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Skip Navigation LinksDepartment of Housing and Public Works > Construction > Building and plumbing > Building > Security of payment

Security of payment

Queenslanders who work in our building and construction industry make an invaluable contribution to our communities and the economic prosperity of our state. They deserve to be paid for the work they do.

The new Building Industry Fairness (Security of Payment) Act 2017, passed by the Queensland Parliament on 26 October 2017, will help give them the confidence that this will happen.

These new reforms, including Project Bank Accounts, are not just important for subcontractors and their families, they are important for Queensland’s economy and productivity.

During extensive consultation the building industry told us that in some cases, subcontractors were not getting paid for their work, putting livelihoods and lives at risk.

We have responded to stakeholder concerns with a set of reforms that will help assure payment, make it easier for subcontractors to navigate the claims process, and strengthen the powers of the Queensland Building and Construction Commission (QBCC) so the action it takes will be meaningful and effective.

Building Industry Fairness Reforms

A series of reforms to improve security of payment for subcontractors have been introduced through the Building Industry Fairness (Security of Payment) Act 2017.

Reforms include project bank accounts, progress payments, increasing the independence of the adjudication registry, a simple English version of the present Subcontractors’ Charges Act 1974  and amendments to the Queensland Building and Construction Commission Act 1991 to prevent phoenixing and strengthen the licensing framework.

The second phase of the building industry fairness reforms will take effect from 17 December 2018.

This will include new procedures for payment claims, payment responses and adjudication of payment disputes, as well as incorporation of the modernised subcontractors’ charges provisions. These provisions will replace the existing Building and Construction Industry Payments Act 2004 and Subcontractors’ Charges Act 1974.

Project Bank Accounts

Project Bank Accounts (PBAs) are established for certain projects to safeguard progress payments, protect retention monies and allow for more timely payments to subcontractors.

From 1 March 2018, projects tendered by the Queensland Government will use PBAs on building and construction projects (excluding engineering projects) valued between $1 million and $10 million. Following successful implementation, this model is set to apply to private sector projects valued from $1 million. However, this will not occur before 1 March 2019.

Find out more about PBAs.

Building Industry Fairness Implementation and Evaluation Panel

The Building Industry Fairness (Security of Payment) Act 2017 allows for the appointment of a Building Industry Fairness Reforms Implementation and Evaluation Panel to work with government and with the building industry to assess the implementation and effectiveness of the suite of 2017 building fairness reforms. These reforms include the Building Industry Fairness (Security of Payment) Act 2017 and the Building and Construction (Non-conforming Building Products and other Matters) Act 2017.

Four eminent professionals have been appointed to the panel including:

Chair - Ms Bronwyn Weir – managing director and consultant specialist in regulatory practice, enforcement and compliance matters in the building and construction industry

Member - Ms Jennifer Robertson - corporate governance consultant and practicing lawyer and Deputy Chair of the Queensland Building and Construction Commission (QBCC)

Member - Mr Troy Lewis - specialist in construction litigation and security of payment law

Member - Ms Fiona Aitchison Reid - principal solicitor in a construction law firm.

View the Terms of Reference for the Panel.

The Panel will be conducting consultation with industry and individuals. More details will be provided as they become available.

One new Security of Payment Act

Several Acts contain provisions aimed at protecting payment to subcontractors. Relevant provisions from the Building and Construction Industry Payments Act 2004 (BCIPA), the Subcontractors' Charges Act 1974 (SCA) and the new provisions about Project Bank Accounts (PBAs), will all be incorporated into a single piece of legislation.

 A single Security of Payment Act will make relevant provisions easier to find and interpret. It will also provide a holistic view of Queensland’s comprehensive security of payment regime.

Enhanced powers for the QBCC

Amendments to the Queensland Building and Construction Commission Act 1992 (QBCC Act) will enhance the QBCC’s ability to regulate the building industry.

Improved ability to detect non-compliance with payment obligations.

Higher penalties will be introduced for individuals who perform unlicensed or defective building work.

Standardised investigator powers will provide greater transparency and equity to the industry.
Expanded definitions in legislation will mean an individual who substantially influences a company’s affairs cannot avoid penalty or the consequences of a company becoming insolvent.
Minimum Financial Requirements will be placed into a regulation, so that the requirements will be set independently of the QBCC.

Background

From 17 December 2015 to 31 March 2016, the Queensland Government released a Security of Payment discussion paper (PDF, 141MB) to seek feedback from industry and the community on how best to tackle this issue for subcontractors.

The discussion paper included a series of options for the public to consider:

  • Option 1—Project Bank Accounts: A project bank account facilitates simultaneous payments of a project's head contractor and all participating subcontractors through a trust arrangement.
  • Option 2—Retention Trust Fund Scheme: This option requires subcontractors’ retention money to be held in a separate trust account.
  • Option 3—Insurance schemes: This option includes a range of insurance schemes to safeguard against defects, late completion and insolvency of contractors.
  • Option 4—Federal legislative changes: This option seeks to lobby the Commonwealth government for reform to Commonwealth legislation relating to security of payment.
  • Option 5—Education: This option proposes education for the building and construction industry stakeholders regarding matters such as financial management and business management.
Finally, the discussion paper sought feedback in 2014 on the effectiveness of the amendments to the Building and Construction Industry Payments Act 2004, as well as the Subcontractors’ Charges Act 1974 and the Queensland Building and Construction Commission’s Minimum Financial Requirements Policy.
The government engaged Deloitte to undertake economic and financial analysis of certain reform proposals that arose from consultation.

Report findings

The Deloitte report, Analysis of security of payment reform for the building and construction industry, shows that implementing Project Bank Accounts (PBAs) will deliver positive benefit cost ratios (BCR) over a 20 year evaluation period in certain scenarios.
Deloitte’s analysis also shows strong positive rating scores for delivery of an education program, and positive overall benefits from proposed changes to the Building and Construction Industry Payments Act 2004.
The report evaluates two proposed PBA models quantifying benefits and costs, analyses the possible economy-wide effects and the efficiency that can be gained in the construction industry.

More information

If you have any questions regarding proposed security of payment reforms, please email securityofpayment@hpw.qld.gov.au.


Last updated 23 July 2018    Creative Commons Attribution 4.0 International (CC BY 4.0)


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