National Review of Security of Payment Laws

Published: 4 June 2018
On 21 May 2018, the Turnbull Government released the final report of the Review of Security of Payment Laws, undertaken by Mr John Murray AM, a specialist in resolving building contract disputes and security of payment legislation.  Minister for Small and Family Business, the Workplace and Deregulation, Craig Laundy said the Government commissioned the review to look at protections for individuals and small businesses involved in subcontracting in the building and construction industry. “For these operators, delayed and disputed payments can make or break them,” Minister Laundy said.  Mr Murray’s comprehensive report makes 86 recommendations to improve consistency in security of payment legislation and enhance protections to ensure subcontractors get paid on time for work they have done, regardless of which state or territory they operate in. The AMCA position on a number of technical matters was featured prominently in the report. The AMCA formally supported the recommendations that enhance mechanisms enabling the prompt payment towards our specialist subcontractors with overall improved commercial outcomes to clients. Key amongst these is the recommendation to make security of payment laws nationally consistent with what is commonly known as the East Coast model, which is modelled on the NSW security of payment legislation.  “I appreciate the extensive consultation that Mr Murray undertook during the review and thank him for his efforts. “As legislative responsibility for security of payment rests with the states and territories, the Government will work cooperatively with them on the findings of the review. As Chair of the Building Minister Forum, I am committed to working closely with all Building Ministers around the country to deliver improvements to the building and construction sector which are long overdue” Minister Laundy said. The Government acknowledges that some states and territories have taken steps in the right direction on security of payments. However, with payments on average 26.4 days late and the construction industry in Australia accounting for 20 to 25 per cent of all insolvencies more needs to be done to protect subcontractors and small businesses who are the industry’s most vulnerable participants. “More needs to be done to harmonise the various state and territory security of payments laws so that businesses and subcontractors operating in the building and construction industry are not required to be across several complex pieces of legislation at any given time. More also needs to be done to ensure that where payments are protect this protection flows through the entire contractual payment chain, not just to the first tier of building industry participants, as has been the case under various trials of Project Bank Accounts including currently in Queensland. Off the back of the release today, the Government will consult with industry to consider the report’s recommendations and explore ways to improve the protections for individuals and businesses involved in subcontracting in the construction industry. The Turnbull Government is the first government to directly address this issue at a national level, further demonstrating our commitment to small business and promoting a fair and productive building industry” Minister Laundy said. The final report is available at. The AMCA commends the Turnbull Government and Mr John Murray in undertaking this comprehensive review. The AMCA will continue to advocate the importance of embracing a framework that ultimately improves outcomes in the building and construction industry. The industry needs to address equitable risk allocation in the industry with supporting payment practices. Harmonisation of security of payment is a positive step in which the Builders’ Minister Forum should act upon in the second half of 2018. The recommendations are well balanced and present a significant opportunity to address the needs of the industry with the Commonwealth Government leading the charge.