Appendix 2: Treasury’s response to recommendations

Recommendation (a): Housing, BMW and Treasury to ensure full information on strategies to protect payments to subcontractors is publicly available

Treasury is of the view that adequate information regarding measures implemented by the State Government to address subcontractor payment security is already publicly available, particularly following recent activity in this area including the review of the Construction Contracts Act 2004 and introduction of the Western Australian Building and Construction Industry Code of Conduct. The Department of Commerce (Building Commission), Department of Finance (BMW) and SBDC collectively provide substantial information. Treasury (SP&AS) has updated its internal contract management processes to include strengthened measures directed at subcontractor payment security and will include relevant advice within future pre‑construction and procurement documents.

Recommendation (b): Treasury and Housing should set clear standards of financial assessment

Assessments of historical financial data are only one of a number of financial risk management strategies implemented by Treasury for its building projects. Treasury also uses forward‑looking risk management tools (for example, performance bonds, equity support arrangements, parent company guarantees and an active risk management strategy). These are – in each case – specifically tailored to the needs of the project in question. Standardising these processes would compromise risk management because of the unique risks that Treasury manages in its portfolio of complex, high‑value projects. However, to provide greater clarity to both internal and external stakeholders, Treasury will investigate the development of an assessment tool to guide project teams in establishing the right mix of financial risk management strategies. Treasury will also ensure that the particulars of, and reasons for, these risk management strategies are clearly documented for future reference. This will include guidance on relevant information required for financial assessments.

Recommendation (c): Treasury to develop a webpage for subcontractor complaints

Whilst Treasury notes that SP&AS has a designated ‘enquiries’ email address that is used by external parties to raise issues, the intent of this recommendation is supported. However, rather than adopt an agency or project‑specific webpage for subcontractor complaints, Treasury believes there is merit in adopting a whole‑of‑government approach with a single webpage for subcontractor complaints, preferably also providing relevant information and guidance, including in respect of the Government’s subcontractor payment security initiatives. Treasury will discuss this proposal with other agencies, notably the Department of Commerce which, through the Building Commission, could provide a logical host site.

Recommendation (d): Building and Construction Industry Training Fund (BCITF) should formalise communication protocols with BMW, Treasury and Housing

Treasury supports the recommendation for improved and more efficient access to and sharing of information and will await BCITF’s proposals in this regard.

Previous: Appendix 1: Progress against SBDC recommendations  Page last updated: December 22, 2016