Queensland leads the way to boost subcontractor payment rights in Australia. New legislation aims to settle building disputes over unpaid and overdue invoices in a fair way.
It looks like Queensland is set to offer the strongest protections for building subcontractors in Australia.
Unpaid and overdue invoices could become a thing of the past, as the state government fortifies subcontractor payment rights.
The Queensland Parliament passed the Building Industry Fairness (Security of Payment) Act in October 2017. Tougher measures will crack down on late payment, unlicensed building work and insolvency.
Legislation will make sure construction workers get paid fairly, according to Queensland Housing Minister Mick de Brenni.
“These reforms help ensure that subcontractors in the building and construction industry are paid in full and on time, every time. With these reforms, Queensland will have the strongest protections for subcontractors anywhere in Australia.”
Some changes have been made since the initial bill was introduced. There will be a mandatory review later this year, but much of the original legislation remains.
It’s unclear when the full Act comes into play, but it should start early this year.
At a glance, new measures include:
- Project Bank Accounts
- Payment claims
- Dispute resolution process
- Subcontractors’ charges
Project Bank Accounts will tackle overdue invoices:
Project Bank Accounts work to ensure that all relevant parties are paid on dates set out in the contract.
These trust accounts hold funds independent of the head contractor and principal, to promote fairness. This stops companies from holding onto subcontractor payments as a line of credit to finance other projects.
PBAs will become mandatory over the next two years. Queensland government projects valued between $1 million and $10 million will fall under the Act early this year. All public, government and private construction projects over $1 million will follow suit in 2019.
It’s important to note that PBA’s don’t extend to subcontractors in civil construction. At this stage, only head contractors and tier one subcontractors are covered by Project Bank Accounts.
Having said this, it appears the government hasn’t ruled out extending Project Bank Accounts to all subcontractors.
“We listened to industry, and our new laws mean that we will have the ability to expand the use of PBAs down to sub-subcontractor level if needed.” – Queensland Housing Minister Mick de Brenni
Payment claims will resolve building disputes about unpaid and overdue invoices:
A new payment claims process will be used during building disputes. This covers all suppliers and subcontractors on a construction contract, unlike Project Bank Accounts.
If the contract doesn’t specify a due date for progress payment, it falls on the 10th business day following the claim. The respondent also becomes liable for the full amount.
There will be strict penalties and disciplinary action for those who don’t respond to a payment claim with a schedule.
Queensland leads the way when it comes to protecting subcontractor payment rights:
Queensland is leading Australia, when it comes to subcontractor payment rights.
But it seems the rest of the nation lags behind. Overdue invoices are causing major headaches across the Australian construction industry. We look at this in more detail next week!