Building Industry Fairness (Security of Payment) and Other Legislation Act 2020
The Queensland government is committed to creating a safer, fairer and more sustainable building and construction industry.
The Building Industry Fairness (Security of Payment) and Other Legislation Amendment Act 2020 (BIFOLA Act) received assent on 23 July 2020.
The BIFOLA Act amends the following legislation:
- Architects Act 2002
- Building Act 1975
- Building Industry Fairness (Security of Payment) Act 2017
- Professional Engineers Act 2002
- Queensland Building and Construction Commission Act 1991
- Retirement Villages Act 1999
These changes support the delivery of the Queensland Building Plan and recommendations of the:
- Building Industry Fairness Reforms Implementation and Evaluation Panel Report (BIF Panel)
- Special Joint Taskforce Report
- Building Confidence Report
Building Industry Fairness (Security of Payment) Act 2017 (BIF Act)
Security of payment in the building and construction industry is an ongoing priority for the Queensland Government.
Recommendations of the Building Industry Fairness Reforms Implementation and Evaluation Panel
The Building Industry Fairness Reforms Implementation and Evaluation Panel Report reviewed how the first phase of project bank accounts was working, and made 20 recommendations for reform. They included implementation of project trust accounts to the private sector and other security of payment reforms. All recommendations were accepted in full or in principle by the Government. These decisions are discussed in the Government response to the Panel’s report (PDF, 694.57 KB).
The panel's recommendations had three guiding principles for further implementation of trust accounts:
- To simplify the project bank account process
- Improve subcontractor protections
- Manage the transition to full implementation of trust accounts
The BIFOLA Act implements the panel’s recommendations for a revised trust account framework which will:
- Reduce the number of accounts: instead of three trust accounts, one project trust account will be needed for each eligible contract.
- Only require one retention trust account to be held per contractor, if a head contractor holds cash retentions.
- Replace the disputed funds account with added protections for subcontractors.
- Relieve Principals from trust account oversight.
- Increase the regulatory functions and oversight of the Queensland Building and Construction Commission, including audit powers over trust accounts.
Once trust accounts are implemented to eligible projects of $1 million or more all subcontractors down the chain in a trust account project will have the benefit of a retention trust, thus providing more protection to retention funds held on behalf of subcontractors.
The new trust account framework will be phased in gradually to all eligible contracts valued at $1 million or more.
From 1 March 2021, the new framework will apply to eligible state government contracts valued between $1 million and $10 million. Contracts of this type are already subject to project bank account requirements.
The trust account framework will apply to other eligible building and construction contracts as follows:
- 1 July 2021—government and Hospital and Health Services contracts valued at $1 million or more.
- 1 January 2022—private sector, local government, statutory authorities’ and government-owned corporations’ contracts valued at $10 million or more.
- 1 July 2022—private sector, local government, statutory authorities’ and government-owned corporations’ contracts valued at $3 million or more.
- 1 January 2023—all eligible contracts valued at $1 million or more.
Once trust accounts are fully implemented, all subcontractors in the contractual chain for a project trust account contract will have the benefit of a retention trust, thus providing more protection to retention funds held on behalf of subcontractors.
Other security of payment reforms recommended by the Panel
The following security of payment reforms will commence on 1 October 2020:
- When a head contractor provides a payment claim to their principal, they must also provide a supporting statement that states that all of their subcontractors have been paid. If payment has not been made, they must explain their reasons for non-payment.
- When an adjudicated amount has not been paid, a head contractor can lodge a payment withholding request against a financier to their principal. Other claimants will be able to lodge a payment withholding request on the party above the respondent in the contractual chain.
- When an adjudicated amount has not been paid, a head contractor can also lodge a statutory charge over the property where work was carried out if it is owned by the respondent or a related entity.
Recommendations of the Special Joint Taskforce
The Special Joint Taskforce made 10 recommendations following its investigation into allegations of fraudulent behaviour relating to subcontractor non-payment in Queensland's building industry. The Government accepted all recommendations of the Taskforce.
Legislative amendments to the QBCC Act to implement Taskforce recommendations will take effect on 1 October 2020 and will:
- strengthen and clarify an existing offence provision relating to causing significant financial loss through failure to comply with contractual obligations, to improve the QBCC’s ability to enforce the provision
- introduce a new offence for causing false and misleading information about a licensee’s financial situation to be given to the QBCC
- provide the QBCC more time to start a prosecution to allow more time for investigation in complex cases
- require a supporting statement to be provided by a head contractor to a Principal (the Panel also recommended this). The BIFOLA Act imposes a new penalty for failing to provide a supporting statement.
Queensland Building and Construction Commission Act 1991 (QBCC Act)
Amendments to the QBCC Act will:
- prevent excluded individuals from holding a site supervisor licence
- improve sharing of licensing information across jurisdictions
- introduce a new penalty for delaying or obstructing the rectification of building work
- implement important amendments relating to fire protection work
- provide businesses more time to obtain a licence when a new licence class is introduced
- clarify the QBCC’s ability to impose a condition on a licence restricting the scope of works.
Amendments to support the transition for mechanical services (points 5 and 6 above) and fire protection licences (point 4 above) commenced on 23 July 2020, and the validation of relevant landscaping work and fire collars work is taken to have commenced on 1 January 2020.
The amendments in points 1-3 will commence on 1 October 2020.
Further changes to support the new fire protection licensing framework will commence on 1 May 2021.
Amendments to Schedule 1A of the QBCC Act in the BIFOLA Act to remove a contractor licensing exemption will commence at a later date that is yet to be determined.
Building Act 1975
The BIFOLA Actwill improve public confidence and address some of the issues highlighted in the Building Confidence Report.
The reforms will:
- strengthen the certification and inspection process
- clarify that a certifier’s primary duty is to act in the public interest, regardless of commercial relationships
- improve owner’s rights including to require additional inspections for assessable building work and obtain inspection documentation
- strengthen the regulatory framework by introducing a demerit point system - building certifiers who accrue 30 demerit points over three years may be disqualified
- improve professional standards by requiring accreditation standards bodies to have their professional development schemes regularly reviewed
- give building certifiers access to an alternative licensing pathway.
These reforms will commence on 1 October 2020. The reform to give building certifiers access to an alternative licensing pathway will commence at a later date.
Architects Act 2002 and Professional Engineers Act 2002
The national Building Confidence Report recommended that the states and territories should give regulators more effective powers and give the public more confidence that the built environment is safe and high quality.
The BIFOLA Act will enhance the powers of the Board of Architects of Queensland and Board of Professional Engineers of Queensland. From 1 March 2021, they will be able to:
- make more thorough investigations by gathering more evidence when a complaint is made
- enter places to search and seize evidence
- audit the work of architects and professional engineers, as well as people who are claiming to be architects or professional engineers
- impose a condition on an architect’s or professional engineer’s registration without their consent.
Further information about these reforms will soon be available.
- Last updated:
- 9 September 2020