Member for Morwell Russell Northe has today in State Parliament taken advantage of Question Time to call upon the State Government to urgently review its retention payment system on Government led-projects that is currently adding to the economic burden a number of local businesses are experiencing.
Speaking from Spring Street this afternoon, Mr Northe began by saying: “Today, I asked the Treasurer to urgently consider reviewing the system that allows the Government to withhold payment from contractors and in some cases sub-contractors’ months and months – or even years – after a Government project is completed”.
“These guys have already been obliged to pay their workers, pay their suppliers… but they still don’t get paid in full themselves, for up to a whole year, which doesn’t make a whole lot of sense to me!”, Mr Northe exclaimed.
“Locally we have already witnessed the economic downturn that COVID-19 has caused, with some devastated businesses sadly shutting their doors for good”.
“I’m asking the Treasurer and the State Government, to seriously consider my initiative as it may very well be the difference between a business keeping the doors open – or not. Cash flow is king at the moment for so many businesses and the Government has the opportunity to address this”.
“The current system may well be a huge barrier to our local small to medium enterprises even putting in a tender for these opportunities in the first place”, Mr Northe lamented. “Which is a real shame because I think we already have limited opportunities to participate as it is!”
“I see the release of retention payments as a real and practical opportunity to provide a cashflow injection and meaningful, immediate support to businesses that are feeling the pinch right now and will do over the coming months, as we gradually ease out of the COVID-19 restrictions. The Government has stated that to improve cash flow they intend to pay supplier invoices within 5 business days and that’s terrific; however I would argue the Government needs to address same on Government-led projects”
“I understand the necessity of having a system whereby defects are required to be remedied and rightly so, but the withholding of payments from businesses seems an outdated and unnecessary way of dealing with this, and I therefore called upon the Government to urgently consider and hopefully deliver upon an improved system that ensures contractors are paid on time for their services provided”, Mr Northe concluded.
Mr Northe said he was buoyed by the Treasurers response and seemingly the willingness of the Government to not only review the overall system to make it fairer for contractors, but to also consider any specific cases where contractors need to be better supported through these challenging economic times.