Pindan won't be the last: Catania

Dozens of subcontractors and employees affected by the collapse of construction giant Pindan have rallied on the steps of Parliament House this afternoon, amid calls for stronger protections in the state’s Building and Construction Industry Bill (Security of Payments Bill) 2021.

The government introduced the new Bill to improve security of payment across the state’s construction industry a week after three Pindan Group entities were placed in administration, leaving hundreds of subcontractors and trade suppliers involved in its 68 active projects out of pocket.

The Bill is designed to complement the use of project bank accounts on government projects and includes a mandatory retention scheme, a rapid dispute resolution process, provisions for monthly progress payments and addresses 'phoenixing' activity.

But the state’s construction union and the opposition have argued that the Bill doesn’t go far enough, with no plans to introduce cascading statutory trusts, despite it having been a recommendation of an independent review of the security of payments for subcontractors in WA’s building and construction industry.

Cascading statutory trusts effectively safeguard money owed to subcontractors in the case of an insolvency.

During a press conference held after the rally, opposition commerce spokesperson Vince Catania said the government needed to honour its promise and prevent other subcontractors from suffering the same fate.

Surrounded by subcontractors that had borne the brunt of the collapse, he warned that Pindan would not be the last building company to go under in WA.

“We have people here who have lost tens of thousands of dollars and, in some cases, hundreds of thousands of dollars because of the inaction of the McGowan Labor government," Mr Catania said.

“Now we need the government to act and do so by ensuring the legislation is adequate to protect subcontractors.

“The defense of not putting cascading statutory trusts into the Bill was that these companies need to have cash flow. 

“What about the cash flow of these subcontractors? They’ve become the bank.

“They’ve become the line of credit for these companies."

Mr Catania questioned the premier's decision against placing cascading statutory trusts in a Bill that was designed to protect subcontractors.

Project Pay founder Louise Stewart echoed those sentiments, and demanded an end to what she described as a “vicious, ugly cycle” in the state’s construction industry.

She said John Fiocco, the barrister who led the independent review in 2018, had been very clear about the need to implement and legislate cascading statutory trusts.

“We were promised by Attorney-General John Quigley, the lawmaker of this state, that he would legislate these payment protections," she said.

“Yet now we find legislation before the parliament that does not have them in there.

“Subcontractors don’t want this to keep happening every time a building company collapses.

“These are good, hardworking people - they get up at the crack of dawn every day, they work hard, they employ people, and they just want to get paid for that work.

“At the moment, large contractors are getting paid for that work, they’re not managing the money effectively and they’re not passing the payment on.

“We’ve heard a lot about the 90 or so Pindan employees, and no-one wants to see anyone lose their jobs, but what about the subcontractors who have their homes on the line? What about their employees?

“This is an ugly, vicious cycle that the government has done a thorough review on, they’ve been talking about payment protection for three years, they just need to do it.

“Stopping this from happening requires a minor amendment to the legislation.”

Lands Minister Tony Buti rebutted claims that subcontractors working on several of Pindan’s state government projects had not been paid, confirming that many of those projects had project bank accounts and that payments had been made by the Department of Communities and the Department of Finance as recently as yesterday.

He said the state government had done what it could to bring forward the legislation as a matter of urgency and defended the Bill, saying it included far reaching amendments that would shield subcontractors.

“Obviously the Pindan situation is very distressing and we have people here who are suffering as a result of that,” Mr Buti said.

“Legislation has been introduced as a matter of urgency, it’s in the upper house and should proceed as quickly as possible. 

“It is good legislation that includes far reaching amendments that will ensure payments are made in a timely manner; it has a retention trust and better dispute resolution mechanisms.”

The rally comes just days after Mr Catania took to parliament to question the efficiency of the state government’s financial due diligence checks, producing a letter it had been sent in August last year raising concerns about Pindan’s financial status.

He accused the state government of failing to enforce the appropriate checks and balances and deliver legislation to protect subcontractors, questioning whether the concerns had led to an investigation.

The robust debate between Mr Catania and Housing Minister John Carey was witnessed by two subcontractors in the public gallery, including the director of Canning Vale roofing contractor Roofeze, Craig Storer, who is allegedly waiting on $70,000 from Pindan after having previously lost $80,000 in the Cooper and Oxley collapse.

Late last month, Business News reported that Pindan had passed three tiers of financial due diligence checks with the Department of Finance as recently as December last year.

Business News revealed the Singaporean-owned group was facing financial trouble in mid-April, 24 hours before EY were appointed administrators of the Pindan Group entities.

Business News is a registered creditor of Pindan in relation to a small advertising contract.