The Queensland Government has commenced its review into the role of developers within the building and construction industry. This review may result in the removal of the Queensland Building and Construction Commission (QBCC) Head Contractor Exemption, as well as the need for some developers to be licensed under the Queensland Building and Construction Commission Act 1991 (QBCC Act).

Legislative background

In Queensland, an entity must hold a QBCC licence to carry out building work valued at $3,300 or more, pursuant to section 42 of the QBCC Act. An entity cannot claim any monetary, or other consideration, for the building work carried out without a licence.

Carrying out building work is broadly defined. A developer entity will be carrying out building work if it is engaged by a parent company to undertake building work. This is the case even though the developer entity subcontracts all building work to appropriately licensed subcontractors.

However, since late 2013 there has been an exemption to allow a developer entity to carry out building work in Queensland without a QBCC licence. This is provided that all building work is subcontracted to appropriately licensed subcontractors, in accordance with section 8, Schedule 1A of the QBCC Act (the Head Contractor Exemption).

The Queensland Government passed the Building Industry Fairness (Security of Payment) and Other Legislation Amendment Act 2020 (Amendment Act) to remove the Head Contractor Exemption in July 2020. We discuss this in our previous article: QBCC Head Contractor exemption to be abolished.

The provisions of the Amendment Act removing the Head Contractor Exemption were due to commence on 24 July 2021. However, on 8 July 2021 the Governor in Council issued the Building Industry Fairness (Security of Payment) and Other Legislation Amendment (Postponement) Regulation 2021. This postponed the commencement of the removal of the Head Contractor Exemption by 12 months.

Review into the role of developers

On 16 November 2021, the Queensland Government commenced its review into the role of developers within the building and construction industry. This followed a recommendation from the Queensland Parliament's Transport and Public Works Committee. According to Minister Mick de Brenni, the purpose of the review is: "…to consider whether further reforms are needed to ensure everyone who benefits from a booming building industry contributes their fair share."

The Developer Review Panel, chaired by Alison Quinn, will examine a range of issues including:

• the financial and operational capacity of developers;
• the ethical behaviour of developers;
• the work practices of developers; and
• whether developers should be captured by the same security of payment measures that apply to builders and contractors.

Looking forward

The Queensland Government says that its review of the role of developers is to enhance the security of payment for all building industry participants. However, it is likely to result in substantial changes to the way projects are carried out between parent company appointed developer entities and contractors. The review may result in the removal of the Head Contractor Exemption, which will have significant impacts for those entities that currently fall within the exemption.

If the Head Contractor Exemption is abolished, developers that are appointed by a parent company to carry out building work will be required to hold a QBCC licence. This is unless they qualify for other exemptions, such as:

• entities carrying out building work for prescribed projects involving building work carried out for a government entity); or
• special purpose vehicles carrying out building work under a public-private partnership.