Security of Payment - draft legislation released

The government has recently released its long awaited draft Security of Payment legislation. This is vital legislation for NECA members and for subcontractors in general.

Overall NECA WA is reasonably happy with the proposed outcomes. The government have enacted much of what we asked for in our submission back in 2018. 

The main areas of reform are:

1. Making the legislation more consistent with those in other Australian states and territories. 
2. Better protection of cash retention and security in the event of an insolvency through a deemed trust scheme that will apply across the contracting chain. All cash retentions in these trusts cannot be accessed by head contractors for use in their day to day business operations. It can only be accessed for the return of retentions to the subcontractor at the end of the project.  Importantly, retentions would be protected should the head contractor go into administration during the project.
3. Expanding the powers of the Building Services Board to take action against building service providers who fail to pay court and adjudication debts. 

However one important issue which the government hasn’t addressed is the introduction of deemed trusts for progress payments. The government have said that they thought that was a step too far when introducing these proposed changes.

However, NECA and many associations representing sub-contractors in other trades, firmly believe that this is a vital tool in the protection of our members so we will continue to lobby for its introduction.

The explanatory statement of the new legislation can be found here.

Feedback on the draft is open until the end of June so if you have any comments, please email them to Aidan O’Grady by Friday 19 June - aidan.ogrady@necawa.asn.au