Good news. Regulation of the construction industry may be modified to recognise COVID-19 crisis.

Michael Chesterman May 7, 2020
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In a recent article entitled Unique times require innovative industry regulation, I stated:

“I am of the view that all industry legislation must be stripped back to that of a basic nature.  This is not to say that important standards and protective measures be reduced.  Far from the case.  But I believe that regulation of the construction industry for now and in the foreseeable future must be tailored to reflect a heavy dose of reality.”

I believe three realities will jolt the industry during the current COVID-19 health and economic crisis, namely:

  • Reality 1 – Businesses will be under serious financial stress.
  • Reality 2 – The economy will be in recession for a long period.
  • Reality 3 – The introduction of statutory trusts to protect payments to subcontractors when the economy is in a recession would in my view, cause untold additional hardship for builders and therefore, also subcontractors.

Signs that some regulatory changes may happen

The Ministerial Construction Council provides a platform for key stakeholders and government organisations to discuss matters relating to the Queensland industry.

Who is on the Ministerial Construction Council?

According to the government’s response to the Parliamentary Committees recommendations into the Building Industry Fairness (Security of Payment) Act 2017, the Council consists of representatives from:

I note that recently the Council has been expanded to include members from the:

  • Department of Housing and Public Works’ Building Industry Reference Group;
  • Queensland Government’s Building Recovery Group; and
  • Building Products Industry Council.

Recent Council stakeholders meeting

On 7 April 2020, a member of the Council, the QBCC, sought feedback from stakeholders about its regulatory approach during this crisis.

In the published minutes of this meeting, I have noted a conciliatory and pragmatic tone by representatives of the QBCC that I found very encouraging, namely:

  • The regulatory approach must have regard to the current environment and will focus on the greatest risks.
  • Some temporary changes may be appropriate to the regulatory approach.
  • Consideration may be given for non-financial penalties concerning certain less serious offences.
  • Concerning the payment of debts under the Minimum Financial Requirements, if it can be established that a licensee has commenced paying the debt, compliance action may be placed in abeyance in those instances.
  • If a certifier cannot perform their obligations due to this crisis, the QBCC would not look to impose a penalty.

Way forward

The minutes state:

“The QBCC must undergo an internal process before the amended regulatory approach can be finalised. This includes meeting with the Sub-Committee of the QBC Board Regulatory and Resolution Committee where guidance will be sought from members. The QBC Board will also be engaged. The feedback from this industry group will continue to inform the QBCC approach. The Department of Housing and Public Works as well as the Minister’s office will also be engaged with as the QBCC progresses these considerations.”

I have some apprehensions regarding the above process, namely:

  1. How long will this consultation process take?
  2. Based on 22 years of working for the industry regulator, I have concerns about the effectiveness of industry committees. It has been my experience that many good ideas are ‘strangled’ in committees.

I would also like to point out that some contractors have raised concerns with me that, unlike the situation in NSW, there has been no announcement to date as to whether any license fee relief will be offered to them during this crisis. I have referred these contractors to a statement on the QBCC website which stipulates that licensees affected by this crisis can contact the QBCC online or by phone.

I am still very encouraged that there may be some reconsideration of approach from the Regulator to guide the industry through the wild rapids ahead.  If you have any ideas you would like to share with me please follow this link here to grab a spot in my diary.

 

Not intended as legal advice. Read full disclaimer.
Michael Chesterman May 7, 2020

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