Greater protection measures for subcontractors

Friday, 12 August 2016 
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• ​Comprehensive package to provide improved subcontractor payment security

The Liberal-National Government today launched a package of measures to improve security of payment for subcontractors.

Small Business Minister Sean L'Estrange said non-payment of subcontractors within the construction sector was unacceptable and required a whole of government response.

"Finance Minister Bill Marmion and I have met with subcontractor representatives and we acknowledge their specific concerns," Mr L'Estrange said.

The new measures include mandating from September 30, 2016, Project Bank Accounts (PBAs) on Building Management and Works construction projects valued between $1.5 million and $100 million.

Mr Marmion said Western Australia was the first State to trial PBAs and would be the first to roll them out more broadly.

"PBAs are an important measure for streamlining the payment process along the supply chain and improving transparency and accountability," he said.

"PBAs can shield subcontractors from 'phoenix' activity, where head contractors strip assets from the business before entering administration."

Mr L'Estrange also announced significant changes to Security of Payment legislation, including:

• reducing the time a head contractor can take to pay a subcontractor to 30 business days
• increasing the application time for adjudication of payment disputes to 90 business days.

The State Government would also develop a Code of Conduct for contractors working on Government projects.  Non-compliance with the code could see contractors blocked from working on Government projects.

"The Government will back building industry productivity by reinforcing the need for adherence to the existing laws that apply to construction workplaces which help stamp out inappropriate and unethical behaviour," Mr L'Estrange said.

The Small Business Commissioner will have an expanded role in reviewing and mediating on disputes involving small businesses on Government projects.

The Government will also fund and establish a Building and Construction Compliance Unit within the Department of Commerce to monitor compliance with the Code of Conduct.

Fact File

• Between September 30, 2016 and June 30, 2017, about 30 Building Management and Works projects with a total value of about $250 million will operate under PBAs
• The Government's response to Professor Phil Evans' Review of the Construction Contracts Act will be tabled when State Parliament resumes
• An Industry Working Group will explore broader options to improve certainty and timing of payment in the building and construction industry