Greater protection measures for WA subcontractors

The Western Australian Government has introduced a new package to provide improved payment security for subcontractors.

In a statement last week, Small Business Minister Sean L’Estrange said that the non-payment of subcontractors within the construction sector was an issue that required a government response.

“Finance Minister Bill Marmion and I have met with subcontractor representatives and we acknowledge their specific concerns,” Mr. L’Estrange said.

The new measures include mandating from September 30, 2016, Project Bank Accounts (PBAs) on Building Management and Works construction projects valued between $1.5 million and $100 million.

Mr. Marmion also said in the statement that Western Australia was the first state to trial PBAs and would be the first to roll them out more broadly.

“PBAs are an important measure for streamlining the payment process along the supply chain and improving transparency and accountability,” he said.

“PBAs can shield subcontractors from ‘phoenix’ activity, where head contractors strip assets from the business before entering administration.”

Mr L’Estrange also announced significant changes to Security of Payment legislation, which include reducing the time a head contractor can take to pay a subcontractor to 30 business days, and increasing the application time for adjudication of payment disputes to 90 business days.

The Western Australian Government will also develop a Code of Conduct for contractors working on government projects. The statement said that non-compliance with the code could see contractors blocked from working on government projects.

“The government will back building industry productivity by reinforcing the need for adherence to the existing laws that apply to construction workplaces which help stamp out inappropriate and unethical behaviour,” said Mr. L’Estrange.

The Small Business Commissioner will have an expanded role in reviewing and mediating on disputes involving small businesses on government projects.

The government will also fund and establish a Building and Construction Compliance Unit within the Department of Commerce to monitor compliance with the Code of Conduct.