The final stage of the Building and Construction Industry (Security of Payment) Act 2021 recently commenced, completing a three-year commitment to implement payment protections across the contracting chain in the event of an upstream insolvency.
This ensures that subcontractors receive payments on time for their work in the building and construction sector.
WA Commerce Minister Sue Ellery said: “After years of uncertainty, these modernised and efficient securities of payment protections will provide peace of mind for industry participants.”
Protections introduced so far have included:
- more structured and transparent payment processes;
- fairer contracting practices;
- expanded rights to claim regular payments to avoid large outstanding invoices;
- an effective dispute resolution pathway;
- an Australian-first retention trust scheme across the supply chain; and
- greater powers against building service providers with a history of financial failure or those who fail to pay debts to subcontractors.
From now onwards, the financial threshold for the retention trust scheme will be lowered from $1 million to new eligible construction contracts over $20,000 — including GST.
It is also now an offence to not fulfil certain requirements of the scheme.
The retention trust scheme under the act requires retention money withheld under eligible construction contracts to be held in a retention money trust account with a recognised financial institution.
Fairer payment rights, allowing for a transparent process for contractors to access cash retention money withheld against them, also recently came into effect.
More information on the new legislation, including a compliance program for building contractors, is available on the Building and Energy website.
