Commerce Minister pledges to strengthen payment protections for subcontractors

WA Department of Mines, Industry Regulation and Safety

Media statement from Hon Sue Ellery BA MLC, Minister for Commerce

  • Latest stage of security of payment reforms to protect building and construction subcontractors now in effect
  • McGowan Government retention trust scheme election commitment delivered
  • Increased powers to ensure good commercial behaviour in the building sector

The McGowan Government has further improved payment protections for building and construction subcontractors, with new trust account requirements and strengthened regulatory powers now in effect.

The second stage of the Building and Construction Industry (Security of Payment) Act 2021 implements an Australian-first retention trust scheme that applies down the supply chain, delivering on a key election commitment by the McGowan Government.

From today, new eligible Western Australian contracts valued at $1 million or more for construction work or related goods and services, and under which retention money is withheld, will require a contracting party to deposit the funds in a separate trust account. The new requirement means better protections for subcontractor retention money in the event of insolvency on a project.

Greater powers enabling the Building Services Board to exclude people with a history of financial failure from starting or continuing a building service business also come into force today. In addition, building service contractors who fail to pay court and adjudication debts to subcontractors can now be denied registration or receive disciplinary action.

These latest measures build on other protections available under the Act that were introduced by the McGowan Government last year, which include more structured and transparent payment processes and an effective dispute resolution pathway to recover money.

The third stage of security of payment changes will come into effect in February 2024, with the retention trust scheme extending to applicable contracts valued at $20,000 or more, and new rules introduced to uphold fairer contracting practices.

Fact sheets, videos and other resources with more information on the new laws are available on the Building and Energy website:

Comments attributed to Commerce Minister Sue Ellery:

"Subcontractors and tradespeople are the lifeblood of the building and construction sector and they deserve to receive timely and efficient payments for their work.

"These improved financial practices will help to ensure that money owed to building and construction subcontractors remains secure and the industry stays strong, even if a building service provider goes insolvent.

"Consumers will also benefit from tougher measures to weed out unreliable or unscrupulous building industry participants and encourage better financial conduct across the sector.

"The McGowan Government is committed to delivering these important reforms, which will deliver sector-wide benefits through a fairer, more efficient and robust payment protection system."

Original statement on the State Government website:

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