outlines five options which the Government is considering to
improve payment outcomes for sub-contractors;
seeks feedback on the implementation of the recent (2014)
amendments to the Building and Construction Industry Payments
Act 2004 (BCIP Act); and
raises the possibility of reform to the Subcontractors'
Charges Act and/or the QBCC's 'Minimum Financial
FIVE OPTIONS UNDER CONSIDERATION
The five options to improve payment outcomes for sub-contractors
in the construction industry that the Government is seeking
feedback on are:
the use of Project Bank Accounts, (trust
accounts set up with a bank to assist with the payment of progress
the implementation of a Retention Trust Fund
Scheme under which a head-contractor would hold retention
money in a trust account (with an authorised deposit-taking
institution) and may only withdraw funds in accordance with the
the use of an insurance scheme (instead of
retention money) to secure sub-contractor performance;
federal legislative changes, notably to the Corporations
Act 2001 and the Bankruptcy Act 1966, to prioritise
payments owing to sub-contractors; and
the implementation of education programs which focus on the
financial skills of relevant stakeholders.
Given the levels of detail provided in the discussion paper on
each of these options for reform, it may be that the options most
likely to be pursued by the Government are the use of Project Bank
Accounts and the Retention Trust Fund Scheme.
The use of Project Bank Accounts is currently being piloted in
Western Australia, the Northern Territory and New South Wales.
Similarly, a Retention Trust Fund Scheme would be a more
feasible option because the reform would be specific to retention
moneys and the legislative reforms needed to implement such a
scheme would be less likely to span across industries (as compared
with, for example, an insurance scheme).
BCIP ACT AND THE SUBCONTRACTORS' CHARGES ACT
While there is also an opportunity to provide feedback on the
recent changes to the BCIP Act and the Subcontractors' Charges
Act, it remains to be seen whether there is appetite for
significant amendments to be made to these pieces of legislation in
the near term, given that:
the BCIP Act only recently underwent major changes (following a
detailed review process) to the payment claim and adjudication
an overhaul to the Subcontractors' Charges Act may
be more likely as part of the suggested harmonising of all of State
and Territory security of payment regimes under a Commonwealth
1 Notably through amended timeframes and
financial thresholds for payment claims and a new process for
2 See recommendation by Senate Economics
Reference Committee, Parliament of Australia, 'I just want
to be paid', Insolvency in the Australian construction
Industry (2015) [8.43]
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.
Most awarded firm and Australian deal of
Australasian Legal Business Awards
Employer of Choice for
Equal Opportunity for Women
in the Workplace (EOWA)
To print this article, all you need is to be registered on Mondaq.com.
Click to Login as an existing user or Register so you can print this article.
Warranties can be risk-shifting mechanisms when the party giving the warranty is not the party at fault for the defect.
Some comments from our readers… “The articles are extremely timely and highly applicable” “I often find critical information not available elsewhere” “As in-house counsel, Mondaq’s service is of great value”
Register for Access and our Free Biweekly Alert for
This service is completely free. Access 250,000 archived articles from 100+ countries and get a personalised email twice a week covering developments (and yes, our lawyers like to think you’ve read our Disclaimer).