NECA welcomes new SA Security of Payment Bill that will protect contractors

The Building and Construction Industry Security of Payment Act 2009 was passed by the South Australian state government recently, after lobbying over more than three years by NECA, representing electrical and communications contractors and other industry groups from the construction industry including the Air Conditioning and Mechanical Contractors’ Association, National Fire Industry Association, Refrigeration and Air Conditioning Contractors Association (SA), Plumbing Industry Association, Civil Contractors’ Association (SA) and Australian Wall & Ceiling Association.

Larry Moore, NECA South Australia CEO, said the legislation was long overdue and followed five other states and territories in Australia which already have the legislation in place: “We are pleased this legislation has passed, bringing us into line with regulations in place in other states, and that the government has recognised the importance of protecting businesses in this state. Importantly, it covers contractors of all sizes, from small one-person operations, which are particularly at risk, through to the large contractors, all of which now have protective legislation which will ensure they get paid for their work.

“It means contractors are now afforded a process under law that will allow for speedy resolution of payment disputes by way of adjudication. Counter-productive clauses such as ‘pay when paid’ will now be void in any construction contract.”

The new legislation is designed to cover contracts for the provision of goods and services in relation to construction work as well as contracts for the carrying out of construction work.

NECA member Sue Chase, who runs Cowell Electric Supply, a powerline construction and electrical contracting business with 40 employees, said the legislation would provide legal recourse that her company has not had before: “In the past, we’ve had experiences where the principal, or client, hasn’t paid their bill or has strung out payment by creating issues with variations, or sometimes very weak excuses.

“We have been reluctant to go through the court system because it costs so much. We always felt that if SA had security of payment legislation in place, it would protect the smaller sub-contractors like us, and put the onus on the clients to actually pay and not stretch it out for the benefit of their own cashflow, or not pay their sub-contractors at all. This legislation means they have to pay, or give a proper reason for not paying.”

The development of the regulations will now be undertaken by the Attorney General’s Department, with the proclamation of the Act expected to take place early 2010.