List of tables

• Table B1: Membership of the Security of Payments Working Group

• Table B2: Monitoring the impact of ABCC activities

Introduction

The Security of Payments Working Group (Working Group) is established under section 32A of the BCIIP Act.

The purpose of the Working Group is to enhance protections for subcontractors by improving compliance with security of payment legislation, through the work of the ABCC.

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 section will be a reference to the BCIIP Act unless otherwise stated.

Key functions of the Working Group

Section 32A(2) sets out the functions of the Working Group. These include:

1. monitoring the impact of the activities of the ABCC on the conduct and practices of building industry participants in complying with all applicable laws that relate to the security of payments that are due to persons in relation to building work (security of payment laws)
2. making recommendations to the Australian Building and Construction Commissioner about policies, procedures or programs that could be implemented to improve compliance by building industry participants with security of payment laws
3. making recommendations to the Minister about any matter that the Minister requests the Working Group to consider
4. any other functions conferred on the Working Group by the rules, as made under section 120.

Membership of the Working Group

Composition

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

• the Australian Building and Construction Commissioner
• at least one member with 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, 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 B1), with an Acting Chair during this financial year.

All members, other than the Acting Chair and the Commissioner, were appointed on 14 April 2017 with a three-year tenure until 13 April 2020.

The Chair of the Working Group is Mr Steve Kibble, Group Manager, Department of Jobs and Small Business. Mr Kibble has experience in building industry policy issues.

Ms Justine Ross, former Branch Manager, Department of Jobs and Small Business, was appointed as a member on 21 May 2017 with a tenure of 12 months. Ms Ross was the Acting Chair in Mr Kibble's absence during this financial year. Ms Ross has legal and policy experience in workplace relations and work health and safety issues in the building industry.

Table B1: Membership of the Security of Payments Working Group

Secretariat

Under the Working Group's terms of reference, the agency's staff provides secretariat support to the Working Group, including preparation of meeting agendas, papers and minutes.

Resignation and termination of members

Appointed members hold office until the end of their tenure, unless a termination or resignation decision is made before that date.

Mr Hadgkiss resigned as Commissioner of the ABCC on 27 September 2018.

Ms Ross completed her tenure as Acting Chair of the Working Group on 20 May 2018.

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:

• 7 July 2017
• 10 November 2017
• 16 February 2018
• 4 May 2018.

Operations of the Working Group

Monitoring the impact of the activities of the ABCC on the conduct and practices of building industry participants

To enable the Working Group to monitor the impact of the ABCC's activities, the ABCC provides the Working Group with a Security of Payments Quarterly Statistics report.

The ABCC presented each report for discussion and feedback at Working Group meetings.

Each quarterly report contains statistics on the ABCC's contact from building industry participants, and the agency's response. The reports have developed in scope in response to feedback from the Working Group. The fourth report, for example, also reported on the ABCC's annual proactive compliance activities for security of payments.

Each report includes statistics such as:

• number of enquiries and reports
• enquiries and reports by jurisdiction
• enquiries by source and type
• outcome of finalised enquiries and reports.

The ABCC received 145 reports and enquiries relating to security of payments during the reporting period, an average of 36 per month. The majority of reported issues involved subcontractors experiencing security of payment issues with head contractors.

In response to enquiries, the ABCC provided information and, where appropriate, referred the stakeholder to another relevant agency for further assistance. In response to reports, the ABCC considered whether the reported issues were within its jurisdiction; if the issues were not within its jurisdiction, the ABCC referred the stakeholder to the relevant state or territory agency. The ABCC monitored issues within its jurisdiction, to ensure adjudication amounts were paid and, if necessary, upgraded to a code audit. Payment or rectification occurred in eight matters; four matters were closed; six adjudications are being monitored; and three matters that were upgraded for audit or investigation are ongoing.

Table B2 is a snapshot of these statistics.

Table B2: Monitoring the impact of ABCC activities

Making 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

During the financial year, the Working Group commenced by settling the terms of reference and the Forward Work Plan. The Working Group heard presentations about:

• the role and functions of the ABCC regarding security of payments
• John Murray AM's national review into security of payments
• the ABCC's jurisdiction under the Code and the impact the ABCC can have on particular security of payment issues affecting the industry.

Disputed and delayed payments

Acknowledging the relatively low number of reports on security of payment issues and the need to improve awareness of the nature and scope of the ABCC's role, the ABCC sought Working Group feedback on communication channels to reach subcontractors.

The Working Group's discussions assisted the ABCC with how best to target communication with subcontractors, leading to the development of an education campaign.

The Working Group made a significant contribution to the ABCC's key messages for this education campaign, scheduled for launch in July 2018. The campaign's goal is to improve awareness, engagement, reporting and compliance with security of payment provisions in the Code and effectively convey the ABCC's role in supporting compliance. A secondary purpose of the campaign is to increase subcontractors' understanding about their rights under state and territory security of payment laws.

Entities covered by the Code must report any 'disputed or delayed progress payment' to the Commissioner and the relevant funding entity as soon as practicable. The ABCC presented on how it came to define 'reportable' payments, and the Working Group challenged the scope of the ABCC's definition, seeking a definition that would invite earlier intervention by the ABCC. The ABCC sought feedback from the Working Group on the types of issues that could be reported earlier and that the ABCC would have the jurisdiction to address.

The Working Group's productive discussions, together with written feedback received out of session from members in March 2018, contributed to the ABCC's revised definition.

The ABCC will communicate the revised mandatory reporting obligations through the security of payment education campaign.

Working with the states and territories

The ABCC reported to the Working Group on its interactions with state and territory security of payment agencies, including:

• collecting adjudication data to help identify whether companies are reporting security of payment issues. The data was of limited benefit, as it was not linked to projects and related mostly to adjudications outside the ABCC's jurisdiction.
• establishing a forum to discuss security of payment issues. The inaugural meeting of the state and territory agencies forum took place in March 2018.
• seeking opportunities to educate subcontractors about the ABCC's role.

Statutory declarations

The Working Group discussed the use of statutory declarations on construction projects that falsely certify that monies owed to subcontractors have been paid. Members understood that the ABCC can only refer this issue to criminal authorities for investigation.

At the request of Working Group members, the challenges in having such authorities address the issue of false declarations was passed on to the Minister, with a request from the members that it be raised with the Attorney-General and the Minister for Revenue and Financial Services for further investigation.

Making recommendations to the Minister about any matter that the Minister requests the Working Group to consider

The Minister has not made a request to the Working Group during this reporting period.

Any other functions conferred on the Working Group by the rules

No other functions have been conferred on the Working Group by the rules.