The Government plans to firstly expand the application of PBAs to larger government projects, and then to private sector projects. The Queensland Government accepted, or accepted in-principle, all 20 recommendations from the Building Industry Fairness Reforms Implementation and Evaluation Panel Report regarding Project Bank Accounts (PBAs).
Based on the release and the Government’s response to the recommendations of the PBA evaluation panel, the expanded roll-out (beyond the Phase 1 status quo) may be:
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Phase 2 |
Application to all Qld State Government building projects above $1m |
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Phase 3 |
Application to all building projects (including private) in Qld above $10m |
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Phase 4 |
Application to all building projects above $3m |
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Phase 5 |
Application to all building projects above $1m |
The report, which proposed amendments to the Building Industry Fairness (Security of Payment) Act 2017 (BIF Act), outlined the industry’s suggestions on the practicalities of the proposed changes to the use of PBAs
Project Bank Accounts are a key component of the Queensland Government’s security of payment reforms, which were trialled from 2018 for Government building contracts between $1 million and $10 million.
Currently, the legislation requires that head contractors establish the following 3 trust accounts for each qualifying project to secure monies for the benefit of subcontractors:
These changes are intended to also apply to projects that do not require a PBA and will provide an ability to “issue a charging order or impose a lien over property”. With Queensland being the first jurisdiction to introduce such measures, the changes will provide expanded protection for head contractors from failure by developers/ principals.
The Government has acknowledged that the “removal of project and retention funds from operating capital is an intended consequence of the reforms and some businesses may need to change their financial management practices and find other sources of working capital from savings, by increasing debt, or liquidating assets” and suggested that the phased roll-out will provide “sufficient time for market adjustment”. The message to those businesses who will be effected by PBA’s is to consider the cashflow impact on your business well in advance of commencement.
The Government has indicated a desire to amend the BIFA to enable the expansion of the regime to require subcontractors (2nd tier contractors) to establish PBA’s where prescribed by Regulation. According to the Government’s Building Industry Fairness Reforms Implementation and Evaluation Panel Report, this “will allow government to monitor and respond quickly and effectively to ensure avoidance practices do not undermine the integrity of the PBA framework”.
