Major construction companies are pushing back against new federal payment regulations.

Big builders argue that their industry experiences relatively fewer insolvencies compared to other sectors and should not face different treatment. 

According to a report by the Australian Constructors Association (ACA), construction industry insolvencies make up nearly one-third of the national total, but the insolvency rate in the construction sector is lower (around 0.5 per cent) than utility services (1.2 per cent) and mining services (1.7 per cent). 

The ACA's Trust Deficit report states, “Construction is in principle no different from any other industry”, and additional regulation should only be imposed if payment performance is systematically worse.

The ACA, representing companies like Multiplex, Icon, Acciona, and more, released this report before the government-industry-union National Construction Industry Forum's inaugural meeting. 

This forum aims to address concerns about tying up payments intended for subcontractors. 

Independent Senator David Pocock says he has secured a commitment from the Albanese Labor government to enhance payment protections for subcontractors, which large contractors oppose, claiming it would strain the construction industry's cashflow.

The meeting established two working groups, one to address gender equity in construction and the other to focus on payment security and liquidity in the industry. 

The ACA's report also opposes the adoption of project bank accounts (PBAs), a payment security system used in Queensland, arguing that PBAs distort the normal market mechanisms by effectively taking control of builders' revenues. 

Builders often rely on subcontractor payment terms for cashflow, while subcontractors want the money ‘ring fenced’ in a trust structure. 

The ACA report claims that PBAs eliminate builders' discretion to employ various commercial strategies for financial stability and growth.

John Murray, the author of the security of payment review, supports PBAs and argues that they should not be criticised for something he did not recommend. 

Murray proposed a system of trust protection over monies received, distinct from the PBA system, which he believed would address the sector's payment issues. 

The CFMEU supports statutory trusts as the fairest way to ensure subcontractors and workers receive payment guarantees, indicating common ground with the ACA on certain industry concerns.