Queensland's new security of payment regime delayed

Published: 13 June 2018

On 10 November 2017 the Queensland Government passed the Building Industry Fairness (Security of Payment) Bill 2017 (BIFSOP Act).

The provisions in the BIFSOP Act introducing Project Bank Accounts commenced operation on 1 March 2018 for government contracts for the construction of fixed structures where the contract sum is between $1million and $10million.

A number of provisions of the BIFSOP Act, including the repeal and replacement of the Building and Construction Industry Payments Act 2004 (Qld) and the Subcontractors' Charges Act 1974 (Qld), were expected to commence on 1 July 2018.

However, by a Media Release on 12 June 2018, the Minister for Housing and Public Works, Mick de Brenni MP, advised that these amendments will not come into effect until at least December 2018.

Minister de Brenni said:

"In the interests of business confidence, we will commence these reforms in tranches, and following industry consultation of the next tranches, I will introduce BIF Act amendments into the House to progress the next stages of reform. I intend for these provisions to commence on 17 December 2018."

The Media Release did not provide any further information as to which 'tranches' would commence in December 2018. However, it did state that a further discussion paper would be released for industry consultation in the coming weeks and that an approved regulation for Minimum Financial Requirements in the Queensland building industry will be in operation from 1 January 2019.

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.

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.