Labor Party announce policy on cascading trusts

Published: 07 March 2019

Last week, federal Opposition Leader, Bill Shorten, and Shadow Minister for Competition, Dr Andrew Leigh, announced a new Labor Party policy aimed at ensuring payment for subcontractors on government funded projects.

The policy would require the establishment of a cascading statutory trusts so that funds intended for the payment of subcontractors remain quarantined from use for any other purpose and beyond the reach of head contractors.

Statutory trusts have been introduced in various state jurisdictions and was one of the key recommendations contained in Review of Security of Payment Laws Report handed down last year by John Murray AO.

In making the announcement, Mr Shorten said that subcontracting companies often don't 'enjoy all the legal protections of an employee', and that the policy is needed 'to protect our subbies from the poor performance and bad behaviour of some of the bigger builders.'

Labor also announced their intention to create a Tradie Litigation Fund to improve subcontractors' access to justice. The fund would be available for use by ASIC to pursue cases on behalf of subcontractors, although the available pool of $7 million has been criticised as being far too small given the level of poor payment practices and insolvency.

Mr Leigh also signalled Labor's intention to work with state and territory governments to ensure greater security of payment on all government projects across the country.

'We want to look at ways of harmonising the laws. Our medium term agenda is to make sure that for all large projects - public or private, we've got cascading trusts set up in place.'

The AMCA welcomed the announcement and has initiated dialogue with the Labor Party to encourage all levels of governments to work collaboratively to improve the protections for small businesses in the construction industry.