Security of payment reforms

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  • The Issue

    Consultation period: 21/08/2018 12:00 am to 18/09/2018 5:00 pm

    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.

    We began reviewing the Act in 2015 to find out if the current security of payment laws are working as they should.

    Stakeholder feedback to the review 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.

  • Milestones

    • Late 2015: we released a discussion paper for industry and public consultation as part of a full review of the Act.
    • 2017-2018: we conducted a number of stakeholder roundtables with peak industry bodies to explore possible options for reform.
    • August 2018: we released an exposure draft Bill, with accompanying explanatory statement, and a consultation paper on a proposal for a statutory trust for public consultation
    • 18 September 2018: Consultation ended.
    • 21 November 2018: The Building and Construction Industry Security of Payment Amendment Bill 2018 (the Bill) passed Parliament
    • May 2019: Draft Regulation released for public consultation
    • June 2019: Consultation on the draft Regulation ends
    • 21 October 2019: The Building and Construction Industry Security of Payment Amendment Act 2018 and the Building and Construction Industry Security of Payment Amendment Regulation 2019 will commence.
  • Outcomes

    The Building and Construction Industry Security of Payment Amendment Bill 2018 (the Bill) has passed Parliament.

    The Bill received assent from the Governor on 28 November 2018 becoming the Building and Construction Industry Security of Payment Amendment Act 2018 (the Amendment Act). The Amendment Act will commence on 21 October 2019.

    The Amendment Act will 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.

    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.

    The Amendment Act is available on the NSW Legislation website.

    View the submissions here

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