Electrical Contracting, Service Industry and Equipment Technicians

Electrical Contracting, Service Industry and Equipment Technicians

NSW legislation strengthens construction industry

- Tuesday, November 19, 2013

The Building and Construction Security of Payment Amendment Bill 2013 was introduced to the NSW parliament last week. This is the first piece of reform stemming from the 2012 Independent Inquiry into Construction Industry Insolvency chaired by Bruce Collins QC.

The Collins Inquiry made a number of recommendations mainly relating to payment practices in the contractual chain between principal/owner, head contractor and subcontractor, including:

  • Introduction of Trust Accounts for money paid by a principle to a Head Contractor for Sub Contractors.
  • Prohibition of Head Contractors would be prohibited from accessing any of that Trust until all subcontractor payments have been made
  • Maximum time of 28 days for payments to be made from a Head contractor to a Subcontractor
  • The creation of a Building and Construction Commission with responsibility for control and regulation of all aspects of the Industry (including licencing) similar to the Queensland model.
  • Penalties for making false statutory declarations.
  • A disputes board to be set up for major Government contracts to handle, among other things, payments to subcontractors

These and other findings from the inquiry would deliver a lot more security for subcontractors and potentially help limit the number of contractors who end up insolvent.

Unfortunately the O’Farrell Government has been slow to move on the recommendations from the Collins Inquiry, which was released back in January, and this piece of Legislation would have only introduced a guarantee of a maximum thirty day period for the payment of progress claims. The Labor Party have been successful in amending the legislation in the NSW Upper House and it now includes the provisions for the Trust accounts to be established for retention money.