Agency responses

Building Management and Works

The Department is pleased that the Office of the Auditor General has recognised efforts the Department has made since the release of the Small Business Commissioner’s Construction Subcontractor Investigation report to improve security of payment in relation to its contracts. These efforts included significant business process re-engineering, the trial of project bank accounts, the introduction of new approaches such as the undertaking of spot checks of subcontract payments and the expansion of support provided to industry in terms of education and awareness.

The Department accepts the recommendations directed to it, namely that it implement measures to enhance the information on security of payment that is publicly available, and liaises with the Minister for Finance on unassigned report recommendations. The Department will implement these measures by 30 June 2017.

Department of Treasury

Overall, Treasury supports the recommendations insofar as they are relevant to the agency, and will implement improvement measures accordingly.

In this regard, it is important to note that the recommendations of the Small Business Development Corporation (SBDC) that are the key focus of the performance audit were directed at building contracts managed by the Department of Finance’s Building Management and Works (BMW) business. As acknowledged in the report, these contracts and their administration and management differ materially in many respects from the high value, complex building contracts managed by Treasury’s Strategic Projects and Asset Sales (SP&AS) business. Therefore, the measures implemented by BMW and Treasury in managing subcontractor payment and related matters security are necessarily different in a number of respects.

Treasury’s response to the individual recommendations has been included in Appendix 2.

Housing Authority

Thank you for the audit undertaken which assessed the Housing Authority’s progress on improving the security of payments made to subcontractors by contractors on government construction projects.

The Housing Authority accepts all the pertinent report recommendations and has started to address the matters raised by the audit.

Building Commission

The Department of Commerce accepts in full the finding in the report and the recommendation. The Department of Commerce, Building Commission Division will, by 30 June 2017, liaise with the Department of Finance and the Minister for Commerce to determine if the two unassigned recommendations from the Small Business Development Corporation’s 2013 report should be implemented, and if so, assign responsibility.

Further consideration of the recommendations in the 2013 Inquiry into Construction Industry Insolvency in NSW (the Collins report) will be undertaken as part of the development of the second package of reforms to the Construction Contracts Act 2004.

Small Business Development Corporation

Thank you for the opportunity to comment on the Audit. I read it with interest and believe the findings presented will further contribute to reforms by government agencies playing significant roles as major procurers of building and construction works for the State or as regulators of the construction industry.

I am of the view that this audit, along with the three significant initiatives have recently been implemented in Western Australia (i.e. the adoption of projects bank accounts, improvements to the principal security of payment legislation and the development of a code of conduct for state-procured construction projects) will lead to improved behaviour in the construction industry in the State.

Construction Training Fund

The Construction Training Fund acknowledges the finding contained within the report. Previously, it has been difficult for the Fund to access information from other government agencies when they have awarded building and construction contracts for works where the BCITF levy would apply. The OAG audit has identified a control weakness in this practice and established there is a need for all government agencies to agree on a consistent and systematic process that will provide the Fund with all the relevant information it needs to undertake its statutory obligation.

Consequently, as a matter of urgency, the Fund will convene a meeting with all relevant government agencies to agree on a consistent method for exchanging information so the Fund can ensure the BCITF levy is paid on all building and construction contract works that are managed by government agencies.

The Fund would like to thank the OAG staff for their assistance and support during this audit.