Fairness reform in QLD construction industry

When construction businesses don’t get paid – or wait too long to get paid – it has a ripple effect across the industry. To combat this, Security of Payment (SOP) Acts exist in all Australian states and territories to improve cash flow and to ensure the burden of insolvency risk does not fall on building contractors and subcontractors.

Changes were recently made to the Queensland Building Industry Fairness (BIF) Security of Payment Act 2017 to speed up payments and improve the processes for claim resolution. If you work in the Queensland construction industry, here’s what you need to know.

What is the Security of Payment Act?

The Queensland BIF Act came into effect in December 2018 – leading the charge for security of payment reforms in Australia at that time. Queensland’s consolidated legislation – which replaced two previous, separate Acts – ensures people working in the building and construction industry get paid for the important work that they do. 

What’s changed?

On July 23 the Building Industry Fairness (Security of Payment) and Other Legislation Amendment Act 2020 (BIFOLA Act) was passed. The amended Act follows recommendations set out in the Building Industry Fairness Reforms Implementation and Evaluation Panel (BIF Panel) Report. 

Some highlights include:

• Replacing Project Bank Accounts (PBAs) with Trust Accounts to protect payments, simplify the payment framework and reduce the administrative burden for head contractors. Stronger regulatory oversight of trust accounts has also been granted to the Queensland Building and Construction Commission (QBCC).

• Stronger payment laws and protections have been put in place for contractors, including protections for claimants over monies in dispute. Under the Amendment Act, it is an offence to underpay a scheduled amount.

• Changes have been made to the minimum financial requirements for obtaining licences – including stronger reporting requirements, greater financial transparency, and ensuring licencees have sufficient working capital to deliver construction projects.  

• Changes have also been made to progress payment processes to encourage these payments to be made.

Broader security of payment reforms

Although security of payment legislation exists in all Australian states and territories, there isn’t a uniform or national approach when it comes to reform.

In September 2020 the Western Australian Building and Construction Industry (Security of Payment) Bill 2020 was introduced to state parliament. If passed it will bring about significant reform for the regulation of payments in the WA construction industry, and forge greater alignment with the "East Coast" model for SOP.

In 2019 similar reforms were applied to the New South Wales Building and Construction Industry Security of Payment Act 1999 – read more about these changes here. Although minor amendments have been proposed in other geographies, no other major reforms are yet to be passed. 

To find out more about the state and territory SOP laws that affect your business, check out the Australian Building and Construction Commission website.