What's next for Queensland building laws

10 August 2020

Changes to the QBCC Act, Building Act and Building Industry Fairness Act were passed by the Queensland Parliament on 15 July. Here’s what you need to know and do to be prepared and avoid penalties.

QBCC Act changes – commencing 1 October

What’s changing

1. The loophole that allows non-licensed entities to contract with clients to perform non-residential building work as long as they engage a licensed contractor to actually do the work will be closed (note: this did not apply to residential construction work or domestic building work).
2. Excluded individuals will be unable to apply for a site supervisor licence.
3. The definition of business day for the payment provisions will be amended to align with the BIF Act i.e. will exclude 22 December to 10 January.
4. There have also been some significant changes to the definition of ‘fire protection work’ and the licensing associated with that work including fire collars and fire walls commonly used in duplex construction. It is now ‘building work’ and, unless an exemption applies, an appropriate licence is required to do that work.
5. The government has committed to carrying out a review of the role of developers in the building and construction industry.
6. The QBCC Regulations will be amended to provide the ACN/ABN of all licensees to be recorded on the QBCC Licensee Register. This will provide certainty as to what entity holds the QBCC licence and should reduce arguments over unlicensed contracting and lack of entitlement to payment under the contract.

What action do I need to take?

No specific changes are required to your business processes although you should check your contract to determine the impact of the change to the definition of ‘business day’; but be aware of the various changes.

Once the QBCC Licensee Register is updated, we recommend you confirm that the entity that you contract through is the entity that holds the licence – particularly if you operate through a trust.

You should also consider whether the changes to ‘fire protection work’ affect your business.

Building Act changes – commencing 1 October

What’s changing

If the builder engages the private certifier for the project, owners will be able to direct the builder to request the certifier to carry out additional certifier inspections (e.g. waterproofing) providing they notify the builder within 10 business days of the owner being advised who the certifier is. In addition, the owner can ask for copies of inspection documentation from the private certifier and must be given them within 5 business days of the request.

What action do I need to take?

No changes to your business processes; but be aware of the changes and ready to accommodate them if requested; and take care not to get caught with the cost of the additional inspections.

When an additional inspection is requested, confirm in writing with your client that they will be contracting directly with the certifier, OR submit a variation claim, for the additional inspection costs.

Progress payments – commencing 1 October

What’s changing

Supporting statements to accompany payment claims

New requirements for supporting statements to accompany payment claims have been introduced.

Head contractors (builders, trade contractors, consultants, etc) will need to give a Supporting Statement to their client with a payment claim made under Chapter 3 BIF Act if they engage subcontractors/subconsultants.  (Note: the claim is still valid if there is no Supporting Statement; but it will be an offence with a maximum fine of approx. $13.5k.)

This applies to all commercial contracts and trade contracts and also to contracts for domestic building work in some circumstances i.e. for:

• Preliminary work, and
• Building work where the client is a company, trust, owner builder or other building contractor

What action do I need to take?

You’ll need to add a Supporting Statement to your payment claims under Chapter 3 BIF Act. Master Builders will develop a template that you can incorporate into your business processes. This is different to the statutory declaration that you may already be required by your contract to give to your client.

Paying scheduled amount by the due date

Anew offence has been introduced if a respondent doesn’t pay the amount noted on their Payment Schedule by the Due Date for Payment ($13.5k approx. max).

What action do I need to take?

Contractors and suppliers need to make sure that they set out in their contracts the Due Date for Payment and the time to give a Payment Schedule. If they don’t, the default provisions are: that the payment schedule is due 15 business days after the claim is given, but the due date for payment will be 10 business days after the claim has been given (i.e. five days before).

Where adjudicated amounts aren’t paid

If an adjudicated amount isn’t paid on time, the claimant can give a payment withholding request to the respondent’s client and the adjudicated amount has to be withheld from payment to the respondent. This does not apply where the respondent’s client is a ‘resident owner’ as defined under BIFA.

What action do I need to take?

• If the claimant is a second-tier subcontractor, they can give a payment withholding request to the builder and the adjudicated amount must be withheld from payment to the first tier subcontractor.
• If the claimant is the head contractor, they can give a payment withholding request to the client’s financier and the adjudicated amount must be withheld from payment to the client.
• In addition, the head contractor claimant can register a charge over the land where the work was carried out if the land is owned by the respondent or a related entity of the respondent.

Adjudication requirements (advising the QBCC)

Contractors face new offences if:

• The respondent pays the adjudicated amount noted on an adjudication decision but does not notify the QBCC within 5 business days of the payment and provide evidence that it was paid on time ($3k approx. max).
• The claimant withdraws an adjudication application but does not notify the QBCC as soon as practicable after the withdrawal ($3k approx. max).

What action do I need to take?

Be aware of the new timeframes and ensure you add notifying the QBCC to your business process.

Statutory Trust Accounts – first phase commencing 1 March 2021

What’s changing

Project Bank Accounts will be replaced with Statutory Trust Accounts:

• First phase applies to current cohort i.e. state government projects between $1M and $10M
• All thresholds now exclude GST
• Builders will only need to open one bank account (Project Trust Account) for each Statutory Trust project. All payments from the principal to the builder must be deposited into this account.
• The requirement for statutory trust accounts has been broadened beyond ‘building work’ – activities such as site testing, electrical work, earthmoving, installing prefabricated components, mechanical services, laying wet pour rubber and fire safety adviser work will now be included as project trust work.
• And more subcontractors will be caught up in statutory trust accounts e.g. cleaners, off-site manufacturers, landscaping, roads, soil testers, quantity surveyors & other building advisors will now be beneficiaries who must be paid from the Project Trust Account.
• Builders can continue with the current PBA model for existing projects or transition to the new statutory trust account model within six months.
• The builder must carry out monthly bank reconciliations on the Project Trust Account and Retention Trust Account.

What action do I need to take?

Ensure your account or contract administration team understand the requirements and set up the required new accounts.  Also ensure that you understand which subcontractors are to be paid from the Project Trust Account and those that are not.

Retention trust account - Builders holding retentions on subcontractors will need to open a single Retention Trust Account for all retentions held for all their Statutory Trust projects.

• Retentions held on other projects do not need to be deposited in this account.
• Mandatory trust account training must be undertaken before opening a retention trust account.
• The retention trust account must be externally audited every 12 months and on closing.

What action do I need to take?

Ensure your account or contract administration team understand the requirements and set up the required new account for all Statutory Trust projects.  Any retention held on a Statutory Trust Project before the Retention Trust Account is opened must be deposited into the Retention Trust Account within 5 business days of requiring a trust account.

2021 and beyond

2021 and beyond, further changes include:

• 1 March 2021 – all state government projects (current cohort) – projects between $1M and $10M (ex GST)
• 1 July 2021 – all state government and hospital and health services – projects over $1M (ex GST)
• 1 January 2022 – first tranche of trust accounts in the private sector plus all state authorities and local governments – projects over $10 M (ex GST)
• 1 July 2022 – second tranche in the private sector plus all state authorities and local governments – projects $3 M to $10 M (ex GST)
• 1 January 2023 - trust accounts apply to all private and public projects over $1 M (ex GST)

More info

For more information or member-exclusive FREE advice and assistance with implementing changes into your business, contact us.