Construction Contracts Act amendments introduced

Thursday, 22 September 2016

• Legislation to protect payments to subcontractors in the construction industry 

The Liberal National Government today introduced legislation into State Parliament to protect payments to subcontractors in the construction industry.

The Construction Contracts Act 2004 provides a useful mechanism for resolving contractual payment disputes and provides building contractors, subcontractors and suppliers with a right to be paid within a reasonable period of time, and a low cost method of enforcing that right.

Introducing the Construction Contracts Amendment Bill 2016, Small Business Minister Sean L'Estrange said the legislation was the first part of a 'whole of Government' approach to improving payment protection for subcontractors.

It will enhance the operation of the scheme and make it easier for subcontractors to access the rapid adjudication process for resolving construction payment disputes.

"The non-payment and late payment of subcontractors, many of which are small businesses, is being addressed by the State Government," Mr L'Estrange said.

"This legislation will also be complemented by a Code of Conduct for contractors and the establishment of a compliance unit within the Department of Commerce to monitor compliance with the code.  Other measures include the Small Business Commissioner having expanded power to review and mediate disputes between contractors and subcontractors.

"Plus, from September 30, 2016, the Government is rolling out Project Bank Accounts across Building Management and Works construction projects valued at more than $1.5 million to speed up the payment process for businesses working on these projects and enable subcontractors to better protect themselves in the event that a head contractor experiences financial difficulty."

Key aspects of the Bill include:

• reducing the maximum time in which head contractors can pay subcontractor payment claims to 30 calendar days
• increasing the time in which an application for rapid adjudication of a payment dispute can be lodged by a subcontractor to 90 business days
• creating greater flexibility in the scheme by allowing adjudication of previously rejected or disputed claims
• providing a faster and more efficient means for a party to enforce an adjudication determination through the courts. 

"Having listened to the concerns of subcontractors and other stakeholders, the Liberal National Government is taking effective action to encourage better behaviour in the building and construction industry, as well as improve the operation of the Act in keeping the money flowing in the contracting chain," Commerce Minister Michael Mischin said.

Fact File

• The building and construction industry in WA generates 12.5% of Gross State Product
• The sector accounts for 10% of the total workforce, including more than 40,000 small businesses