WA passes new laws to protect subcontractors and small businesses

Western Australia has passed new laws to protect subcontractors and small businesses in the wake of growing payment disputes in the construction sector.

Under the new laws, the Small Business Commissioner has greater powers to investigate improper behaviour such as price gouging and late or non-payments of insurance claims or denial of claims.

According to Small Business Minister Paul Papalia, the laws were put in place to respond to a growing number of insolvencies and payment disputes in the construction industry.

“At a time when small businesses confront incredible challenges, the likes of which have never been seen in modern times, it’s more important than ever that we provide greater powers for an authority that supports the little guy,” he said.

“They will also provide an extra layer of protection for small businesses as they navigate the COVID-19 pandemic.”

In addition to the Small Business Development Corporation’s (SBDC) current dispute resolution service, the commissioner will now have the authority to compel government entities, companies and businesses to provide documents during the course of investigations.

“In the past, there were many highly publicised cases of insolvencies and disputes over payments owed to small businesses especially in relation to government projects,” Mr. Papalia said.

“Behind those headlines were the stories of real people with cautionary tales of mismanagement, deceit, intimidation and grief.”

Mr. Papalia said the Small Business Commissioner can now conduct inquiries based on industry and inter-agency intelligence and complaints from small businesses.

“A specialised investigations and inquiry unit within the SBDC is now up and running, and is aimed at improving corporate and government processes and identifying unfair practices,” he said.

“These new powers come after years of advocacy by both myself and the Small Business Commissioner, and strengthen the role of the SBDC in maintaining good business relationships throughout WA.”

Small Business Commissioner David Eaton said the reforms will support the existing role of the SBDC, which has been offering information and support services to small business owners and operators throughout Western Australia for more than 35 years.

“The SBDC is independent and impartial, so the legislative changes will not alter its service culture, nor will it compromise the voluntary nature of its highly successful dispute resolution service that has the support of large and small businesses,” he said.

“In the current environment, businesses large and small need to work together to secure cash flow and employment. However if that does not occur, then these new tools allow my team to investigate poor behaviour and bring it to the attention of the most appropriate body.”

Once a complaint is lodged, Mr. Eaton said the SBDC will seek to validate it through robust investigations before pursuing or rejecting a claim.

“My objective is to establish facts and not target any particular company or industry,” he added.

“Ultimately my goal is a fair operating environment for all businesses across Western Australia.”

The reforms come into effect immediately.


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