BUILDING AND CONSTRUCTION INDUSTRY SECURITY OF PAYMENT BILL

Second Reading

Adjourned debate on second reading.

(Continued from 16 July 2009. Page 3578.)

Mrs GERAGHTY (Torrens) (10:45): I am pleased to have the opportunity to speak on this bill.

The Hon. I.F. EVANS: Sir, I rise on a point of order. I note that the government took the adjournment on its own motion on its own bill. My understanding of the procedure of the house is that if a private member from the government side moves a bill the adjournment is normally taken by the opposition.

The SPEAKER: No; the government took the adjournment after the member for Schubert spoke on the bill.

Mrs GERAGHTY: As I said, I am pleased to support this bill, which was introduced by the member for Newland, and I certainly acknowledge the work he has done on the bill, which will apply to the building and construction industry in South Australia. Security of payment legislation has been an issue in the building and construction industry since the 1990s. The Howard federal government's Cole royal commission in 2003 identified the need for state legislation to ensure a speedy process for timely adherence relating to contractual obligations in the building and construction industry.

To briefly explain, this legislation is about a process to deal with disputed payments for work done and/or supplies provided in the building industry. South Australia remains the only mainland state without some form of security of payment legislation. I have discussed this matter with a number of contractor organisations and contractors in the building industry over a very long period, and they have advised me that there are significant problems concerning contractors receiving timely payments for work undertaken and/or materials being provided. Whilst many building firms do the right thing and pay contractors in a timely way, others string out payments to their contractors, causing them considerable financial stress.

In the current economic climate (and I accept that it is improving) credit can be difficult to obtain for many small and medium size businesses. Delays in the payment for work done, be it progress payments or payments for completed work, can lead to a business folding. This in turn can see employees sacked, including apprentices, who are very hard done by and certainly are the future of our building industry.

Unfortunately, in many cases the contractual provisions for progress payments are flouted by building companies or perhaps the prime contractor. As I said, it can jeopardise the financial viability of contractors, particularly small contractors, who can have many tens of thousands of dollars outstanding for work done or materials they have supplied even though there has been no suggestion of shoddy work or materials. In effect, these contractors are asked to provide the cash flows for the builders. Again, not only can this have a significant negative impact on the contractor in question but there can also be dire consequences for many employees they may employ, including apprentices, as I said. To add insult to injury, if the contractor were to then withhold labour or materials to the builder they can be in breach of their contractual obligations and can be sued in a court of law for their failure to adhere to the contract.

On the issue of apprentices, it has been stressed many times over that our community faces a skills shortage, particularly with the prospect of a significant increase in our state's mining industry and the defence projects that are happening now. It would be a tragedy if the future of many apprentices was put at risk because some members of the building industry fail to act fairly and pay their contract obligations in a timely way.

I have even been advised that at the completion of some building projects there have been builders who have withheld the final payment and then bargained down the payment on bogus arguments of work quality, knowing full well that the contractor is not in a position to seek legal redress given the cost and time involved in doing so—and that is the fact. This security of payment legislation is a means to address that situation without the need for the parties to resort to costly and time-consuming litigation, which can take years to reach a conclusion. Security of payment legislation need not lead to a costly government bureaucracy, as the dispute resolution process can be industry funded.

Given the feedback I have had from various contractors and their peer organisations, I support this bill. Similar legislation operates in New South Wales, Victoria and Queensland, and the New South Wales legislation has been in force since I think 1999. In part, to explain my support for security of payment legislation, I put forward the following details for those who have concerns.

The proposed security of payment bans 'pay when paid clauses' in building contracts. To explain that, a builder cannot withhold payment for work or materials on the basis that they themselves have not been paid. It provides for the making of statutory claims for progress payments. It allows for the adjudication of disputed claims made under the act by accredited adjudicators. The cost of the adjudication (or arbitration, as some may want to call it) is determined by the adjudicator, who apportions it among the disputing parties. These costs may be high and as such this tends to limit frivolous claims.

The act provides for the creation of a statutory debt, so that if an adjudicator determines a claim in favour of the claimant contractor the claimant can then, if the respondent fails to pay the adjudicated amount, obtain an adjudication certificate and register it as a judgment, allowing them to have the right to sue for the debt in a court of law. Strict time frames are applied to the adjudication process to ensure that payment disputes are dealt with in a timely way—and that is the key: 'in a timely way'.

An example of the effectiveness of the security of payment legislation can be seen in New South Wales, where, under its act, there are nearly 1,000 claims a year. Some of them do not proceed to determination, but there has been a major reduction of building and construction industry contract disputes going to formal litigation and arbitration. The introduction of the Building and Construction Industry Security of Payments Act here would see a fair and cost-effective method of dealing with contract disputes in the industry, and it would provide reasonable protection to building contractors who are, as we have all acknowledged over our years in this place, the backbone of the building and construction industry in this state.

It is a fair piece of legislation and it is something that is certainly sought by many in the industry. As we all know, there are those—a few—who do not support this because they have been able to use contractors almost as a bank account for themselves, but we need to protect our contractors who are vast employers in the community and certainly take on many apprentices. I do support this bill and I commend the member for Newland for bringing it forward.

The Hon. I.F. EVANS (Davenport) (10:54): The government has decided to bring this particular bill on today. It is regrettable that it did not advise the opposition spokesperson (namely, me) that it wanted to bring it on today, because I could have advised it, as I now advise the house, that because the private member who introduced this bill filed amendments to the bill just three weeks ago, which I have sent to the industry groups for consultation and on which I have not received any feedback from the industry, of course, it is difficult for the opposition to finalise its position on the bill. So, having not been advised, I inform the house that I am speaking as the opposition spokesperson knowing that the Liberal Party has not reached a final decision on this bill because the industry groups have not got back to us on the member's amendments which he brought in just three weeks ago.

However, the government has decided to bring this on, so the opposition is locked into a position of at least having to debate the bill. The opposition will not be discourteous to the member and seek to adjourn it. Even though this government has for years sought to adjourn virtually every piece of private member's legislation before the house, we will not play the game of adjourning this legislation.

The Hon. M.J. Atkinson interjecting:

The Hon. I.F. EVANS: Because, Attorney, I think the industry groups deserve the bill to be debated on this side of the election. Right?

The Hon. M.J. Atkinson: You are virtue itself.

The Hon. I.F. EVANS: No, I am happy to have the debate. When this was first introduced, the industry groups had an anti position. When I talk about the 'industry groups', it was the Master Builders Association and the Housing Industry Association. When it was first introduced, I think Mr Xenophon or Mr Darley in another place opposed this principle, and they opposed it on a number of grounds, particularly because it did not take into account all the building industry chain, that is, right from the financing through to the lowest subcontractor.

They opposed it because of the privatisation of the arbitration system. It is interesting to see that the Labor Party is supporting the privatisation of the arbitration system in this bill, because they are private sector arbitrators, they are not government appointed arbitrators. That is what the government has locked itself into in this bill. It will be the first time, to my knowledge, that private sector arbitrators will deal with this sort of matter, but if that is the government's policy, so be it.

The industry groups were opposed to the principle of this bill for many months. Then the member for Newland picked up the bill and introduced this type of bill. I sent it out to the industry groups many months ago. The Housing Industry Association and the Master Builders Association, from memory (I do not have my documents here, because the government did not tell us that it was bringing it on today), opposed it at that point in time, because of a whole range of issues that were well-known to the government prior to the introduction of this bill.

My understanding is that the member for Newland has tabled some amendments, and I have sent them out to the industry groups. The Master Builders Association indicated to me last week, from memory, that it is generally supportive of most of the amendments but not all. I have not heard back from the other industry associations to whom I have sent them; certainly, the feedback has only been from one group. The opposition's view—and this is my view only at this stage, of course, because it has not gone to the party room—is that we are generally supportive of the principle. I think I am right in saying that I am the only member of parliament who comes from the building industry. I think I am right in saying that, having been a licensed builder.

The Hon. K.O. Foley: I sold steel.

The Hon. I.F. EVANS: The Treasurer says that he sold steel. My understanding is that that is the retail industry. I was actually building houses.

I am familiar with the problems that the bill seeks to address, but, unless the bill gets it right, it will create more problems for the industry than already exist. The member for Torrens talks about the issue of cash flow in the building industry. That has always been a problem, and the reason the building industry associations opposed the original bill was because it did not deal with the finances. So, if the banks did not pay the builder, the builder was still obligated to pay down the chain and, of course, that created huge cash flow problems for the builders. If the banks do not release the money to you, then how you pay is an interesting question to which the member for Torrens might like to turn her mind.

I am familiar with the cash flow problems existing in the building industry which this bill seeks to address. The groups that do strongly support this, of course, are the subcontractor-based industry groups. What I am talking about there is the Electrical Trades Association and the Plumbing Industry Association—those sorts of groups that contract to the main builders.

Mr Rankine and a number of representatives from other industry groups came to see me three or four months ago on this bill as part of the consultation process. At that point, they advised me that they understood that the government was looking at amendments and that, until they had seen the amendments, they were not sure what they were, either. Again, we have not heard back from those groups about what they think of these amendments before the house today. My view, as the small business shadow, is that, in principle, the Liberal Party would support a bill that would attempt to try to bring some better certainty to the payment system within the building industry, but at this stage we will not support a bill that does not have the broad agreement of the industry.

I cannot confirm to my side of the house that it does have the broad agreement of the industry, because the amendments being tabled were sent to the industry groups only a matter of weeks ago. If I knew that the government wanted to bring this on today we might have been able to track that down earlier, but the reality is that we have not received back the position of the industry groups. I know that the Master Builders Association had a major problem with the arbitration system, which is still proposed under this bill.

I suspect that the Housing Industry Association would have exactly the same problem with the arbitration system. The building industry is a very complex industry. You might have on any one site hundreds of different businesses, all with different contractual arrangements, all with different responsibilities, and cash flow has always been the problem. There are two different models of security payment legislation in Australia. There is essentially the eastern states model, which the member for Newland picked up originally and which he has now altered through a series of amendments.

There is the Western Australian model, which is the industry-preferred model—and when I say the 'industry' I mean the building industry, not necessarily the subcontractors. The building industry prefers the Western Australian model, which is used in that state and in the Northern Territory. The government has looked at both models, I assume, and has gone with the New South Wales model. I think it is a pity that the process adopted has occurred in this manner. There was goodwill—and there is goodwill—on this issue from the industry groups and, indeed, the opposition and the government.

Why the government did not ring me a week or even three days ago and say, 'We're going to bring this on on Thursday—'

Mrs Geraghty: Because it's a private member's bill.

The Hon. I.F. EVANS: It may well be a private member's bill, Madam Whip, but the whip on the private member's behalf can ring the opposition and suggest that you are going to bring it on. That never occurred, to my knowledge. That is a pity because we could have had a complete debate, but why bring it on for a half-informed debate? The position of the Liberal Party, which I am putting down without the consultation of the party room, is that in principle we support the position, but we will not support a bill that does not have broad industry support. The arbitration clause is still an issue in the industry which needs to be sorted out.

Mr GRIFFITHS (Goyder—Deputy Leader of the Opposition) (11:04): I also wish to make a brief contribution on this bill. I congratulate the member for Davenport, the shadow minister, on his summation of the concerns at the moment. Since the member for Newland introduced this bill, and in the period that I had responsibility for small business as shadow minister, I did have a lot of contact—nearly on a weekly basis when the parliament was sitting—with the member for Newland to determine when it was intended to bring this bill forward.

The words the honourable member quoted to me every week were, 'Amendments are being considered.' I suppose that fact has created some uncertainty from our side of the chamber as to when this bill would come on for debate. As the member for Davenport said, we certainly understand the intent behind it; we certainly appreciate the fact that to the very large number of contractors involved in the building industry timely payment is critical for them and the cash flow situation that results. Unless bills are paid promptly, contractors are put under enormous pressure. The intent is clear.

The concerns that exist from various sectors within the industry—certainly in Western Australia and the Eastern States, and I met with one industry group which also expressed some varied opinions about this bill—make our position even more firm that industry groups must have the opportunity to consider the amendments that have been introduced by the member for Newland. Those comments come back to what the shadow minister said about the party having the opportunity to consider those amendments and form its final position.

There is general in-principle support of the intent behind the bill, but it is that lack of opportunity to ensure consultation to the fullest extent that really concerns us. The Master Builders Association and the Housing Industry Association expressed concerns earlier on. Subcontractors support this measure because it is vital to the people with whom they are involved but, unless we get it right we could create a greater problem. I urge the member for Newland to consider the problem that exists. Yes, support existed several months ago and general in-principle support is there, but we would seek an opportunity to ensure that full consultation allows an informed debate to occur in the house.

Dr McFETRIDGE (Morphett) (11:06): As the member for Davenport pointed out, the opposition's view is not settled on this piece of legislation, although there is in-principle support. I for one will be giving it in-principle support but I want to look at the detail and just go through the amendments and, as the member for Davenport said, seek the opinions of the industry, not just the subcontractors but the big players in the industry—the Housing Industry Association and other members of the construction industry.

I know that, as a small business owner who issued hundreds of invoices every week, it was very frustrating not to get paid. That was just in the veterinary practice. Although most vets do not give credit, I gave credit to people who presented at my practice. They had pets that were victims of a circumstance in many cases: it was not the pet's fault, people could not pay, and so I did give credit; and, in the vast majority of cases, those bills got paid.

But what happens in some cases is that you get part of the payment and not all of it. Chasing those very amounts, particularly in small business—and this is an issue for all small businesses chasing small accounts—is a real issue. Perhaps this bill needs to go a bit further, or more legislation needs to be introduced to extend this sort of security of payments to small businesses, because issuing summonses, making phone calls or sending letters is just not good enough.

At one stage I put up the names of my bad debtors on my noticeboard in the clinic, with a few dud cheques that had come through as well. I was told that you could not do that because of the privacy legislation, so I reluctantly took them down. Chasing small debts, for businesses, is a real hassle when you are out there. It is sometimes a wheelbarrow business: if you do not keep pushing that wheelbarrow, the business stops, and you need to get paid.

I had one particular client who was a farmer. He was known as Mr 10 Per Cent, because he always took 10 per cent off any bill he ever paid. That fellow did not get any discounts; I can guarantee that. Where I might have been feeling a bit generous on a particular day—

The Hon. I.F. Evans: Did you put his bill up 20 per cent?

Dr McFETRIDGE: I was very tempted, as the member for Davenport says, to put his bill up 20 per cent, but I did not do that. I resisted that temptation. I always delivered the service, because, as I said, it was not his animals' fault that he was a bit of a scrooge. Getting paid is so important for small business.

I have had a number of constituents come and see me about the building industry and their subbies, who are out there working very hard to get paid, to do the work, to get paid, to run the business. They need to get paid because they have to then buy their supplies, pay their apprentices, pay all the people working for them. It is a supply chain. If you break that chain at any stage you are in real strife. The fact that there is a deliberate ploy on behalf of some of the big building companies to delay payments for financial purposes, for accounting purposes or for taxation purposes, there is a ploy there—

Ms Chapman: To save money.

Dr McFETRIDGE: To save money, I suppose, in some cases, as the member for Bragg says. There are good business decisions and there are bad business decisions. In many cases, the reason that we get this sort of legislation is because of those business decisions which do unfairly affect some of these subbies and those lower down in the food chain, the supply chain, of the building industry.

What we need to do is make sure that everybody in that supply chain is comfortable. The money has to come from somewhere. It has to end up distributed throughout the whole of the industry. We have to make sure that this piece of legislation is not going to in any way force people into circumstances which really are beyond their control.

If the banks, for some reason, do not forward a payment on time, or if it is a day late after the prescribed time of the legislation, then the person involved could be in a bad position through no fault of their own. They have done their best, but there has been a bit of a break in the supply chain, there has been a bit of a breakdown in communication—for instance, the fax did not arrive, the email did not arrive, or it has been overlooked. If there is a breakdown in the supply chain we have to be very careful that there are no unintended consequences. Until we get feedback from the other players, the stakeholders, who the member for Davenport has contacted, we cannot form a final position on this.

I do know of some South Australian building companies who, unfortunately, have a reputation of not paying all of their bills. It is a bit like my Mr 10 per cent, they only pay part. It is a deliberate ploy, and I think it is a disgraceful thing if those building companies are not exposed. If this legislation is not going to capture those sorts of people, well, I would be very disappointed.

We need to know that it is going to do its job. We need to know that those involved in the building industry are going to be comfortable with the private adjudicators—an interesting bit of privatisation there. We need to know that the subcontractors are going to be happy with that system. If you are a subbie, if you are out there working your backside off, and you are a sole trader, it is a bit hard to take a day off to visit the adjudicator and to go through more difficult red tape, as they might see it.

It needs to be simplified to the point where the honest processes that should apply do apply. We do not have all the feedback from the stakeholders. We have some amendments here. I am not across these at the moment, and I make no excuse for that, because this is a piece of legislation that is important. I will make sure that I do follow it up as an individual and, having had representations from some constituents a while ago, it is important that we make sure it is going to work properly.

I know that the member for Newland is well-meaning in this, but it is not good enough just to be well-meaning. It cannot be rushed, it has to be put through this place in a constructive fashion, a fashion that is going to be examined and looked at, so that we do not have to come back and make amendments in a few weeks' time.

I remember the legislation that was put through this place for codes of conduct for sporting groups. It was rushed through this place. It was needed, it was needed to save all the sporting groups. What happened? We had to come back and we had to move amendments through, because we realised we needed waivers for the Masters Games that were being held in Adelaide. We should not be doing that.

We should not have to come back and repeatedly revisit pieces of legislation. If we had done the work in the first place, if we had made sure that the legislation was agreed to by all those who have a stakehold in it and it is given the opportunity to be examined by members of the opposition, then the situation we find today is one that we will see over and over again, and we will be revisiting legislation, taking up the time of the house unnecessarily. It is a position that everybody in this place needs to be aware of.

What we need to do now is recognise that this is in principle a very good piece of legislation, but the practicality of the situation that we are faced with today is that we need to have a further look at what is going on so that we do get it right, so that the subbies out there can get paid for the work they are doing, so that their families can enjoy life without having to worry about the old man, or the tradesperson, coming home and saying, 'Well, we're not getting paid, so what do we do this week?' It is a very important piece of legislation, and I look forward to seeing the final results of it, because I hope it does what is intended.

The Hon. R.B. SUCH (Fisher) (11:15): I will make some brief comments regarding this bill but extend the argument to broaden it a bit. I have felt for a long time, and I have done some preliminary research on this, that the issue of bad debt in our community is extensive and it really hurts small business, in particular, when people do not pay their bills. I regard a bad debt, or an unpaid debt, as a form of theft. It is no different in terms of its impact from someone stealing from the small business operator.

The big business concerns can usually protect themselves somewhat against bad debts and people who do not want to pay, but for small operators it can literally put them out of business; it does not matter whether they are a subby in the building industry or whether they are doing any other type of activity.

For a long time I have been amazed that as a community we do not seem to take this seriously. I know we have a small claims court and that people can take legal action but, from the cases that I have seen, by the time people take action—in some cases, they have to engage a lawyer—with the time and money that it takes it is really almost counterproductive. I am not sure what the answer is. I am trying to work on some approaches, but the point is that the current system is not fair and reasonable for a lot of small business people.

We would all know, I guess, through our contact with schools, of the number of parents who do not pay the minimum required contribution to their school. Some of them use the argument that it is supposed to be a free system. We all know that there is no such thing as a free anything in life; there is no such thing as a free lunch or a free education, that is all theory. What is often galling is that many of the people who can afford to pay choose not to pay, and it becomes for them a habit and a practice which is not only bad for small business, in particular, but it is unethical, in my view, to put someone in a position where they are on the verge of going out of business.

I support any measure which will help address this issue of bad debts or lack of payment. I am not totally convinced that this bill is the right strategy, but the issue of bad debts is certainly one where I think you need the resources of government to have a look at it to see if we can bring some fairness and equity into the system of payments. I have had contact with some business organisations, and it is very difficult to get some of the data that you would need to spell out some reforms, but I will continue to work on it. It is a big issue and I think the sooner we can rein in people who bludge off others, the better.

Mr HANNA (Mitchell) (11:18): I am addressing some issues which have been brought into this parliament by the member for Newland, Mr Tom Kenyon. He is a fine young member, at least when he is playing rugby union. He has brought in the issue of payment to subcontractors in the building industry.

Before I get on to the substantive issue of the bill I must make a procedural point, that is, that this piece of legislation has only been in the parliament for a few weeks, whereas other non-executive members of the House of Assembly have brought in pieces of non-government legislation, which we call private members' legislation, that have been around for much longer.

I will give an example. I have a bill, which in my own humble way I would consider quite worthy, to prevent the owners of nursing homes from signing death certificates for the residents of their own homes. That was a proposal that I brought into this place on 25 September 2008, so it has been around for more than a year, and yet the government chooses not to deal with such measures.

So, I just highlight the one-sided view of the government. Of course, it is entitled to do that, but the problem is that, in this place, what goes around, comes around; it is perpetuating a harsh and ruthless method of operation in this place when, in fact, all non-government proposals ought to get a fair hearing in this place in the one hour a week allotted for such discussion.

In relation to the Building and Construction Industry Security of Payment Bill that has been brought in by Mr Kenyon, the first point I would make is that it is extremely broad. When you look at the definition of those involved in building and construction work, it pretty well covers everything to do with the construction and finishing of any sort of building that you could imagine. It would cover every kind of trade, including painters, fitters, decorators, bricklayers, electricians, plumbers, gasfitters, you name it.

That fits, of course, with the intention of the bill that these people, when they do work, ought to be paid, and I do not have a problem with that principle. However, it is not quite as straightforward as it might appear. One point that has already been made in debate, which I think is a critical one that has not yet been addressed by Mr Kenyon or Mrs Geraghty on the government side, is the issue of enforced payment of subcontractors when the builder, at the head of the chain of contracting, does not have the money to pay.

It may be that a young couple orders a new home to be built, the builder is happy to do that and engages all of the various subcontractors, and they start work, then the young couple might split up, they might lose their jobs, or some other tragedy might occur and they cannot continue with the building of the house, so the builder does not get paid.

Under this legislation, the builder must, nonetheless, pay the subcontractors for the work they have done, so the question is: why should the builder lose out? There does seem to be a lack of equity in that. It is all very well to say that some of these building firms are big firms that can withstand that sort of imposition, but there are plenty of other small builders, sole practice builders, who are really in as much of a difficult situation as the contractors they use to finish their work. I am sorry that I have only 10 minutes today to speak on this bill (that is the restriction on time to speak on these issues) because I am actually quite impassioned about it.

We also need to bear in mind that there is already a course of action for subcontractors who are in the position of not being paid. I know that all sorts of criticisms can be made about the court system, but it also has a lot of advantages. I have to say that the debt collection system has really improved a lot over the last 10 or 20 years. In the Magistrates Court, they have made huge efforts to streamline the process of getting money that is owed to people, and that is particularly so in the case of a straight-out debt that remains unpaid.

When we get into the area of disputed workmanship, and whether a certain level of building has been completed, we do get into a grey area. The member for Newland would wish to send those issues off to an adjudicator, a private sector adjudicator. I believe those issues actually do need to go to court. It is not necessarily just a matter of whether the right colour paint was chosen; some of these issues are incredibly complex. I remember when I was involved in legal practice (I am a lawyer only in name now), but when—

The Hon. R.B. Such: And by reputation.

Mr HANNA: Thank you.

Mr Pengilly: Once a lawyer, always a lawyer.

Mr HANNA: That's right. It is a bit like the priesthood: if you keep up your practising certificate, you are always a lawyer, even if you do not practise. When I was practising law, one of the cases I had involved a boat at Adelaide Brighton Cement. The key issue in the case was whether or not the electrical wiring of the boat was adequate. It was of such vast complexity (it was a trial that went for a number of days) that I have to say that I could not have expected the sort of private sector adjudicator envisaged under this bill to have presided over such a complex issue.

The people involved in that trial virtually had to become instant experts on complex electrical wiring to come to a reasonable conclusion about the answers that needed to be arrived at in that case. So, the adjudication provisions are not as attractive as they might appear at first. After all, who are these adjudicators going to be?

I presume there will be people who are actively involved in the building industry or perhaps retired from the building industry. However, to cover every aspect of the building industry with the expertise that is sometimes required, especially in more complex cases, I am not sure that you will get the full range of adjudicators to cover all those eventualities.

The member for Torrens mentioned that this might have to be industry funded. I am not sure that the building and construction industry has been properly consulted about how much it will have to pay for a separate adjudication process. The court process, in a sense, we all pay for as taxpayers; however, this adjudication process, which might amount to hundreds of thousands of dollars or maybe even millions of dollars a year (I do not know how many building and construction disputes there are) could be a very expensive imposition on the building and construction industry.

Another issue I raise in relation to this is the interrelationship between the enforced payment of subcontractor bills and insolvency laws. If someone in the chain of subcontracting becomes insolvent, what happens then? We have state legislation that provides that the next person down the chain needs to be paid, but we also have an insolvency practitioner, who is looking at a range of debts of the person one step higher in the chain, who has to decide which debts are paid and which are not. So, I think that is an issue that has not been addressed. No doubt, in discussing the bill in detail at the committee stage, we can sort through some of these issues.

It has also been pointed out that legislation like this operates in some other states, and that raises another interesting point: perhaps this whole thing ought to be resolved federally through the Corporations Law. If people think that is a silly idea, it is exactly the argument that Premier Rann uses in relation to having an independent commission against corruption. He says, 'Why would you do it on a state-by-state basis when you could have one overall scheme?'

I believe that could work very well. If we must have such a scheme for enforced payment of subcontractor debts, why not do it on a national basis for all corporations? I think you will find that most of the parties affected would be a company, even if it were a sole director company or a family company. I think that the exemptions that are provided for in the bill also need to be pointed out.

Time expired.

Mr KENYON (Newland) (11:29): I thank all members for their contribution and make a few very brief points. While the amendments have been on file for only three weeks, they have been out to the industry for a bit longer than that. It is my recollection that I gave the amendments to the opposition before I tabled them formally. However, I gave them to the member for Goyder; that was my mistake, as I had not realised that had changed.

For the member for Mitchell, the amendments I put forward are all the result of industry consultation that took place after I introduced the bill in March. That said, the MBA has been completely consulted, and it has a fundamental problem with the method of resolving these issues, but we will get to that at the committee stage. I commend the bill to the house and thank members for their contribution.

Bill read a second time.

Committee Stage

In committee.

Clause 1 passed.

Progress reported; committee to sit again.

Members interjecting:

The SPEAKER: For those members who are whingeing 'The bell, the bell, the bell,' it is the practice of the chair—not just this chair but all chairs—to allow a certain stage of proceedings in which we can conclude what is being done, and that is done mainly for the efficient running of the house and as a courtesy that is extended to all members, and members who have been here much longer than I have should know that.