Security Of Payment Act Reform Proposed For NSW
“The NSW construction industry is set for a shake-up after an inquiry into building company collapses in the state made dozens of recommendations for change, including a new construction authority and the establishment of trusts to ensure subcontractors are paid for work.A report by Sydney barrister Bruce Collins, QC, commissioned by the state government in August last year and released on Monday, makes 44 recommendations to minimise the effect of construction company insolvencies on jobs and major projects in the state.The recommendations include the creation of a new statutory body, the NSW Building and Construction Authority, and a legal requirement for construction trusts to be set up on building projects worth over $1 million.There is also a proposal for a licensing system for builders and construction contractors, which would require projects to have “demonstrated financial backing”.“This inquiry was initiated following the rising number of construction company collapses over the last three years, which has left thousands of suppliers and subcontractors more than $1 billion out of pocket,” NSW Finance Minister Greg Pearce said.“The inquiry looked into the extent and causes of insolvency within the industry and what reforms were needed to safeguard the interests of subcontractors.”He said the government would consider the recommendations and consult with stakeholders and the public about potential legal and policy changes until February 21.Mr Pearce has been a vocal critic of building companies such as Sydney-based St Hilliers Group, which put the construction arm of its business into administration in May last year after it was unable to secure additional funding for a prison expansion project.St Hilliers said it was the “only prudent” course of action, but Mr Pearce said in Parliament that the group was trying “to avoid paying their creditors”, including subcontractors.The group’s collapse was one of a string of construction company failures last year. Reed Construction Australia, which had been locked in a dispute with the NSW government over payments for schools and roads projects, went into administration in June.”
Michaela Whitbourn
The Australian Financial Review
The full report is available on the here.
The NSW Govt Consultation Paper on the proposed Licensing of commercial builders is here.
The NSW Govt Consultation Paper on the proposed changes to the Security of Payment Act is here.
The NSW Govt Consultation Paper on the proposed introduction of Construction Trusts is here.
