Hang on tightly, 2020 will see further major SOP reforms

Michael Chesterman November 28, 2019
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The Queensland government today has released two long awaited SOP reports.

1. Special Taskforce

On 27 March 2019, the government established a special taskforce (Taskforce) to investigate allegations of fraudulent behaviour relating to subcontractor non-payment in the construction industry and considered whether current legislation was adequate to address conduct of this nature.

In a report, the findings and recommendations of which are summarised on the Department of Housing and Public Works website, it is stated:

“Taskforce investigations resulted in the referral of 108 possible breaches of legislation to nine different prosecuting authorities, and the Taskforce made 10 recommendations focused on delivering more effective enforcement by the building industry regulator; ensuring the integrity of industry participants; and greater collaboration among regulators.

The Taskforce also concluded that the existing supervisory powers of the building regulator, the Queensland Building and Construction Commission (QBCC), are generally sufficient to address fraudulent behaviour relating to subcontractor non-payment.

The Taskforce’s recommendations were based on the following key themes:

  • More effective enforcement—Some legislative provisions may not operate as intended, constraining the QBCC’s ability to target offending behaviour and to mount successful prosecutions.
  • Licensing—Gaps in the current licensing process may allow inappropriate individuals to enter the industry.
  • Unfair contract terms—A concern among subcontractors and the organisations that represent them is that subcontractors are not operating on a level playing field with head contractors and have limited ability to negotiate contract terms that balance the rights and obligations of the parties.
  • Education—A lack of understanding of relevant laws, contractual obligations, and business, financial and contract management means that subcontractors can fall victim to poor payment and contracting practices.
  • Greater transparency and information-sharing—There is scope for more collaborative enforcement between the QBCC and other agencies, as well as information-sharing to assist subcontractors in making informed decisions.
  • Statutory declarations—False statutory declarations about subcontractor payment are not unusual and greater deterrence is needed.”

Government’s response

The government has accepted all ten recommendations of the Taskforce.

2. Building Industry Fairness Reforms Implementation and Evaluation Panel review of building reforms

The Building Industry Fairness Reforms Implementation and Evaluation Panel (Panel) was established to assess the implementation and effectiveness of the building industry fairness reforms.

In a report, the findings and recommendations of which are summarised on the Department of Housing and Public Works website, it is stated:

“The Panel found that the BIF Act reflects the government’s policy intent to effect cultural change to provide for effective, efficient and fair processes for securing money in the building and construction industry. The Panel identified 20 recommendations to enhance the existing framework and improve security of payment outcomes for the building and construction industry.

The 20 recommendations are grouped in the following three themes:

  1. Managing the financial transition to enable industry to get ready for future implementation
  2. Simplifying the framework to reduce administrative costs while providing for effective monitoring and enforcement
  3. Improving protections, including having a single retention trust account to be held by all contractors and private principals in the contractual chain.”

Government’s response

The Government has accepted or accepted in-principle the Panel’s 20 recommendations.

Once I have fully digested all the information contained in these two reports, I will publish further articles.  The only thing I am certain of already is that industry needs to hold on to their seats because more change is coming.

Not intended as legal advice. Read full disclaimer.
Michael Chesterman November 28, 2019

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