Most Read Contributor in Australia, September 2016
In 2012 the NSW Government commissioned an Independent Inquiry
into Construction Industry Insolvency to assess the cause and
extent of insolvency in the industry and to recommend measures to
better protect subcontractors. The Building and Construction
Industry Security of Payment Amendment Bill 2013
(Bill) (introduced on 24 October 2013) proposes
amendments to the Building and Construction Industry Security
of Payment Act 1999 (NSW) (Act) which focus
on the protection of subcontractors.
What are the proposed changes?
The Bill introduces 3 major changes to the Act:
Act applies to all payment claims for construction work
or related goods and services: Except for certain
residential building contracts, payment claims will no longer need
to include a statement that they are made under the Act to attract
the operation of the Act. Claims management processes will
therefore need to be even more rigorous given the likely increase
in the number of claims to be dealt with in accordance with the
Prompt payment: A maximum time for payment
will be prescribed, so that progress payments from a principal to a
head contractor will be due and payable 15 business days after the
payment claim is made, and from a head contractor to a
subcontractor 30 business days after the payment claim is made.
Longer payment terms will have no effect. Certain residential
building contracts will be excluded from these maximum payment
Supporting statements: A head contractor will
need to submit a "supporting statement" with each payment
claim, declaring that it has paid its subcontractors all amounts
that have become due and payable in relation to the construction
work concerned. A failure to do so will be an offence with a
maximum penalty of $22,000. Knowingly providing a false or
misleading supporting statement will be a separate offence with a
maximum penalty of $22,000, 3 months imprisonment or both. A form
of the statement will be prescribed in the regulations.
Once enacted, contract administrators, principals and head
contractors will need to ensure compliance with the new provisions,
paying special attention to the new prompt payment
The content of this article is intended to provide a general
guide to the subject matter. Specialist advice should be sought
about your specific circumstances.
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