Master Electricians Australia (MEA) has called on the Victorian Government to provide protection for sub-contractors in the wake of a string of major building company collapses across the state.

Last week Victorian construction firm Snowdon Developments was ordered to go into liquidation on the grounds of insolvency.

Earlier in the month, Wulfrun Construction and Westernport Constructions entered liquidation while Victorian-based Langford Jones Homes and CBD Developments have also been forced to shut down.

The MEA’s National Advocacy Advisor, Chris Lehmann, said with more collapses likely to follow, building contractors needed the protection of statutory trust accounts to ensure they are not left out of pocket when building companies go bust.

“If we had proper trust accounts for each project, builders would be prevented from switching money between jobs,’’ Mr Lehmann said. “They’d 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 Lehmann said the statutory trust account model introduced by the Queensland Government for major public projects in the state had worked well and is due to be introduced into private works soon.

“We have feedback that It is helping change culture in the industry and having an effect on the old process of builders shuffling money between jobs and trying to cover their expenses until the whole house of cards collapses. Money paid for one job should not be used to top up a deficit elsewhere.

“We understand the legacy caused by fixed-price contracts coupled with sky-rocketing material prices, and we urge customers to engage with their builders in good faith in circumstances such as this.

“However, with statutory trusts we are talking about a fundamental business practice change that will benefit all sectors of the community going forward.”

“Instead of trying to shift blame for failures, it would be good to see major builders getting behind this concept for the whole sector. It would benefit customers and tradies, as well as rewarding those builders who already do the right thing.”

[ENDS]

Chris Lehmann is available for interview via the SAS Group on 07 3221 9222 or 0467 792 013.

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