12 September 2024
Just shy of 45 days until Queenslanders head to the polls, the building and construction industry is spotlighting the facts on red tape slowing its progress on the housing crisis.
Master Builders launched its Home Truths 2024 state election campaign back in May, calling on all sides of politics to better support the sector to grow the state for the good of all.
Among the five solutions put forward in the plan for progress is the scrapping of Project Trust Accounts (PTAs), which put simply, do not work.
“As we head to the polls, we need all political parties to commit to working smarter to deliver the homes and community facilities our state needs,” Master Builders CEO Paul Bidwell said.
“Getting rid of PTAs is a step that could be taken, now, to provide immediate relief. They come at a huge administrative cost, and don’t help subcontractors get paid if builders end up insolvent.
“In recent times, we’ve seen builders including St Hilliers Contracting Pty Ltd, PBS Building (Qld) Pty Ltd, and GCB Constructions (Qld) Pty Ltd all go into liquidation.
“Each of them was operating Project Trust Accounts – but Master Builders is not aware of any subcontractors caught up in these financial failures who were paid ‘in full, on time, every time,’ as promised by government when they imposed project trusts on our industry.
“In addition, to operate the accounts builders need new special purpose accounting software. But seven years on, there are still no commercially available platforms that can tackle the complex nature of the PTA system, meaning it’s impossible for builders to meet the legislated accounting reporting requirements.
“If PTAs are rolled out to private projects over $3 million in March 2025, and then $1 million in October as planned, smaller businesses will be forced into meeting the requirements. This could have the effect of forcing more builders out of the industry, and leaving more subcontractors exposed.
“We’re already up against a labour shortage, a wave of regulatory change, and construction costs that have blown out by around 40 per cent in the last three years – not to mention the rising cost of living.”
Experienced builder and business owner Richard Field has had first-hand experience with PTAs and said they created unnecessary stress through a mountain of paperwork and time-wasting.
“Having won a project, at the critical moment where we are trying to sign up subcontractors, apply resources and get on with the job, we’re distracted with this bureaucratic paperwork for opening up a bank account and setting up the accounting,” Richard said.
“We then have to write to the government to tell them we've opened an account, as well as telling the client and the subbies – and that process can take up to three weeks. During that time, if there are fast deposits to be paid to engage a subcontractor with the work to commence or for some critical activity, we're not lawfully able to do that – so we have to delay projects.
“Having done all that, at the end of the project, we have to close the account and write a letter and tell the QBCC and the client to advise them. For a builder that wants to get on and do the work that is a good going concern, there’s no benefit whatsoever.
“We’re seven-and-a-half years into this journey, and the state government’s decision 12 months ago to prolong this cascading into industry at $3 million and $1 million next year – after the election – is an example of them acknowledging that it's still not working.
“If PTAs expand, there will be a significant chorus of upheaval in the industry and complaints from builders and subcontractors. The government will be exposed to the significance of the problem because there will be so many more people that are caught up in this legislative red tape that will be coming forward to the government to ask, why have you done this?
“Economic conditions will remain tough in the next year, and we just need government to admit the PTA experiment has gone on too long, it hasn't worked, and it's time to scrap them all together.”
Mr Bidwell said there were also other levers that could be pulled right now to enact change.
“Removing the productivity-sapping elements of the government’s own Best Practice Industry Conditions (BPIC), plus rolling back costly red tape including costly and unnecessary changes to the National Construction Code 2022, getting the Queensland Building and Construction Commission to work better with and for us, and implementing a mandatory Queensland Housing Code, are all crucial.”
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