experiences of poor payment practices within this sector, I thank you.

Across the state we know that the cost-of-living pressures are increasingly falling on our constituents, their families and wider communities, and in this place we hold the power to strengthen protections for workers to be paid on time and appropriately, to feed their families and to pay their bills on time. In fact this morning we saw legislation introduced: the Building Legislation Amendment (Fairer Payments on Jobsites and Other Matters) Bill 2025 I have not had an opportunity to look at this legislation yet, but I look forward to reading it over the coming weeks and making a contribution in this place. I am sure my colleagues on this side of the house are also looking forward to making contributions on it in the coming weeks.

Unfortunately late payment and non-payment of subcontractors are recurring issues within the construction industry, an important industry that we all know keeps Victoria running. This inquiry found that poor payment practices are all too common within construction, with subcontractors experiencing non-payment, late payment, incomplete payment or long payment terms, and our most vulnerable workers within the industry are bearing the brunt force of this. Sadly, migrant workers are at high risk of exposure to poor payment practices as they make up a significant portion of finishing trades such as plastering, painting and tiling. As such, these workers are more susceptible to late payment or protracted payment terms as the final employees within the hierarchy to be paid for their contributions.

Notably the inquiry found that a major contributor to poor payment practice lies within the hierarchical nature of the industry, with agencies and developers at the top. They then engage with head contractors, who then engage subcontractors. Payment flows down this structure, but it can be delayed at any level if administrative issues arise or when funds are misused or repurposed by other businesses. These funds that are earmarked for the payment of subcontractors are often put towards other business operations or projects. Concerningly, contractors at the head of the supply chain have superior bargaining power in awarding contracts, which means that they have the power to dictate unfavourable terms or make late payments to their subcontractors. We need to further protect our subcontractors, who are too often overlooked at the end of the supply chain, to mitigate these poor practices and protect construction workers at every level.

What this inquiry has found is that national harmonisation and uniformity of payment security laws is essential for construction businesses to operate fairly across all jurisdictions – yet the most recent legislation is from 2002. This legislation, the Building and Construction Industry Security of Payment Act 2002, provides subcontractors with the right to claim regular payments for their work and establishes an adjudication process to resolve payment disputes quickly. But as I said, this act is over 20 years old and should be updated to ensure that workers and subcontractors are accurately represented in the work that they are doing now in the current economy. I am so pleased that we are doing that by just this morning introducing legislation that will see rights for subcontractors protected and strengthened.

Importantly, this inquiry recommended strengthening the statutory right to claim payment through legislative reform. I would like to commend the committee on the strong recommendations that they have made, starting with their recommendation on reviewing construction best practice behaviours and engaging in consultation with stakeholders to inform future procurement practices within the industry. These are excellent and strong recommendations. I look forward to seeing the work progress beyond the inquiry. I congratulate the minister for introducing legislation this morning, and I am looking forward to making a contribution on this legislation, as I know my colleagues on this side of the house will also be in the coming weeks.