Security of Payments

21 May 2018

Centre Alliance Senator Rex Patrick has today welcomed the release of the Review of Security of Payment Laws report – a review negotiated between the Federal Government and former Senator Nick Xenophon in late 2016. The report is the result of extensive consultation with industry by Mr John Murray AM.

"Subcontractors in the building and construction industry rely heavily on cash flow. When progress payments are delayed or when head contractors become insolvent, it is subcontractors who suffer the most hardship," said Rex. "An important element of the review was to examine how to stop this hardship from occurring."

Mr Murray has made 86 recommendations on matters that balance the competing interest of all stakeholders, including the use of the ‘East Coast Model’ and the establishment of a system of statutory trusts. 

"The devastation felt by small business owners who were not paid for work on the Pacific Highway upgrade demonstrates that the can must not be kicked down the road any further. The Government must take swift action to implement recommendations that will support and protect small subcontractors."

The framework of security of payment laws is complex with each state and territory enacting their own models. Smaller subcontractors who experience difficulties in recovering payment often do not have the legal expertise or resources to enforce their legal rights.

"While I acknowledge that some recommendations, particularly those relating to statutory trusts, will be contested, I urge the Federal Government and state and territory governments to work collaboratively on implementing recommendations that assist smaller subcontractors who are the most vulnerable participants in the contractual chain," said Rex.

"I would also like to thank Nick Xenophon who made security of payment a front and centre issue during the debate on reinstating the ABCC, as well as Mr Murray for his work over the last 12 months."

The report and recommendations can be found here.

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