This weekend witnessed thousands of Sydneysiders hitting the streets to protest against lockout laws.  While the Security of Payment Act (SOP) is unlikely to generate mass protests, it can often be the cause of frustration and irritation for all construction industry participants (for different reasons).  In any event, NSW Fair Trading has circumvented the need to hit the streets by the release of its Discussion Paper, calling for submissions in respect of the SOP Act from industry stakeholders.

Recent amendments to the NSW SOP Act

Effective from April 2014, a raft of amendments were made to the NSW SOP Act as a result of the Collins Inquiry into contractor insolvencies in the construction industry.  Those amendments included:

  • the introduction of mandatory payment time frames;
  • the introduction of a requirement for head contractors to provide a supporting statement with payment claims;
  • the removal of the requirement for a payment claim to state that it is a payment claim under the SOP Act; and
  • the introduction of the requirement for head contractors to hold retention money in a retention money trust account on projects with a value greater than $20 million (introduced by the Building and Construction Industry Security of Payment Amendment (Retention Money Trust Account) Regulation 2015 and effective from 1 May 2015).

Discussion paper

Fair Trading’s discussion paper is accessible at: http://www.fairtrading.nsw.gov.au/biz_res/ftweb/pdfs/About_us/Have_your_say/Building_and_Construction_Industry_Security_of_Payment_Act_1999_Discussion_Paper.pdf), which is the beginning of the NSW Government’s full review of the SOP Act.

The Discussion Paper seeks submissions on a very broad range of issues, including issues such as whether:

  1. claims ought to be possible both up and down the contractor chain;
  2. the requirement for a payment claim to state that it is made under the SOP Act should be re-introduced;
  3. NSW should follow the Queensland legislation and introduce different time frames for the adjudication of high value payment claims;
  4. the current adjudication process and time frames are effective and appropriate;
  5. attempting to resolve a dispute by mediation should be a mandatory condition precedent to making an adjudication applications; and
  6. retention money trust accounts should be extended to all projects, not just those with a value greater than $20 million.

Essentially, it appears that nothing is off-limits in the review of the SOP Act.

Naturally, there will be contrasting experiences for principals, head contractors and subcontractors and each category of stakeholders will have different bugbears with the SOP Act.  The review provides industry stakeholders with a rare opportunity to directly lobby the NSW government, however time is running out.

The deadline for submissions to be lodged with NSW Fair Trading is Friday, 26 February 2016.