Queensland Introduces ‘Project Bank Accounts’ to Protect Head & Subcontractors
The Queensland Government is planning to stamp out unpaid subcontractors under new legislation introduced into state parliament.
Under the Building Industry Fairness Bill, Project Bank Accounts would be introduced which secure payments for head and subcontractors in trusts. The Palaszczuk Government said that this would be “the strongest payment protection in the nation’s history” and will be gradually phased in over 2 years to apply to every Queensland project valued over $1m.
Why we should care..
Not only will this secure timely payments but will prevent dodgy developers from racking up debts and then liquidating companies at the expense of head and sub-contractors. This legislation may have prevented incidents such as the over half a billion dollars owing to creditors that Ralan Group racked up before they collapsed and were found to be trading insolvent and cooking the books.
It seems the tide is turning on the 40 years of deregulation of the construction industry. Queensland is leading the way on walking the talk to fix the industry’s problems.
This new legislation is likely to get on the wrong side of a lot of powerful people and possibly push development away from Queensland and into other states. At least the Queensland government has the sensibility to fix the industry without watering down legislation, despite the possible destimulating economic effect this may have.
The introduction of this legislation sets a powerful benchmark for other states, particularly NSW which would likely shun any plan to hinder developers’ cash flow, given the close relationship both Liberal and Labor have with property developers and lobby groups.
In October 2019, NSW introduced Security of Payment reforms that requires that head contractors pay subbies within 20 days instead of 30 - however does not require that the Principal or Developer pay the head contractor within the same period.
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