WA reforms building and construction industry

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WESTERN Australia will introduce new laws to bolster confidence in the building and construction industry by ensuring payment is made on time and target dodgy contractors who engage in phoenixing activity.

In what is an Australian first, the Building and Construction Industry (Security of Payment) Bill 2020 will introduce a mandatory retention trust scheme to protect subcontractors’ retention money from being misappropriated or lost altogether in insolvency at each level of the contracting chain.

The Bill also includes provisions to have registered building contractors with a history of ripping off subcontractors, or engaging in ‘phoenixing’ activity by driving a construction business into the ground and then re-emerging with a brand new business to be removed from the industry.

Further, it requires timely engagement in the payment process and imposes significant consequences for failure to do so. Principals will be required to pay head contractors within 20 business days of receiving a claim, and head contractors will be required to pay subcontractors within 25 business days or any lesser period in the construction contract. Payment claims for certain residential-related construction work will need to be paid within the date specified in the contract or 10 business days if there is no date specified.

Commerce Minister John Quigley said the current reality is businesses need to always contend with the fear of not getting paid on time or at all, and without access to effective rights and protections under the law.

“Our election commitment was made in recognition of the fact that the state’s construction industry has a long history of businesses and their families suffering significant financial losses due to non-payment and mistreatment.

“I thank the industry for their engagement in the consultation process and acknowledge the productive and constructive input provided by a large number of groups and stakeholders into the development of these reforms.” Quigley said.

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