Statement From Spokesperson For Minister For Industry Karen Andrews

Statement relating to tradesmen story from The Sunday Project

The states and territories are responsible for security of payment legislation in their respective jurisdictions.

The Commonwealth remains committed to improving protections for individuals and small businesses who subcontract in the building and construction industry, and to achieving greater consistency in security of payment laws across Australia.

However, the scope of the Commonwealth’s constitutional authority to act in this area is limited, and any Commonwealth action to legislate risks overlap with existing state and territory laws. This would likely increase the complexity and compliance burden for industry.

Noting this, the Government is working with all jurisdictions through the BMF to improve protections and the progress of payments.

The Commonwealth’s National Review of Security of Payment Laws (the Murray Review) made broad recommendations to

  •         address the high insolvency rates in the construction industry
  •         improve protections for small businesses.
  •         improve consistency in security of payment regimes across jurisdictions.

Using the Murray Review as a blueprint for reform, the Commonwealth has been work closely with the states and territories—through the Building Ministers Forum (BMF) which Minister Andrews chairs.

The NSW Government has already moved to adopt the Review’s recommendations and the WA Government is also taking action to implement the recommendations.

The Commonwealth has been encouraging all jurisdictions to follow NSW’s lead in considering the remaining recommendations and amending their security of payment regimes to improve financial protections for subcontractors.

The BMF has agreed to develop model legislation for cascading statutory trusts, for state and territory governments to draw upon.

However, adoption of model legislation, and ultimate responsibility for building and construction activities, remains the responsibility of the state and territory governments.

As per the Murray Reviews recommendation, the BMF has agreed to develop model legislation for cascading statutory trusts, for state and territory governments to draw upon.  This decisions was announced by the BMF in February 2019.

In developing this model legislation, governments are taking into account the Australian Small Business and Family Enterprise Ombudsman’s research into cascading statutory trusts which found the benefits of introducing such a mechanism outweighed the potential costs and impacts on working capital.

The Commonwealth already requires businesses and contractors that seek to be, or are, involved in Commonwealth funded building work to comply with the Code for the Tendering and Performance of Building Work 2016, which requires compliance with state and territory security of payment laws.

The Australian Building and Construction Commission (ABCC), which monitors compliance with the Code, undertook an educational campaign to raise awareness of the security of payment system in place for Commonwealth projects.

In November 2018, the Hon Scott Morrison MP, Prime Minister, and the Senator the Hon Michaelia Cash, Minister for Small and Family Business Skills and Vocational Education announced a new payment times reporting framework.

The Commonwealth has reduced its payment times to be an exemplar of payment policy to industry and to other levels of government. Since 1 July 2019, the Government’s target payment times for contracts valued up to $1 million reduced from 30 days down to 20 days.

The Commonwealth is also progressing the development of a Payment Times Reporting Framework for large businesses to publish payment information on how they engage with small businesses.