Electrical industry peak body Master Electricians Australia (MEA) has called on state governments to administer better protection for small business after subcontractors emerged empty handed from yet another major Australian building firm collapse.

The liquidators’ report into the collapse of Australia’s twelth largest home builder, Porter Davis, in Melbourne last March has revealed that unsecured creditors such as subbies owed $71.55 million for work are unlikely to be paid.

MEA CEO Malcolm Richards said statutory trust accounts regulated and overseen by state governments would ensure that small business owners are not left out of pocket when big businesses go bust.

“The sweat of too many mum and dad businesses has been used to prop up failing construction companies for too long in this country,’’ Mr Richards said.

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“This is despite the fact that almost a decade ago the Murray Inquiry recommended establishing trust accounts for major construction projects to ensure that small business could not b used as proxy cash flow by the big construction companies,” he said.

“With a statutory trust account administered by a third party, major companies would be forced to plan their cash flow and expenses better, and sub-contractors would face less risk from building company collapses.

“Sub-contractors should not have to bear the brunt of poor planning and mismanagement by the building contractors.’’

Mr Richards said the statutory trust account model introduced by the Queensland Government for major public projects in the state was working well but it needed to be introduced into private works immediately.

“We are facing an economy that is spiralling,’’ Mr Richards said. “These collapses will only hasten the slowdown. If a proper trust account properly administered had been in place with Porter Davis, subcontractors would be able to have been paid for their unpaid work.’

“This is a sensible protection that is long overdue.’’

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Malcolm Richards is available for media interviews.  Please contact the SAS Group on 07 3221 9222 or 0467 792 013