The " risk factor ! "

Earning a living as a self employed person has both risks and rewards.   Most people with their own businesses earn more than those on wages, and this shows in many ways.   Proprietors usually drive a better car - live in a very nice house and take holidays other people simply dream of - but there is also a down side.

Their income stream is influenced by their skill in effectively pricing jobs and obtaining work, and they are forever at risk of their customer going broke and failing to pay them before the work is finished.

That is the situation facing a big number of sub-contractors as several substantial building firms have closed their doors and appointed administrators.  In some cases, amounts owing run to hundreds of thousands of dollars, and the outcome will probably be bankruptcy for the " subbie " !

Both the industry and the unions are calling for tougher measures to ensure sub-contractors are protected when government jobs are involved.  There is a contention that the government has " deep pockets " and that it should payout the " Subbies " when a government contract goes bad, but this flies in the face of the entire system of private enterprise.

What is missing is acceptance that risk goes hand in hand with all forms of contracting and the percentage of job failures is just a tiny percentage of the entire industry.   The only way to ensure total financial safety would be for the government to own it's building arm and thus guarantee that it's subbies would get paid.

We know what happens when governments get involved in commercial transactions.  Everything gets hopelessly wrapped up in bureaucratic red tape - costs blow out enormously - and for some strange reason everything costs a lot more than when the work if carried out by private enterprise.

The present system definitely needs fine tuning.  At present, work completed is evaluated and payments made to the builder on that basis.  In a well run operation, sub contractors could expect to get progress payments on the same basis, but that relies on the prime contractor being solvent - and that is the present weakness.

Perhaps the answer is to legislate to open a new avenue of insurance guarantee.  Perhaps it is time for the insurance industry to try a new approach - and for governments to require a certificate of compliance that a policy to guarantee the payment of sub contractors is lodged before any work contract is signed.

Unfortunately, the cost would be prohibitive - and it would probably destroy the sub contracting system that has served us well for ages.

Perhaps that would be a case of throwing the baby out with the bath water !