Building Industry Fairness (Security of Payment) and Other Legislation Amendment Act 2020

The Queensland government is committed to creating a safer, fairer and more sustainable building and construction industry.

The Building Industry Fairness (Security of Payment) and Other Legislation Amendment Act 2020  (BIFOLA Act) received assent on 23 July 2020.

The BIFOLA Act is supported by the Building Industry Fairness (Security of Payment) and Other Legislation Amendment Regulation 2020 and the Building Industry Fairness (Security of Payment) (Transitional) Regulation 2020 which were approved by the Governor in Council on 1 October 2020.

The BIFOLA Act amends the following legislation:

• Architects Act 2002
• Building Act 1975
• Building Industry Fairness (Security of Payment) Act 2017
• Professional Engineers Act 2002
• Queensland Building and Construction Commission Act 1991
• Retirement Villages Act 1999

These changes support the delivery of the Queensland Building Plan and recommendations of the:

• Building Industry Fairness Reforms Implementation and Evaluation Panel Report (BIF Panel)
• Special Joint Taskforce Report
• Building Confidence Report

What's changed

Building Industry Fairness (Security of Payment) Act 2017 (BIF Act)

Security of payment in the building and construction industry is an ongoing priority for the Queensland Government.

Recommendations of the Building Industry Fairness Reforms Implementation and Evaluation Panel

The Building Industry Fairness Reforms Implementation and Evaluation Panel Report reviewed how the first phase of project bank accounts was working, and made 20 recommendations for reform. They included implementation of project trust accounts to the private sector and other security of payment reforms. All recommendations were accepted in full or in principle by the Government. These decisions are discussed in the Government response to the Panel’s report (PDF, 694.57 KB).

New trust account framework

The panel's recommendations had three guiding principles for further implementation of trust accounts:

1. To simplify the project bank account process.
2. To improve subcontractor protections.
3. To manage the transition to full implementation of trust accounts.

The BIFOLA Act implements the panel’s recommendations for a revised trust account framework which will:

• reduce the number of accounts: instead of three trust accounts, one project trust account will be needed for each eligible contract
• only require one retention trust account to be held per contractor, if the contractor holds cash retentions
• replace the disputed funds account with added protections for subcontractors
• relieve Principals from trust account oversight
• increase the regulatory functions and oversight of the Queensland Building and Construction Commission, including audit powers over trust accounts.

Phased implementation

The new trust account framework is being phased in gradually to all eligible contracts valued at $1 million or more.

On 1 March 2021, the new framework commenced applying initially to eligible Queensland Government contracts valued between $1 million and $10 million. Contracts of this type were already subject to project bank account requirements.

The framework is scheduled to apply to other eligible building and construction contracts as follows:

• 1 March 2025—private sector, local government, statutory authorities’ and government-owned corporations’ contracts valued at $3 million or more.
• 1 October 2025—all eligible contracts valued at $1 million or more.

Read more about the trust account framework.

Other security of payment reforms recommended by the Panel

The following security of payment reforms commenced on 1 October 2020:

• When a head contractor provides a payment claim to their principal, they must provide a supporting statement that states that all of their subcontractors have been paid. If payment has not been made, they must explain their reasons for non-payment.
• When an adjudicated amount has not been paid, a head contractor can lodge a payment withholding request against a financier to their principal. Other claimants will be able to lodge a payment withholding request on the party above the respondent in the contractual chain.
• When an adjudicated amount has not been paid, a head contractor can also lodge a statutory charge over the property on which the construction work, or supply of related goods and services occurred, if it is owned by the respondent or a related entity.

Read more about supporting statements and securing payment following an adjudication process.

Recommendations of the Special Joint Taskforce

The Special Joint Taskforce made 10 recommendations following its investigation into allegations of fraudulent behaviour relating to subcontractor non-payment in Queensland's building industry. The Government accepted all recommendations of the Taskforce.

Legislative amendments to the QBCC Act to implement Taskforce recommendations commenced on 1 October 2020. The amendments:

• strengthen and clarify an existing offence provision relating to causing significant financial loss through failure to comply with contractual obligations, to improve the QBCC’s ability to enforce the provision
• introduce a new offence for causing false or misleading information about a licensee’s financial situation to be given to the QBCC
• provide the QBCC with more time to start a prosecution to allow more time for investigation in complex cases
• require a supporting statement to be provided by a head contractor to a Principal (the Panel also recommended this). The BIFOLA Act imposes a new penalty for failing to provide a supporting statement and grants the QBCC power to prosecute someone who provides false or misleading information on a supporting statement.

Queensland Building and Construction Commission Act 1991 (QBCC Act)

Amendments to the QBCC Act:

1. prevent excluded individuals from applying for a site supervisor licence and prevent newly excluded individuals (i.e. those who become excluded individuals after 1 October 2020) from continuing to hold an existing site supervisor licence
2. improve sharing of licensing information across jurisdictions
3. introduce a new penalty for delaying or obstructing the rectification of building work
4. implement important amendments relating to fire protection work
5. provide businesses more time to obtain a licence when a new licence class is introduced
6. clarify the QBCC’s ability to impose a condition on a licence restricting the scope of work.

Amendments to support the transition for mechanical services licences (points 5 and 6 above)  commenced on 23 July 2020. The validation of relevant landscaping work and fire collars work is taken to have commenced on 1 January 2020.

The amendments in points 1-3 commenced on 1 October 2020.

Further changes (point 4 above) were made to support the revised fire protection licensing framework which commenced on 1 May 2021.

Building Act 1975

The BIFOLA Act also included amendments to improve public confidence and address some of the issues highlighted in the Building Confidence Report (PDF, 4.5MB).

The reforms, which commenced on 1 October 2020, are:

• strengthen the certification and inspection process
• clarify that a certifier’s primary duty is to act in the public interest, regardless of commercial relationships
• improve owner’s rights during the inspection and certification process
• strengthen the regulatory framework by introducing a demerit point system - building certifiers who accrue 30 demerit points over three years may be disqualified
• improve professional standards by requiring accreditation standards bodies to have their professional development schemes regularly reviewed.

Read more about the Building Act 1975 and supporting regulation changes (PDF, 146.14 KB).

Architects Act 2002 and Professional Engineers Act 2002

The national Building Confidence Report recommended that the states and territories should give regulators more effective powers and give the public more confidence that the built environment is safe and high quality.

The BIFOLA Act enhanced the powers of the Board of Architects of Queensland and Board of Professional Engineers of Queensland. These reforms commenced on 1 March 2021 and allow the Boards to:

• gather more evidence as part of an investigation when a complaint is made
• enter places to search and seize evidence
• audit the work of architects and professional engineers, as well as people who are claiming to be architects or professional engineers
• impose a condition on an architect’s or professional engineer’s registration without their consent.