Rethink required on project bank accounts

Rethink required on project bank accountsSlower payments, reams of red tape and more expensive housing will be the outcomes of the Queensland Government’s proposal to mandate project bank accounts, says the Property Council.Queensland executive director, Chris Mountford says the Palaszczuk Government’s proposal to mandate project bank accounts will not resolve payment issues and will increase construction costs. In 2016, Queensland housing minister Mick de Brenni announced that dedicated project bank accounts would be mandatory for developments worth more than $1 million from 1 January 2019. The government claims it will ensure payment for subcontractors on time, but industry modelling has found it will only increase costs by up to three per cent.The Property Council has joined Queensland’s Master Builders Association, the Civil Contractors Federation and Major Contractors Association in a concerted campaign against the government’s proposed plan.Mountford says the government already has a range of legislative mechanisms in place to resolve payment issues, including the existing Building and Construction Industry Payments Act and Subcontractors Charges Act.”These should be better used and refined before the government embraces more red tape,” Mountford says.The details of the proposal are yet to be released, but Mountford says it is clear the government’s preferred model will require significant changes to existing payment mechanisms.”Any move towards a project bank account model would increase compliance and administrative costs for builders, which will be felt financially by all sub-contractors and the end purchasers.”Project bank accounts would mean slower payments, without offering any real solution for when disputes occur between parties lower down the contractual chain.” A trial of project bank accounts for public construction contracts between $1m and $10m is to start next year, and follows similar trials in NSW, Victoria, Western Australia and the Northern Territory.”The Property Council would like to see the Queensland Government explore the results of trials being undertaken in other states prior to rushing into any action on this front.”Mountford says collaboration with industry to “sharpen” existing legislation is the best way to address payment issues.