On 23 July 2020, the Building Industry Fairness (Security of Payment) and Other Legislation Amendment Act 2020 (Qld) (Amendment Act) was enacted.
The Amendment Act is largely the same as the tabled Bill, with the primary change being a further delayed timeframe to the staged implementation of the reforms. Our previous alert, In with the new? Bringing further project bank account reforms closer, summarises the key amendments contained within the Bill.
Further delays to phased rollout of PBAs
The next phase, which was set to commence on 1 July 2020, will now commence on a date to be fixed by proclamation. In the second reading speech, Minister Mick de Brenni confirmed this delay is a result of COVID-19 and continued uncertainty regarding its impact on the construction industry.
The Queensland Government intends to implement the reforms in accordance with the following timetable, provided Queensland continues to manage the pandemic's impacts well:
- 1 March 2021: Trust accounts will be required for all new State Government building contracts worth between $1 million and $10 million, with the option for State authorities to 'opt in' for eligible projects;
- 1 July 2021: The regime will be extended to State Government and Hospital and Health Services building contracts valued at $1 million or more;
- 1 January 2022: The regime will be extended to private sector, local government, statutory authorities and government owned corporations eligible building contracts worth $10 million or more;
- 1 July 2022: The regime will be extended to private sector, local government, statutory authorities and government owned corporations building contracts valued at between $3 million and $10 million; and
- 1 January 2023: full implementation with the regime applying to all eligible building contracts worth $1 million or more.
Delays to security of payment amendments
COVID-19 has also delayed reforms to the security of payment regime, which were set to commence on 1 July 2020 under the tabled Bill. These will now commence on a date to be fixed by proclamation. In addition to the changes summarised in our previous alert, these reforms introduce new administrative requirements with penalties for non-compliance, including requirements to:
- Provide a supporting statement declaring that subcontractors have been paid with each payment claim (although a failure to do so won't affect the validity of a payment claim);
- Pay the certified amount in a payment schedule by the due date; and
- Notify and provide evidence to the registrar of payment of an adjudicated amount.
Looking forward
Once implemented, the new project and retention trust requirements will introduce an increased administrative and cost burden to projects, especially for contractors. When planning, tendering and entering into new contracts, we recommend that parties consider the indicative timeframes for implementation of the reforms and ensure that, if applicable, these arrangements are reflected in project plans, tender and contract documents. Parties should also consider how these documents should deal with the security of payment amendments, for example, by including the requirement to provide a supporting statement with a payment claim in the payment provision.
Fortunately, the proposed extended timeframe will allow industry more time to plan for the transition.
According to Minister de Brenni, the intended purposes of the phased approach also include more time to allow:
… licensees to develop their skills and knowledge around the framework; and it allows for the finance sector, particularly the banks, to establish their software products and their trust account instructions to support the implementation of the framework.
Should you wish to discuss how these new arrangements will affect your business and how to mitigate associated risks, please contact us.
