08/06/2016 - 14:48

Tighter scrutiny needed on govt projects: report

08/06/2016 - 14:48


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More checks and balances are needed to ensure sub-contractors on government jobs are getting paid, according to a report released today by Auditor-General Colin Murphy.

Claims of non-payment by subcontractors at Perth Children's Hospital have come under close scrutiny. Photo: Attila Csaszar

More checks and balances are needed to ensure sub-contractors on government jobs are getting paid, according to a report released today by auditor general Colin Murphy.

The Office of the Auditor General was called in to investigate claims of non-payment by sub-contractors providing works for lead contractor John Holland on the $1.2 billion Perth Children’s Hospital in Nedlands.

Under current arrangements, contractors that win government jobs are required to provide a monthly statutory declaration stating that all sub-contractors have been paid, while also keeping the Department of Treasury informed on any significant events on the project.

The Office of the Auditor General tested whether John Holland was up to date on its payments for the period between June 30 and August 31 last year, with the result being that four invoices that were overdue in June were still not paid in August.

An independent consultant appointed in October 2015 found that John Holland’s creditor listings were not accurate, with some invoices left out of the reports.

The auditor general’s report found that the Department of Treasury’s monitoring of payment disputes was consistent with the contract terms, but said processes for monitoring payments needed to be tightened.

“We saw no evidence during the review that the Department of Treasury’s oversight of contractor payments to its subcontractors is not in accordance with contract terms,” the report said.

"However, the contract terms do not ensure that Treasury is fully informed on the status of payment disputes or that the contractor’s statutory declarations are supported by reliable information."

Also today, the auditor general said Treasurer Mike Nahan’s non-disclosure of the details and values of disputes between John Holland and its sub-contractors to parliament was reasonable based on confidentiality agreements contained in the contracts.

Opposition spokesperson for commerce and small business, Kate Doust, said the auditor general’s report justified Labor’s concerns over the handling of the non-payment disputes.

“It is clear that the Liberal-National government approach was not good enough and that sub-contractors need to be supported,” she said.

“We have seen tragedy and massive anxiety caused in part by a government that was happy to look the other way and ignore problems.

“It should not be too much to ask – whether you are an individual worker or a sub-contracting company – to get paid within a reasonable time.”

The state government today said the Perth Children’s Hospital would open its doors to its first patients in late October, with commissioning to be staged over two months.

The hospital, which is being built by John Holland, has been delayed by more than a year and has had a number of other problems during construction, separate from the claims of non-payment.

The 298-bed hospital in Nedlands will treat its first patient on October 24, Premier Colin Barnett said, while selected day surgery would commence from November 7.

“The final patient move from Princess Margaret Hospital for Children is planned for November 20,” he said.

“Perth Children’s Hospital will be a world-class paediatric centre with modern facilities, advanced technologies and new ways of working, which will bring enormous benefits for patients, families and staff.

“Although commissioning such an advanced hospital is a challenging task, the government has delivered many new hospitals in recent years and that considerable experience is being used to ensure the transition is as smooth as possible.”

Mr Barnett said PCH had been a very complex project, but the result was a world-class facility the state could be proud of.

“The hospital is on track for building handover in August, however many areas such as intensive care and operating theatres are already being accessed by PCH commissioning team staff,” he said.

Health Minister John Day said it was important to schedule key commissioning target dates.

“This ensures appropriate and accurate planning for the transition period because all equipment, systems and treatment processes must be repeatedly tested before we begin treating our young patients at the new facility,” he said.

“The hospital opening will be a tremendous achievement, with PCH forming the centre of a network of new and expanded facilities for children and families that we have built across the state.

“We will not compromise safety, and the hospital will only accept patients on the planned dates if construction and commissioning activities are complete and the move can be done safely.”


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