Breaking News: Project Bank Accounts to be Introduced to Secure Payments (QLD)
The Queensland Government announced yesterday that it intends to reform the building and construction industry with a suite of security for payment measures for subcontractors including project bank accounts.
The press release states that the Project Bank Accounts will be introduced in the following stages:
From the start of 2018, all Government construction projects between $1 million and $10 million;
From 1 January 2019 every construction project over $1 million.
On the face of the announcement, this reform may affect large domestic building projects as well as private and public commercial projects.
What is a Project Bank Account?
A Project Bank Account is a trust account set up by the owner/developer and the builder. Rather than, payments being made directly to the builder and the builder then paying its subcontractors, the money for the project will be held in the Project Bank Account and subcontractors and the builder will be paid directly from the Project Bank Account instead.
This means that the money set to pay the subcontractors is never held by the builder, and the builder and subcontractors have security before the project starts that the money to pay them exists and will continue to exist in the Project Bank Account.
We attach an image used in the recent Government consultation to explain how the system works below:
A detailed summary of a Project Bank Account is given in the discussion paper provided by the Government. The discussion paper can be found at: http://www.hpw.qld.gov.au/SiteCollectionDocuments/SecurityOfPaymentDiscussionPaper.pdf
Project Bank Accounts are discussed from page 10 of the discussion paper.
What other reforms will be made?
Project Bank Accounts are part of a series of reforms that the Palaszczuk Government will be introducing. We will keep you up to date with the other reforms as they are announced.
What next? Queensland Building Plan
The Government also announced yesterday that it will open a new consultation on 1 April 2017 on a new Queensland Building Plan.
The discussion paper for the consultation covers a wide range of areas "including a review of licencing [sic] and plumbing and drainage laws, the potential for a single state housing code and the sustainability of buildings."
What does this all mean?
We are set for more change in the industry, but we hope that this change will be positive and provide a real security for subcontractors to get paid.
However, the changes will not be immediate. In fact, good law takes time to draft and consider. So in the interim it is still important that you learn about, understand and take what protective measures you can so that you can protect your business and your cash flow so that your business can survive.
We also give a cautionary note that these changes are due to be implemented after the next election. Therefore whether these measures are implemented and to what extent will be influenced by the next election's results.
The press release for the Project Bank Account can be found at: http://statements.gld.gov.au/StatemenU2016/11/30/project-bank-accounts-tosecure-payments-for-subcontractors
The press release for the Queensland Building Plan can be found at: http://statements.qld.gov.au/StatemenU2016/11/30/project-bank-accounts-tosecure-payments-for-subcontractors
 Mick de Brenni, Queensland Government Media Release 30 November 2016.