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Thursday, 17 October 1985
Page: 1393


Senator PARER(12.55) —As a matter of public interest, I raise yet again the sorry saga of a contract between the Department of Housing and Construction and E. &J. M. Maltry at the new Brisbane International Airport. The contract to carry out certain works was granted to E. &J. Maltry in November 1983. This company had been in operation for approximately 20 years and credit evaluation at December 1983 showed that it was considered sound with a better than average pattern of payments. Maltry's subsequently engaged subcontractors and tender prices were determined on the basis that claims would be paid within seven days of progress payments from the Department of Housing and Construction. Payment terms, of course, are important in determining prices.

As the job progressed, subcontractors became concerned that the Department was not, in accordance with the original understanding, making payments in the time specified. The contractor, Maltry, was requested on several occasions to approach the Department regarding payment for deliveries made of completed goods to the airport site. The contractor advised on each occasion that the Department would not consider the request. During late May and early June 1984 several attempts were made to discuss non-payment of completed works with the Department. A major subcontractor, Evans Deakin Industries Ltd, made numerous telephone and personal calls, but to no avail. The Department refused to make officers available. On 18 June 1984, Evans Deaken informed Maltry and a Mr John Hodges of the Department of the removal of labour from the site. The reaction was that the Department did not want to know. Notice of intention to claim charge under the Subcontractors' Charges Act 1974-76 (Queensland) was issued on 19 June 1984 on the same day labour was withdrawn by Evans Deakin.

On 20 June, an unofficial discussion was held with the Department project manager, a Mr Trevor Barrel, who was informed of the notice under the subcontractors Act but told that it would be withdrawn if work recommenced. The project manager advised that work would recommence in about a week. The provisional liquidator to Maltry was appointed on 21 June. With the sanction of the Department the provisional liquidator remained on site with some labour in an attempt to keep the contract alive. Major suppliers and subcontractors were approached by the provisional liquidator to give their support in meetings with the Department for completion of the contract. The response of the Department was negative and frustrating. A meeting was held with the provisional liquidator at the office of the Director of the Department of Housing and Construction, a Mr Janssen, who said he would investigate the matter further with his officers. Follow-up revealed that the Director had been transferred interstate and an appointment was made with the Acting Director, a Mr Caton, for 31 July to discuss the proposal for the provisional liquidator to complete the contract.

Notice of termination of contract was served on the provisional liquidator on 27 July 1984 and the meeting with the Acting Director cancelled. The provisional liquidator telexed the Federal Minister, Mr Hurford, outlining what had happened and a reply was received declining to comment on the contractual matters. On 20 June the Department wrote to Evans Deakin claiming it was not bound by the Subcontractors Charges Act. This Act was introduced to protect subcontractors in the event of a prime contractor going into liquidation or bankruptcy. It was introduced to cover all construction authorities letting contracts in Queensland and provided for moneys owing to the prime contractor to be paid direct to subcontractors and suppliers. The Department of Housing and Construction claimed that it was not subject to the same law applicable to every other construction authority in the State. On 20 August 1984, the Department was advised that it was bound by the provisions of the Queensland Act and, therefore, was prevented from paying any moneys to the liquidator. The Government's solicitor acknowledged the letter and stated:

It is unlikely that there will be any moneys to be paid by the Commonwealth to E. &J. M. Maltry.

The question of whether the Commonwealth was bound by the subcontractors Act went to the Supreme Court on 20 September 1985. The Full Court handed down its decision finding unanimously in favour of Evans Deakin Industries Ltd and, on 11 October, the Commonwealth sought leave of the High Court to appeal the judgment of the Full Court.

This, Mr Acting Deputy President, is a very sad and sorry affair. It indicated a litany of bungling events. The tragedy is that in the Commonwealth frenzy to show that it is not covered by an Act which covers everyone else in the State, 285 subcontractors and suppliers have not been paid a cent. In December last year this so concerned the Government Whip in the other place, Mr Ben Humphreys, that he called for an inquiry. Predictably, nothing happened. Evans Deakin is the largest of the subcontractors, being owed around $215,000 and, as such, has taken up the running. However, another 284 are owed approximately $1.3m. Some of these have gone broke, and others have been required to mortgage their homes to avoid bankruptcy. Apart from the totally unnecessary delays which have been caused by the Department's lethargy and bungling, contractors will need to consider seriously their position in future contracts where any Commonwealth department is the principal, and protection offered by the Queensland Sub-contractors Charges Act is not assured. Why is the Government continuing to penalise 284 innocent subcontractors who have provided goods and services under the terms of their contract? I believe these events are grounds for an inquiry into yet another case of monumental government mismanagement.