An Act has been passed in NSW which changes payment requirements in the Building and Construction Industry.
The Building and Construction Industry Security of Payment Amendment Act 2013 amends the Building and Construction Industry Security of Payment Act 1999 where it relates to payments to be made under construction contracts.
Changes to be introduced include that subcontractors need to be paid within 30 days. In construction contracts "payment claims" will no longer need to state that they are payment claims made under the Act, but must now be accompanied by a supporting statement that all subcontractors have been paid all amounts owed to them. Contractors can be prosecuted for lying about paying subcontractors, with fines up to $22,000 or possible jail time. Another change is that a head contractor must pay retention money into a trust account that operates according to the regulations.
The requirement to pay subcontractors within 30 days has been criticised by The Master Builders Association as being overly harsh on builders/head contractors because the legislation does not ensure prompt payment between clients and builders. This means that head builders could be short on funds, and some head contractors/builders could go to the wall, reducing competition and increasing construction costs.
The amendments will not apply to construction contracts entered into before the Act commences.
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