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Principals or head contractors in South Australia who attempts to threaten or intimidate subcontractors who are seeking payment for work could be jailed under proposed new changes as the government in that state seeks to clamp down on the non-payment of subcontractors on construction projects.

In his latest announcement, South Australian Minister for Small Business Martin Hamilton-Smith said the government will seek to amend the Building and Construction Industry Security of Payment Act 2009 to make it an offence to assault, threaten or intimidate anyone who is seeking payment for work.

Penalties for those found guilty of the new offence include fines of up to $50,000 for individuals or $250,000 for companies and prison sentences of up to two years.

The State Government has also asked the Industry Advocate and the Small Business Commissioner to develop a “Good Behaviour” test model which can be applied to contractors bidding for big Government projects.

The insertion of a penalty provision for intimidation was a recommendation included in a proposal for amendments to the Act contained in a consultation paper published last year by South Australian Small Business Commissioner.

That paper recommended a three-stage process for reform, which also includes the introduction of simple and complex claims and an extension of the Act to cover residential construction.

Those proposals followed an earlier review of the Act by Retired District Judge Alan Moss – three years after the Act came into force in 2011.

It also followed the collapse of Tagara Builders, when went into liquidation on June 26 2015 owing around $10 million in debts including around $4.8 million worth of progress claims under the Security of Payment Act.

In another win for subcontractors, the bill does not seek to abolish private sector authorised nominating authorities (ANAs) who assign adjudicators to cases and provide administrative assistance to the parties throughout the adjudication process.

Under proposals included in both the Moss Review and the Small Business Commissioner consultation paper, private sector ANAs would have been removed and responsibility for appointing adjudicators and assisting parties would have been the role of the Small Business Commissioner, who would have become the sole ANA.

Whilst some building industry lobby groups argue that private sector ANAs have a conflict of interest and are prone to selecting claimant-friendly adjudicators, others within the sector say the assistance which private sector ANAs provide to the parties in terms of the administrative aspects of the adjudication process is imperative.

In Queensland, where similar changes were made in 2014, more than half of all applications for adjudication now ‘fall over’ prior to acceptance by an adjudicator – a phenomenon which is largely attributed to inadequate supports which subcontractors and other claimants are now receiving through the adjudication process.

Instead of abolishing ANA’s however, the government has moved to give the Small Business Commissioner greater oversight over arrangements regarding ANAs and adjudicators who operate under them.

In a statement, Hamilton-Smith that subcontractors deserved to be paid without fear and intimidation.

“Businesses working in the building and construction sector are entitled to be paid in a timely manner for work properly completed or goods which have been supplied,” Moss said.

“We need to keep the cash moving in this important industry and the Act provides one of the means in which this can occur.”

 
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