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Appendix C: Security of Payments Working Group Annual Report

Introduction

The Security of Payments Working Group (Working Group) is established under section 32A of the Building and Construction Industry (Improving Productivity) Act 2016 (BCIIP Act).

Section 32K of the BCIIP Act requires the Chair of the Working Group at the end of each financial year to prepare and give to the Minister, for presentation to the parliament, a report on the membership and the operations of the Working Group during the financial year.

All legislative references in this report will be a reference to the BCIIP Act unless otherwise stated.

Purpose of the Working Group

The functions of the Working Group as set out in section 32A(2) include:

  • monitoring the impact of the activities of the ABCC on the conduct and practices of building industry participants in relation to their compliance with laws that relate to the security of payments that are due to persons in relation to building work;
  • making recommendations to the ABC Commissioner about policies, procedures or programs that could be implemented to improve compliance by building industry participants with security of payment laws;
  • making recommendations to the Minister about any matter that the Minister requests the Working Group to consider; and
  • any other functions conferred on the Working Group by the rules, as made under section 120 of the BCIIP Act.

Membership of the Working Group

Composition

Section 32B sets out the requirements for the composition of the Working Group’s membership as:

  • the ABC Commissioner;
  • at least one member who has experience or background in each of:
    • employee representation in the building industry
    • employer representation in the building industry
    • contractor representation in the building industry
  • any other members (if any) appointed under section 32C.

Other than the automatic appointment of the Australian Building and Construction Commissioner (the Commissioner), members are appointed to the Working Group under section 32C by the relevant Minister.

Appointment

Membership of the Working Group was formally announced by Senator the Hon Michaelia Cash, former Minister for Employment, on 26 May 2017. The Working Group consists of 11 members (outlined in Table C1), including the Chair and the Commissioner.

The three-year tenure for the nine members representing the interests of either employees, employers and contractors in the building industry ended on 13 April 2020. The Minister for Industrial Relations and Attorney-General, the Hon Christian Porter, reappointed eight of these nine representatives as members on 9 June 2020 for a further three-year term. Ms Rebecca Sostarko replaced Mr Shaun Schmitke as the Master Builders Australia Working Group member and was formally appointed by the Hon Christian Porter on 9 June 2020.

Ms Justine Ross, the current Chief Executive Officer of the Asbestos Safety and Eradication Agency, is the Chair for the Working Group and was formally appointed to the position on 8 November 2018.

Table C1: Membership of the Security of Payments Working Group during the reporting period

Role

Member

Organisation

Chair

Ms Justine Ross

Asbestos Safety and Eradication Agency

Representing the interests of employees in the building industry

Ms Sophie Ismail

Australian Council of Trade Unions

Representing the interests of employers in the building industry

Ms Vasuki Paul

Australian Industry Group

Mr Shaun Schmitke (1 July 2019 – 13 April 2020)

Master Builders Australia

Ms Rebecca Sostarko (9 June 2020 – 30 June 2020)

Master Builders Australia

Ms Melissa Adler

Housing Industry Association

Representing the interests of contractors in the building industry

Mr Ken Phillips

Independent Contractors of Australia (now Self-Employed Australia)

Mr Suresh Manickam

National Electrical and Communications Association

Mr Chris Melham

Civil Contractors Federation

Ms Juanita Gibson

Subcontractors Alliance

Other member appointed under section 32C

Ms Lorraine Djuricin

Adjudicate Today

Australian Building and Construction Commissioner

Mr Stephen McBurney

Australian Building and Construction Commission

Meetings

Each financial year, the Chair must convene at least four meetings of the Working Group.

The Working Group held four meetings on the following dates:

  • 6 September 2019
  • 5 December 2019
  • 19 March 2020 (by teleconference)
  • 25 June 2020 (by videoconference).

A summary of each meeting is posted on the ABCC website following the meeting at www.abcc.gov.au/about/what-we-do/security-payments-working-group.

Operations of the Working Group

Pursuant to its functions under the BCIIP Act, the Working Group is required to monitor the impact of the activities of the ABCC on the conduct of building industry participants. To enable the Working Group to monitor the impact of the ABCC’s activities, the ABCC provides reports and case studies to the Working Group. The ABCC continued to provide a Security of Payments Quarterly Statistics Report at each meeting and at the June 2020 meeting, the ABCC presented a trend analysis for the first three quarters of the 2019–20 financial year.

During the reporting period, the ABCC received 232 reports, 210 enquiries and 68 complaints relating to security of payments.

93 per cent of the reports made to the ABCC related to disputed and delayed payments that had been paid at the time of reporting to the ABCC.

The ABCC has noticed a significant reduction in the amount of disputed and delayed payments reported from companies that have been routinely reporting. There has further been a reduction in the median days taken to rectify overdue disputed or delayed payments with these same companies.

Following the outbreak of the COVID-19 pandemic, the ABCC has been providing the Working Group monthly figures on the number of COVID-19 related enquiries and the subsequent number of these enquiries that relate to security of payments.

The Working Group may make recommendations to the Commissioner about policies, procedures or programs that could be implemented to improve compliance by building industry participants with security of payment laws. No formal recommendations were made by the Working Group during the reporting period. However, the Working Group made suggestions regarding improvements to reporting processes and education initiatives and provided valuable insights to assist the ABCC improve compliance by building industry participants.

The BCIIP Act provides that the Working Group may make recommendations to the Minister about any matter that the Minister requests the Working Group to consider. The Minister did not request any matters for the Working Group to consider, and there were no formal recommendations made to the Minister from the Working Group.

No other functions have been conferred on the Working Group by the rules, as made under section 120 of the BCIIP Act.