The head contractor licensing exemption under section 8, Schedule 1A of the Queensland Building and Construction Commission Act 1991 (Qld) (QBCC Act) has officially been confirmed as remaining in force, with the Building and Other Legislation Amendment Act 2022 (Qld) (the Amendment Act) receiving assent on 10 June 2022.
McCullough Robertson's Insight article dated 30 March 2022 previously discussed that the foreshadowed abolition of the head contractor exemption would not be proceeding, and that a Bill had been introduced to Parliament on 29 March 2022 proposing to preserve the head contractor exemption. Section 8, Schedule 1A of the QBCC Act has also been amended via the Amendment Act to provide that the head contractor exemption will 'not apply in circumstances prescribed by regulation'. While no regulation dealing with this issue has been introduced yet, this provision provides Parliament with the ability to prescribe circumstances in which the head contractor exemption will not apply in the future
Head contractor exemption to remain in force
Section 42(1) of the QBCC Act provides that it is unlawful to carry out, or undertake to carry out, building work without the appropriate licence.
An exemption to this requirement is contained in section 8, Schedule 1A of the QBCC Act, which provides that an unlicensed person does not contravene section 42(1) of the QBCC Act if they engage an appropriately licensed contractor to perform any building work requiring a licence.
This exemption was initially introduced in 2013 and has been relied upon by head contractors to engage licensed subcontractors to carry out elements of building work for which the head contractor may be unlicensed.
In 2020, the Building Industry Fairness (Security of Payment) and Other Legislation Amendment Act 2020 (Qld) (BIFOLA Act) was enacted, which provided for the abolition of the head contractor licensing exemption. The abolition was due to commence in July 2021, but was postponed until 24 July 2022 to enable further industry consultation.1
Following extensive industry input, the Bill introduced by the Government on 29 March 2022 proposed to preserve the head contractor exemption. This was welcome news for industry participants who had relied on the exemption in conducting their operations, and raised concerns regarding the additional administrative costs and burdens that would have resulted from its abolition.
As noted above, the Bill was passed, and the Act assented to on 10 June 2022. This means that the head contractor licensing exemption will remain in force.
A regulation may prescribe circumstances where the exemption will not apply
A new section has been added to section 8 of Schedule 1A of the QBCC Act, which provides that the exemption will 'not apply in circumstances prescribed by regulation'.
At this stage, a regulation has not been introduced, however the Explanatory Notes to the Bill previously foreshadowed that a regulation could possibly be made to exclude 'high risk' work such as fire protection and mechanical services from the head contractor exemption.
In the Second Reading debate, Minister Mick de Brenni explained the rationale behind allowing a regulation to prescribe circumstances in which the head contractor exemption will not apply:
'Given the complexity of the building industry, enabling a regulation to prescribe circumstances where it is critical that head contractors be licensed will allow us to respond to emerging issues such as security of payment or safety issues and we will respond as they arise. These regulations will be subject to extensive consultation, as we have committed to previously and has been the case throughout this process because that is what a good government does. A good government listens and then a good government responds. These regulatory amendments will allow us to respond in an agile fashion.'
In respect of the preparation of a regulation, the Queensland Government has stated that consultation will be carried out later in 2022 with stakeholders: 2
'.the Government will ensure the Department of Energy and Public Works conducts comprehensive industry consultation in the development of any regulation to prescribe relevant circumstances in which it is critical that a head contractor hold a licence.
Consultation is currently proposed to be conducted later in 2022 on potential circumstances that could be prescribed by regulation. This will allow stakeholders to provide relevant feedback on the detail of any proposed regulation. The independent panel appointed to conduct the review of the role of developers in Queensland construction industry is anticipated to conduct public consultation during July and August 2022 and finalise its report in October 2022. The Panel will be kept informed of work to develop a regulation and may consider it, as necessary, as part of its deliberations. Further, the Queensland government will consider the timing of the commencement of any regulation, in light of the Panel's work and the Committee's recommendation.'
We will continue to monitor this situation and provide an update when further news becomes available.
If you would like more information on the amendments to the QBCC Act or the head contractor exemption generally, please reach out to a member of the Construction and Infrastructure team at McCullough Robertson. We will be discussing these issues at our upcoming events.
Thank you to Alex Power for preparing this article.
1The BIFOLA Act was postponed by the Building Industry Fairness (Security of Payment) and Other Legislation Amendment (Postponement) Regulation 2021 (Qld).
2 Queensland Government's Response tabled 24 May 2022 to the Transport and Resources Committee Report No 18.
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