Building and Construction Industry Security of Payment Regulation 2020

What is this about?

A proposed Building and Construction Industry Security of Payment Regulation 2020  has been developed to replace the existing Building and Construction Industry Security of Payment Regulation 2008.

Although the repeal date of the existing Regulation has been postponed, the Government is proceeding with the finalisation of the proposed Regulation due to the benefits that will be provided to the industry. This completes the reform package for the Building and Construction Security of Payment Act 1999 (the Act).

The proposed Regulation is scheduled to commence on 1 September 2020.

What has happened so far?

On 21 October 2019 amendments to the Act commenced. At that time, the supporting Regulation was also amended to enable the changes to the Act. These changes sought to address poor payment practices and the high incidence of insolvencies in the building and construction industry. They also sought to facilitate prompt payment, preserve cashflow and resolve disputes quickly and efficiently.

What are the changes?

The proposed Regulation will deliver a more secure system of contractor payments within the building and construction industry. The primary objective of the proposed Regulation is to provide the legislative support and administrative detail for the operation of the Act. The proposed Regulation will also achieve the following:

• reduce the project value threshold from at least $20 million to at least $10 million for retention money trust account requirements
• remove the annual reporting requirements for trust accounts to NSW Fair Trading
• introduce an obligation to provide trust account records to subcontractors if their money is held in trust
• introduce qualifications and eligibility requirements for adjudicators.

Next steps

The proposed Regulation, a Regulatory Impact Statement (RIS) and CPD Guidelines for Adjudicators have been prepared for public consultation. The RIS sets out the rationale and objectives of the proposed Regulation and the various options for achieving its objectives. It also discusses important aspects of the proposed Regulation and seeks feedback from stakeholders and the community.

Stakeholders and interested parties are invited to review the proposed Regulation, the RIS and CPD Guidelines for Adjudicators and provide comments. Consultation will open from 26 June 2020 5:00pm to 24 July 2020 5:00pm.