Queensland’s construction payment reforms: What they mean for electrical contractors

The Queensland Government is proposing significant amendments to the Building Industry Fairness (Security of Payment) Act 2017, an Act designed to protect small-to medium enterprises (SMEs) which are the backbone of our construction industry. While the Bill does not propose any substantive change to pre-existing legislative SOP protections, it intends to address any ambiguities while making some provisions more concise.

Let’s dive into the key points:
 

What MEA supports

• Broader protection: MEA applauds the inclusion of electrical work in the definition of ‘project trust sub-contracts’. This continues to clarify projects involving electrical work benefit from the Act’s payment protections.
• Simpler rules: MEA welcomes streamlining the language of the Act, making it easier for contractors to understand their rights and obligations.
• No more short-project exemptions: Removing the rule that projects under 90 days are exempt from project trust requirements is seen particularly as a significant win for SMEs. All projects that meet the financial threshold should be protected; if anything a shorter timeframe adds additional risk and pressure to SMEs.
• Lowered threshold: reducing the project fund threshold for, in a phased approach, from $10 million to $1 million is a major win for subcontractors. This change acknowledges that even smaller projects can inflict significant financial damage when payments are mishandled.

Areas where MEA seeks improvement

• Clarity and consistency: Considering the Bill’s purpose to make the Bill more precise, MEA has objected to the drafting of some proposed clauses in the Bill, providing an alternative drafting option to improve clarity and avoid potential misinterpretations.
• Accountability matters: Although reducing over-burdensome regulations is important, MEA believes removing the requirement for monthly bank reconciliations could weaken oversight and safeguards for subcontractors’ funds held in trust.
• Catch the loophole: MEA highlights a potential loophole where subcontractors involved in multiple subcontracts for the same large project could still fall under the $1 million threshold individually, leaving them vulnerable.

Overall: Positive progress with room for refinement

MEA commends the Queensland Government for consistently improving security of payment legislation. While supporting the Bill’s intent, we advocate for specific amendments to ensure maximum effectiveness and clarity for all contractors.
 

What this means for electrical contractors

If the Bill passes with MEA’s recommended changes, electrical contractors in Queensland will see clearer legislative protections reducing risk of ambiguity. This better protects SMEs against financial risk thereby boosting their businesses’ financial health in a challenging industry.

Read the full submission and other recent advocacy submissions here.