Subcontractors and staff owed millions of dollars by a collapsed construction company are urging reform on insurance legislation to prevent them from missing out on pay.
Imagine Building Concepts Pty Ltd entered voluntary administration in October, owing more than $6.56 million to creditors and $114,000 in wage-related expenses.
Imagine's construction manager, Dion Young, said his team of eight knew nothing of the collapse until they were contacted by the administrator, RSM Australia.
Mr Young said the directors of Imagine Building and a related company, Imagine Management Pty Ltd, had been like family before the collapse.
He had gone back on the tools since to pay bills while looking for another construction management role.
"There are not many jobs available at the moment. There may be mid-next year, but not at the moment," Mr Young said.
"Most of us are only getting jobs now [in November]. It's not only that we are losing what we were [due from Imagine], there's another month's salary you miss out on too," he said.
This had been particularly hard for staff with young children or who were new to the industry.
"A lot of the blokes like me are just waiting, and you have to earn a living while you wait," he said.
Mr Young's team was hoping for payouts through the federal government's fair entitlements guarantee scheme, but a claim could not be made unless Imagine was wound up and liquidation concluded.
Mr Young said he did not expect to be able to lodge a claim until the next financial year.
One subcontractor of Imagine Building, who did not wish to be named, had lost hope in getting any money back for this work.
"All the money is gone. There is no money," he said. "There is no point in chasing it."
He was owed more than $500,000 for work completed for Imagine Building.
The subcontractor said he was now hesitant to work with any builder he did not already have a personal relationship with, given the state of the industry.
"I am really limiting who I work with," he said. "I would be afraid to do work [for builders I do not know]."
Imagine Building Concepts has been contacted for comment.
'We are just trying to support our families'
Mr Young said under current insurance models, it was always subcontractors and construction staff who lost out.
"At the end of the day, we are just people trying to make a living and support our families," Mr Young said.
In the ACT, buildings of three storeys or below must be covered by residential building work insurance.
The builder is responsible for making sure insurance is in place.
This may be provided by a licensed insurer or the Master Builders Fidelity Fund.
The ACT has more stringent laws than other jurisdictions when it comes to allowing those affected by insolvency to appeal to the Supreme Court.
But there is very limited protection in any part of Australia to ensure money collected by insurers is paid to insured subcontractors.
"The [federal] government needs to look into the amount of money collected by insurance companies compared to the money paid out to [subcontractors and staff]," Mr Young said.
He wanted to see updated security of payment laws that ensured money paid to insurance companies was given back to workers when a builder went bust.
"Ideally, it should pay the subbie or supplier for the work they have done. Then, there should be a price negotiated for [tradespeople who are already contracted to a building site to finish the job].
"If they did that, only the builders would go broke, not the suppliers and the subbies," he said.
Other contractors who have lost money from Imagine Building's collapse said they would like to see trust accounts mandated project trust accounts for each job.
These accounts - in which money for projects is held separately to a project head's main account - were made compulsory in Queensland in 2021.
They are not compulsory in the ACT or federally.
What is the Murray report?
An independent review published in 2018 - known as the Murray report - found payment security for small businesses across the country was slim.
At present, subcontractors often have to wait 30 days to receive payment once work is completed.
A statutory trust model was one of 86 recommendations from the federal government review of security of payment laws, published by building contract dispute specialist John Murray.
The Albanese government said they would enact some of the recommendations this Parliamentary term.
Independent ACT senator David Pocock said he hoped statutory trust accounts would be established as a result.
"Far too many subbies are missing out on getting paid for work done due to weak and nationally inconsistent security of payment laws," he said.
The government has established a national construction industry forum and tasked it with looking at the security of payments as a priority.
Trust accounts could lead to more insolvencies
The Housing Industry Association's ACT executive, Greg Weller, said mandated security measures could lead to more builders going insolvent.
He wanted to instead see better education for construction company owners and subcontractors.
"If you tie up the working capital of builders in a trust account, you might be pushing towards an outcome you are trying to avoid, which is builders going broke and trade contractors missing out," Mr Weller said.
Builders were generally funding jobs and being paid by the client in arrears, so liquidity was important, he said.
Mr Weller believed there was a "question in ensuring builders have the right skills to be running businesses".
"[Subcontractors] are running a business. They are not employees," he said. "They need to put measures in place themselves to ensure they are not continually exposing themselves to people who are not paying them," Mr Weller said.
