New legislation to create a fairer system for building and construction industry

  • Building and Construction Industry (Security of Payment) Bill 2020 to be introduced into State Parliament
  • Delivering an election commitment to provide a fairer system for those carrying out construction work or supply related goods and services in WA
  • Bill improves security of payment across the WA building and construction industry 
  • New laws to bolster the confidence of all participants in Western Australia’s building and construction industry by ensuring payment is made on time will be introduced into State Parliament today.

    The reforms will promote business growth and innovation, safeguard the livelihood and wellbeing of the Western Australians behind the State’s construction businesses, and complement measures the McGowan Government has already delivered through the expanded use of Project Bank Accounts on government projects and enhancing the investigation powers of the Small Business Commissioner.

    In what is an Australian first, the Building and Construction Industry (Security of Payment) Bill 2020 introduces a mandatory retention trust scheme. This will protect subcontractors’ retention money from being misappropriated or lost altogether in insolvency at each level of the contracting chain.

    The Bill also includes provisions to have registered building contractors with a history of ripping off subcontractors, or engaging in ‘phoenixing’ activity by driving a construction business into the ground and then re-emerging with a brand new business to be removed from the industry.

    Further, it requires timely engagement in the payment process and imposes significant consequences for failure to do so. Principals will be required to pay head contractors within 20 business days of receiving a claim, and head contractors will be required to pay subcontractors within 25 business days or any lesser period in the construction contract. Payment claims for certain residential-related construction work will need to be paid within the date specified in the contract or 10 business days if there is no date specified.

    As stated by Commerce Minister John Quigley:

    “The building and construction industry is a vital part of our economy, providing the jobs, housing and critical infrastructure to meet the needs of all Western Australians.

    “It is also a significant source of employment and income for both the Australian and Western Australian economies. It hosts the largest number of small businesses in this State, with hundreds of thousands of people earning a living through the industry.

    “The current reality is businesses need to always contend with the fear of not getting paid on time or at all, and without access to effective rights and protections under the law.

    “Our election commitment was made in recognition of the fact that the State’s construction industry has a long history of businesses and their families suffering significant financial losses due to non-payment and mistreatment.

    “I thank the industry for their engagement in the consultation process and acknowledge the productive and constructive input provided by a large number of groups and stakeholders into the development of these reforms.”

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