Tradies working on government projects will have their pay cheques preserved if their employer goes bust, under a new policy announced by the Labor Opposition today.
The Tradie Pay Guarantee would require businesses down the supply chain get paid on time including subcontractors.
In a statement released today, Opposition Leader Bill Shorten also announced $7 million for a Tradie Litigation Fund to allow regulators to take "dodgy bosses" to court.
"Not only will this give tradies their day in court, it will also act both as a punishment and deterrent for dodgy directors," the statement read.
"People who deliberately burn their companies should be subject to the full consequences of failing directors’ duties, including being liable for compensation, fines of up to $200,000 or five years behind bars."
The building industry is burdened every year by an estimated $3 billion in unpaid debts and this includes subcontractor payments.
In 2018 alone, 1,642 construction businesses became insolvent, according to the Australian Subcontractors Association (ASA).
Last year the federal government completed a review of Security of Payment Laws in the building and construction industry.
It found laws are different in each state across Australia which has a significant impact on the level of protection afforded to subcontractors.
In its submission to the review, the Air Conditioning and Mechanical Contractors Association (AMCA) called for the introduction of nationally consistent legislation to ensure prompt payment for contractors.
AMCA executive director, Sumit Oberoi, said competition is fierce among contractors.
“The situation is made worse because tenders are often selected based on the lowest price,” he said.
“Security of payment is also a big concern because most subcontractors are small to medium sized enterprises, often they are family-owned businesses.”