Security of Payment Reforms

What is this about?

The Building and Construction Industry Security of Payment Act 1999 (the Act) is designed to ensure that a person can receive payments under a construction contract for carrying out construction work, or providing goods and services related to construction work.

The Act aims to ensure that contractors and subcontractors are paid promptly, that cash is moved down the contracting chain faster and that disputes over payments can be resolved fairly and quickly.

In response to a full review of the Act, commencing in 2015, NSW Fair Trading has released an exposure draft Bill, with accompanying explanatory statement, and a consultation paper on a proposal for a statutory trust for public consultation.

The Building and Construction Industry Security of Payment Amendment Bill 2018 (the Bill) seeks to strengthen the security of payment framework while improving the operation of the Act and facilitating greater confidence within the industry of the Act’s ability to facilitate cash flow along the construction chain.

The NSW Government seeks public and stakeholder feedback on a proposal for a statutory trust for the Government’s consideration as part of the NSW review. Recent collapses in NSW have reinforced the need to effectively protect subcontractors from the consequences of contractor insolvency.

Consultation closed for both the Bill and the consultation paper on 18 September 2018.

What's happened so far?

In late 2015, Fair Trading released a discussion paper for industry and public consultation as part of a full review of the Act. The paper was designed to guide discussion about whether the current laws are working as they should and outlines potential options for improving them.

Stakeholder feedback on the discussion paper confirmed there is strong support for the continued operation of the Act, however, there was consensus that an opportunity exists for reform to enable it to more effectively deliver its objectives.

Fair Trading also conducted a number of stakeholder roundtables with peak industry bodies in 2017 and 2018 to explore possible options for reform.

What are the proposed changes?

Key reforms include:

  • providing a statutory minimum entitlement to make a payment claim at least once per month, for work done within that month,
  • re-inserting the requirement for the endorsement of payment claims,
  • allowing claimants to make a final payment claim where a contract has been terminated,
  • shortening payment due dates,
  • enabling subcontractors to be able to inspect the retention money trust account records,
  • enabling the Minister to make a code of practice for Authorised Nominating Authorities, and
  • new investigative and enforcement powers to investigate, monitor and enforce compliance with the Act.

Have your say

Public consultation on the draft bill and consultation paper closed on 18 September 2018.

Next steps

Fair Trading will review all submissions. If required, we may conduct further targeted consultation on any key issues identified. If you submitted comments, you will be notified when the Bill is finalised.