Queensland is about to introduce a new state payment scheme for subcontractors.
The system means they would be paid in full and on time and analysis by Deloitte has found it could result in an extra $6.42 billion of economic activity over the next 20 years and thousands of jobs.
Housing Minister Mick de Brenni says the system is being finalised but says he's heard from countless subbies that non-payment or delayed payment is killing small business confidence and tearing apart families.
It comes as the Small Business Ombudsman Kate Carnell announces an inquiry into late payment terms.
The Ombudsman wrote in a column for Fairfax Media: "Here in Australia, more and more small businesses are falling victim to the unscrupulous payment practices of some big businesses – and even some governments – that are quite frankly, a drag on productivity.
From stipulating unfair payment terms in contracts, to simply not honouring agreed payment times, a number of big businesses are effectively treating the little guys as banks by forcing them to provide interest free-loans in the form of late paid or unpaid invoices."
AAP with Fairfax Media