Review of Security of Payment legislation

Fair Trading is conducting a full review of the Building and Construction Industry Security of Payment Act 1999 (the Act).  The security of payment laws are designed to ensure that a person can receive payment under a construction contract for carrying out construction work or providing any goods and services related to that work.

The Act, whilst well intended and meeting its base objective to ensure subcontractors get paid, has been too bluntly implemented.  It requires fine tuning to avoid the current state of unmanageable rules for its application.

The Property Council made a submission on the review. Key points in the submission include:

• The Act was not intended to be utilised for the settlement of variations or complex contractual matters arising over the course of a project;
• Timeframes stipulated in the legislation are adequate for the determination of simple claims relating to payments due but are inadequate in the case of larger and more complex claims and claimants can misuse this to their commercial advantage;
• The accreditation and selection process of adjudicators is not well suited to the resolution of larger and more complex matters;
• A standard payment term of 30 days should be adopted in line with industry norms; and
• The inclusion of bank guarantees under the scope of the Act should not be adopted.

To read the Property Council’s submission click here.