The ACT government will tighten building industry regulations to ensure dodgy builders and so-called phoenix companies cannot avoid personal liability and leave workers and subcontractors in debt.
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Legislation will be introduced on Thursday to stop construction companies deliberately liquidating to avoid paying creditors, taxes and employee entitlements, only to relaunch with the same assets months later.
The package of 43 reforms includes changes to on-site supervision, building and surveyor licenses, dispute resolutions, government procurement, building approvals and insolvency.
Planning minister Mick Gentleman said "phoenixing" was practised by few in the industry but was devastating for employees and clients.
The government will introduce a mechanism to stop companies with a history of compliance issues from operating in the ACT, including automatic suspension triggers.
The ACT Civil and Administrative Tribunal will be granted additional power to consider whether breaches are relevant to several companies rather than one and to take appropriate disciplinary action.
The government will also consider allowing authorities to issue orders to people closely associated with an insolvent or a "disappeared" corporate licensee.
CFMEU ACT secretary Dean Hall said the practice was common in the territory and has written to the Fair Work Ombudsman, Australian Tax Office and the Australian Securities and Investments Commission seeking action.
In April, Mr Hall asked the ACT government to investigate whether the company Bridge and Marine, which went into liquidation three years ago owing subcontractors money, was linked to the Civil Bridge and Wharf company registered a few days later.
The Australian Taxation Office pursued phoenix companies with a series of raids in Sydney last year, with deputy commissioner Michael Cranston alleging more than $40 million in tax revenue was at risk in Sydney alone.
Phoenix activity costs the Australian economy up to $3.2 billion each year, with honest businesses suffering up to $2 billion in unpaid debts and the non-supply of goods and services.
Mr Gentleman said the reforms were based on two years of consultation with community and industry stakeholders and would redefine contracting standards.
Consultation revealed the industry agreed action was needed to improve the security of payments and services with building companies, although there were "highly diverse views on potential models".
"These reforms benefit owners and future owners of residential buildings as well as those builders and industry members that already follow good practices," Mr Gentleman said.
The ACT government will also consider a trial of new measures to deal with insolvency and will increase reporting requirements for licensees.
"A review of ACT arrangements will aim to improve security of retention payments held by contractors and progress payments on government projects," government documents said.
The government will also refine the proposed alternative dispute resolution model based on consultation feedback.
"Improving the building industry is more than just changing legislation; we need to look at other ways the government, industry and the community can work together in the future to achieve good outcomes," Mr Gentleman said.
A raft of changes will be made to licensing agreements including the removal of architectural and engineering qualifications from the mandatory qualifications schedule.
Mandatory qualification will be revised to allow the registrar to ignore references from builders with a poor compliance history or associated with defective building work.
