Cook Government completes reforms on subcontractor payments

The recent reforms introduced by the Cook Government mark a significant development in the building and construction industry, particularly for subcontractors. These changes are designed to enhance payment protections, ensuring subcontractors receive their dues in a timely and fair manner.

Structured payment processes and fair contracting practices

At the heart of these reforms are improved payment processes and fairer contracting practices. These measures aim to bring more transparency and accountability to the industry, offering subcontractors a more secure working environment.

The final stage of the Building and Construction Industry (Security of Payment) Act 2021 (the Act) commences from 1 February 2024, completing a three-year project to implement payment protections across the contracting chain in the event of an upstream insolvency.

Protections introduced so far have included:

• more structured and transparent payment processes;
• fairer contracting practices;
• expanded rights to claim regular payments to avoid large outstanding invoices;
• an effective dispute resolution pathway;
• an Australian-first retention trust scheme across the supply chain; and
• greater powers against building service providers with a history of financial failure or those who fail to pay debts to subcontractors.

Key feature: The retention trust scheme

A pivotal aspect of the reforms is the enhancement of the retention trust scheme. From 1 February 2024, the lowering of its financial threshold to $20,000 means more projects will benefit from this protection. The scheme safeguards subcontractors’ payments, especially in cases of insolvency, making non-compliance a punishable offence.

Fairer payment rights, allowing for a transparent process for contractors to access cash retention money withheld against them, also come into effect today.

More information on the new laws, including a compliance program for building contractors, is available on the Building and Energy website: demirs.wa.gov.au/securityofpayment

Industry implications

These reforms are expected to positively impact the construction industry as a whole. By securing subcontractor payments, the reforms contribute to the overall stability and reliability of construction projects. This initiative reflects a commitment to ethical practices and financial security within the industry.

Commerce Minister Sue Ellery commented on the significance of the reforms, emphasising their role in securing payments for subcontractors and suppliers. “

We have delivered on a commitment to ensure money owed to subcontractors and suppliers remains secure and the industry stays strong, even if a building service provider goes insolvent.

“Today marks the completion of a significant body of work that is already providing wide-ranging benefits across Western Australia’s building and construction sector.

“After years of uncertainty, these modernised and efficient security of payment protections will provide peace of mind for industry participants.”

The Cook Government’s reforms are a significant step towards improving the working conditions for subcontractors in the construction sector. By focusing on timely payments and financial security, these changes are set to bring about a more stable and fair working environment, benefitting both subcontractors and the industry at large.