Consultation on draft WA security of payment reform for government projects opens

The draft Building and Construction Industry (Security of Payment) Amendment Bill 2025 aims to strengthen SOP for subcontractors and streamline payment protections. Other minor amendments, providing greater clarity and transparency regarding the adjudication process and the powers of building industry regulators, have been proposed by the Cook government.

The currently used project bank account system, a payment method where contractors and subcontractors receive direct payments from a trust on department of finance projects, will be replaced with a construction trust scheme if the bill is passed.

Nicole Whitby, an expert in construction law at Pinsent Masons, said: “The creation of the trust, which is greatly simplified by the removal of legal documentation such as the PBA trust deed poll and PBA agreement will be a welcomed change for contractors and subcontractors in the industry.”

“It also removes the need for subcontractors to register a security interest in the amounts held in the trust account, and therefore a deed of release or priority deed poll is no longer required, as the bill will grant a security interest in the trust funds for the purposes of the Commonwealth’s personal property securities laws,” she said.

“These changes would reduce the administrative burden on all parties involved.”

The construction trust scheme will operate in the same way as the current project bank account system by facilitating direct and near-simultaneous payment to a project’s head contractor and its subcontractors if the head contract equals or exceeds A$1.5 million (approx. US$975,000) in value, automatically if the value of the subcontract exceeds A$20,000 or by ‘opting-in’ to the process.

David Ulbrick, an expert in construction law at Pinsent Masons, said: “The changes are also significant for the adjudication regime, removing the timing requirements for service of an adjudication applications and responses on the opposing party, currently required to take place within one business day of filing, and the introduction of a new provision expressly stating that an application isn’t invalid because a copy is served on the other party out of time, which should diminish disputes as to timing of service of documents in the adjudication process.”

“Importantly, the requirement to serve an adjudication application on the nominating authority remains unaltered, so the urgency associated with preparing an adjudication application will remain. Also, the time for a respondent to prepare an adjudication response will continue to run from the date the respondent is served, so there is no possibility that the respondent is put at a disadvantage if the adjudication application is not served on the respondent on the same day it is served on the nominating authority,” he said.

“The change potentially allows for a brief window of negotiation following the commencement of an adjudication process, by service on the nominating authority, but before service on the respondent, at which time the respondent would ordinarily apply maximum effort to the response and so have limited bandwidth for settlement negotiations.”

Finally, the Building Services Board, when considering an application for the grant or renewal of registration as a building service contractor during the registration process, will be able to include matters occurring after the application was submitted when making its decision. The Building Commissioner will also have its information gathering powers broadened under the legislation.

The bill is open for public consultation until 14 November 2025.