Ewen Jones (Herbert, Liberal Party) Share this | Hansard source

Can I say from the outset that I support this bill and I support what the government is trying to do. In question time yesterday the Treasurer was answering a question in relation to small business and the economy, and he said, 'We've made a good start but we have a lot of work to do'. Can I suggest: this is a good start but we have a lot of work to do when it comes to small business.

There are some real issues around small business, particularly around subcontractors, that I would like to concentrate on in my contribution here. The nature of unfair contracts and the nature of work in the construction industry seems to have changed. Once upon a time, the contractor would tender for a job and do the job. It seems to be the case now that someone tenders for a job and they become the lead contractor but they do not do any of the work. They are the developer. The person who carries all of the risk is the subcontractor; they are the one that carries all the debt and all the risk.

I can give you an example. We had a flight simulator built at RAAF base in Townsville. It was a fantastic job. People line up to do government work because they are assured of being paid. This was just after I was elected. The developer, as opposed to the winner of the tender—and it was a fair and open tender—had numerous other projects going on around the country. One of the projects they had a real issue with was a swimming pool complex in South Australia. Because of their bad work on that—or supposed bad work or technicalities on that job—that bloke went into receivership and liquidation. He was wound up. My subcontractors in Townsville, thinking that they were doing government work, were fully exposed. At the end of the day, you cannot get your concrete back. You cannot pull out the steel you put in the concrete foundations. You cannot do it.

So, I was a brand new member of parliament, a brand new person in the role, and someone is coming to me and saying, 'We've done this government work and we aren't getting paid'. I thump the table and say: 'That's what we're here for, Mate. Bloody Labor! They'll stick it to you every time.' But, when I go back and talk to my guys, they say: 'Mate, unless they've got a contract signed by the government, they don't have a contract with us. They're not doing government work.' So, whilst we are talking about this sort of thing—people being screwed for price on government work because you are assured of getting paid—they carry everything; they carry all the risk. There are two things we cannot legislate for in this place. We cannot legislate for greed and we cannot legislate for stupidity. So we have to make sure that it is part of the broader part of the nature of business and the nature of construction.

I am an auctioneer by trade, and the auctioneer's creed is to leave a dollar in it for the next guy. You cannot just wipe him clean every time he comes in, because he cannot make any money out of it. It seems to me that the way the big contracts are done—the construction of government roads and that sort of thing—instead of being left over at the end, the profit is taken at the front. They have structured in how much profit they need to make at the front. I say these words with absolutely no factual base whatsoever. But these are the sorts of things that are coming to me in the pubs, in my office and in the streets when I am talking to subcontractors.

There is the big end of town that takes the profit first, and the subcontractor down the bottom is left to accept the price or not get the work. The problem we have when we get into that space is—and the member for Flinders is in here, and he is a good man; he has driven trucks and done all this stuff—when you are that lone driver-owner-operator and the bloke from the big contractor comes up and says, 'That's the price'. You are promised about $1,200 a day to run your truck and that sounds alright; so you commit to the work, knowing that that is alright. But then they change the goalposts and say, 'That's the price.' You are already in so far; how do you get out? How do they get out? If the developer or winner of the major contract is struggling for cash and the subcontractor is not getting paid, how long does the subcontractor leave it before he walks away? When is he prepared to make the complaint? Who is going to make the complaint?

I had an owner-operator come and see me the other day. It was about a job in Townsville and it was reasonably close to the quarry. His end rate—and he could not really work out how much an hour or how much it was—was $1.84 a tonne to deliver. He was not paid an hourly rate; he was just paid a tonnage rate.

I have situations in Townsville where truck drivers—with a dog and trail, with a quad dog tipper—have to modify their trucks to make sure they have automatic curtain things that go over the top, covers and all that sort of stuff; they have to do all of that. These guys are signing up for about $80 an hour, knowing full well that their break-even is about $140 an hour, and knowing that to make a profit they need to make at least $160 an hour; yet they are signing these contracts and doing these things in the hope that, because they are turning wheels, something will happen and they will end up better off. This ombudsman here is a great idea but it is not going to fix that. It is not going to fix the nature of that thing. What we have to do is go back and have a look at the very nature of the tender process and the way business is conducted in this country.

As I said before, when I was a young bloke, my dream job was to be a final trim grader driver. I figured that was a bit of art; you could use your fingers and everything like that. But technology changes the nature of all these things, and changes the job. What we have done over a long period of time is change the rules about how business runs. We have just had a builder—not on a government job, but on a private job—for a very large not-for-profit church-based organisation. The builder or developer has gone under, and every subcontractor in Townsville who has worked on that is basically going to walk away with very little. This happens a lot.

People go broke. As an auctioneer I worked a lot in the insolvency industry and the companies for whom I worked made a lot of money out of these things. The Keating recession was a fantastic time for auctioneers. And when the economy is going well it is an even better time for auctioneers, because people have more money to buy the stuff from you. But what we have done is make the tender process so convoluted, conflicted and confused that it is no longer about driving value for the tax dollar and driving the value through our economy more than once.

I can give you one example here—it is not particularly related to this bill. The logistics hub at Lavarack Barracks is a $120 million job. It is a fantastic facility. Baulderstone, which are now Lend Lease, won the tender fair and square. But their major subcontractor was an organisation called Shamrock Civil Engineering. Shamrock have an office in Townsville—they have about six people working in that office. But their blokes were fly-in fly-out, and they brought all their equipment up from Brisbane. The local guys, even though they live there, could not match their price to do the work.

Minister David Johnston was the Minister for Defence at the time, and he said, 'You'd be really happy with that—that $120 million going into your economy.' I said, 'Well it is not, really. The $120 million-facility gets built, but there are no apprentices or tradies going through. So that $120 million flushed through our economy just once. The only person who is making money and putting people on is the bloke who runs Hungry Jacks across the road.' He was the only one making money out of it.

What we have to do here as a parliament, especially when it comes to government work, is to make sure that the money flushes through our economy more than once. I think that the tender process in this space has become convoluted and confused. It becomes harder and harder for someone to take a bite out of it and become the principal contractor for that part of it. That is where it leads to our subcontractors being exposed.

What we have to do is to understand the nature of business and how people get desperate when times are tough. There is a lot of stuff happening in Townsville—there is a lot of building going on and a lot of federal government money going in—and we are a very good town. But confidence is brittle, and a lot of what this government has done in relation to the small business package has been fantastic for Townsville. But small business is more than just the instant asset write-off. We understand that getting rid of red tape and everything like that is very important in this, but what we have to do is to understand that the way that business is being conducted these days is very different.

As I said before—and I want to make the point again—it just seems to me that the person who never loses is the person with the least risk. Surely, we have to look at these things? When these things go bad and these guys go to the Small Business and Family Enterprise Ombudsman they will not be able to get their money in every case. And we are not guaranteeing that they are going to get their money. No-one can guarantee that they will get their money because that is not the way that business works. That is not the way the world works. But the subcontractor in today's day and age—the concreter, the truck driver and the chippy—the bloke who does the work, cannot participate in the tender process anymore. So he cannot get the guarantee of the work, he cannot get the guarantee of the payment and he is exposed, she is exposed and their families are exposed.

These are the people who live in our electorates. These are the guys who we have to look after. And if we are to talk about unfair contracts: if someone is offered a job at $1.84 a tonne, goes and complains and says, 'That's an unfair contract,' so that they have to up their payments, what chance does he have of getting the work? They will find some way of getting rid of him. At the moment we have blokes driving around in rags in their trucks because although they are getting income and turnover they are steadily going backwards. We have to look seriously at the way we are doing these things in this country at the moment.

The tender size for a job like this is now very thick. There are all these things that go into it and you have the state and federal governments turn it over, open it up and see $1.1 million or $1.05 million—and $1.05 million gets it. So while it is weighted 100 per cent on price but not on value for money we have a real issue.

So this is good legislation; this is a good start. We have a very good Minister for Small Business, who understands this. We have a very good Treasurer, who understands this. But what we must do is drive this reform through COAG, because until we can get to the stage where people can actually bid for work—where the tender can reflect the part that they want to make—they are not guaranteed payment at any stage for government work. And they are the ones who are carrying the risk.

There is not a person in this place who wants subcontractors in their electorates, their state or their country to continue to be exposed. There is not one person in this place who does not understand the nature of business. There is not one person in this place who does not get that we must be better at this. This has happened over a long period of time and it is something that not one of us is happy about, getting belted in the street by people who hit us up about them having done all this work and, because something happened on the other side of the country, they are out of pocket by $100,000.

Now, $100,000 on a $120 million-job is not a lot of money. But $100,000 to an owner-operator of the truck with a quad dog is a massive amount of money; $100,000, or even $50,000, to someone who has three kids in school, loan payments or an overdraft is a lot of money. And when you have no chance of getting that back and you have no chance to alter your circumstances in the first place—you have no chance to participate where the money is guaranteed—that is where the fault lies. And that is what we as a parliament and what this country must do through COAG. We must work to the place where we can be better at making sure these things comply—that people can have a go.

The Treasurer stood up there on budget night and when he announced the small business package I almost ran down there and hugged him.

I thought it was bloody spectacular. But unless we are doing what we need to do, unless we can fix this up for people to have that go, unless we can offer some sort of protection, unless we can increase participation and make it easier for people to have a slice at it—the taxpayer must always be protected. I do not believe that the current tender situation is actually producing a great result for the taxpayer. There are too many examples out there of too much going wrong. So I support this legislation but I support it because it is a step in the right direction. As the Treasurer, the Minister for Small Business and the Prime Minister have all said, this is a start. We have a long way to go but we are up for the job—and we have got to be up to the job.

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