As you may know, the Building Industry Fairness (Security of Payment) Act 2017 (the BIF Act) required the Minister for Housing and Public Works to appoint a Building Industry Fairness Reforms Evaluation and Implementation Panel (BIF Act Review Panel) to undertake a review of the operation and effectiveness of the 2017 suite of building and construction reforms and prepare a report of the outcome of its findings.
The appointed BIF Review Panel has now released its report. The panel made 20 recommendations, and the Queensland Government has accepted them all (with some recommendations accepted in part).
A link to the full report is here: https://www.hpw.qld.gov.au/__data/assets/pdf_file/0011/9200/buildingindustryfairnessreforms.pdf
The key recommendations are as follows:
- (Roll out of Project Bank Accounts (PBA) to private sector projects confirmed) Project Bank Accounts will be legislated for all government building projects above $1m from 1 July 2020, and all private/public projects over $10m from 1 July 2021, and then progressively to private projects under that size in stages throughout 2022.
- (Streamlining of Project Bank Accounts) The Project Bank Account requirements will be streamlined (e.g. there will be no separate ‘disputed monies’ trust account required). The BIF Act will be amended to require a single ‘retention trust account’ be held by all building and construction contractors in the contractual chain (and by private sector principals) who withhold retentions from progress claims.
- (Mandatory trust account training precondition to withholding retention monies) All contractors and principals who intend to withhold retentions and therefore need to operate a ‘retention trust account’ will be required to undertake mandatory trust account training at an authorised training provider and submit completion of that training to the QBCC before they can withhold retentions and operate a retention trust account.
- (Ability to charge monies due, retentions, and the land of the Principal) Amendments to the BIF Act will be developed that will allow for a claimant in a adjudication application to put a charge on the “party above the respondent in the contractual chain to require that party to retain sufficient money to cover the claim out of the money that is or becomes payable by that party to the respondent” while the adjudication is being resolved.
Similarly, amendments will be developed to allow for head contractors to be able to charge, or impose a lien, on the developer’s/principal’s land on which the building work is being carried out if an adjudicated amount is not paid.
- (QBCC regulatory reach to be extended further) The QBCC will be given more substantial powers to regulate compliance with the Project Bank Account amendments – including additional powers to freeze PBAs, obtain any information related to PBAs from any person or class of persons including a principal, head contractor, beneficiary or bank and take control of the PBA in the event of insolvency of the holder of the account or the account holder becoming unable to manage it.
There are numerous other changes but the above are the major ones. The Government’s full response to the recommendations is here: https://www.hpw.qld.gov.au/__data/assets/pdf_file/0028/9199/panelgovernmentresponse.pdf
What this means for you and what you should do now
The Government has not indicated when the above changes will be legislated, however we are expecting them to be implemented quickly, in anticipation of the forthcoming State Election in late October 2020.
In the meanwhile, now would be good time to review and evaluate how your business has responded to the changes the BIF Act has brought to-date, as well anticipating the steps you will need to take in the future to ensure compliance once the changes are implemented.
Please contact us if we can assist.