House of Assembly Fifty-First Parliament, Third Session (51-3) 51 3 Parliament of South Australia House of Assembly published Bills Building and Construction Industry Security of Payment Bill BUILDING AND CONSTRUCTION INDUSTRY SECURITY OF PAYMENT BILL Final Stages Final Stages The Legislative Council agreed to the bill with the amendments indicated by the following schedule, to which amendments the Legislative Council desires the concurrence of the House of Assembly: No. Clause 4, page 5, after line 8—After the definition of progress payment insert: recognised financial institution means a bank or any other person or body prescribed by the regulations for the purposes of this definition; No. Clause 7, page 7, lines 9 to 13 [clause 7(2)]—Delete subclause (2) and substitute: (2)	This Act does not apply to— (a)	a construction contract that forms part of a loan agreement, a contract of guarantee or a contract of insurance under which a recognised financial institution undertakes— (i)	to lend money or to repay money lent; or (ii)	to guarantee payment of money owing or repayment of money lent; or (iii)	to provide an indemnity with respect to construction work carried out, or related goods and services supplied, under the construction contract; or (b)	a construction contract for the carrying out of domestic building work (within the meaning of the Building Work Contractors Act 1995) on such part of any premises that the party for whom the work is carried out resides in or proposes to reside in; or (c)	a construction contract under which it is agreed that the consideration payable for construction work carried out under the contract, or for related goods and services supplied under the contract, is to be calculated otherwise than by reference to the value of the work carried out or the value of the goods and services supplied. No. Clause 7, page 7, after line 18 [clause 7(3)]—After paragraph (a) insert: (ab)	provisions under which a party undertakes to carry out construction work, or to supply related goods and services, as a condition of a loan agreement with a recognised financial institution; or No. Clause 21, page 15, lines 5 and 6 [clause 21(3)(a)]—Delete 'the date on which the adjudicator notified the claimant and the respondent as to his or her acceptance of the application' and substitute: — (i)	the date on which an adjudication response is lodged with the adjudicator; or (ii)	if an adjudication response is not lodged with the adjudicator on or before the last date on which the response may be lodged with the adjudicator under section 20(1)—that date; or (iii)	if the respondent is not entitled under section 20 to lodge an adjudication response—the date on which the respondent receives a copy of the adjudication application; or No. Clause 26, page 18, after line 7 [clause 26(1)]—After paragraph (b) insert: or (c)	an adjudicator who accepts an adjudication application notifies the claimant and the respondent that he or she has withdrawn from the adjudication. No. Clause 26, page 18, line 8 [clause 26(2)]—Delete 'those circumstances' and substitute: the circumstances specified in subsection (1)(a) or (b) No. Clause 26, page 18, after line 12—After subclause (2) insert: (2a)	In the circumstances specified in subsection (1)(c), the application is discontinued and the claimant may make a new adjudication application under section 17. No. Clause 26, page 18, lines 14 and 15 [clause 26(3)]—Delete 'becomes entitled to withdraw the previous adjudication application under subsection (2).' and substitute: — (a)	becomes entitled to withdraw the previous adjudication application under subsection (2); or (b)	is notified by the adjudicator that he or she has withdrawn from the adjudication. No. New clause, page 18, after line 17—After clause 26 insert: 26A—Claimant may discontinue adjudication A claimant may withdraw an adjudication application at any time before the application is determined by notice in writing served on the respondent, the adjudicator and the authorised nominating authority to whom the application was made. No. Clause 29, page 19, lines 30 to 32 [clause 29(1)(b)]—Delete paragraph (b) and substitute: (b)	if no such amount is agreed—the hourly rate (if any) prescribed by regulation in addition to reasonable expenses; or (c)	if no such amount is agreed and no hourly rate has been prescribed—such amount, by way of fees and expenses, as is reasonable having regard to the work done and expenses incurred by the adjudicator. No. Schedule 1, clause 2, page 22, line 33 [Schedule 1, clause 2(6)]—Delete subclause (6) and substitute: (6)	Section 30(3)—delete 'unless the building work contractor has requested the payment by notice in writing given to the building owner or an agent authorised to act on behalf of the building owner.' and substitute: unless— (a)	the building work contractor has requested the payment by notice in writing given to the building owner or an agent authorised to act on behalf of the building owner; or (b)	the domestic building work contract is a contract to which the Building and Construction Industry Security of Payment Act 2009 applies (in which case the provisions of that Act relating to progress payments apply). Consideration in committee. Mr KENYON House of Assembly Mr KENYON: I move: That the Legislative Council's amendments be agreed to. Essentially, there have been a couple of amendments in the Legislative Council, the most notable of which has been the removal of the inclusion of 'banks', an amendment that I moved in this house. Since then opinion has changed. The industry came to the view that that was perhaps not in the best interests of everyone and that is why the amendment was included in the first place. I am more than happy to see that amendment removed. The second amendment relates to the exclusion of 'householders', which was included in the original bill. I included 'householders' in amendments and the Legislative Council has removed them. I will accept that, but my preference is that all contracts and the entire contracting chain be included in the process. I accept the arguments put forward in the upper house that there would be some difficulty for householders with no experience in the building industry—which one would expect contractors to have. Without that experience they are likely to be caught out by the process. Queensland is reviewing the way in which it goes about it, and Tasmania has recently passed a bill that includes householders. Perhaps the more prudent approach is to observe how Queensland goes about its review and think about Tasmania's legislation. I still have to say that my preference is that the whole contracting chain is included, and I would be more than willing to see this bill reviewed and perhaps amended in the not too distant future. Finally, some minor amendments that were moved by the Hon. John Darley in another place reflect some suggestions of a meeting we both attended with arbitrators. That was a very enlightening meeting, and some very sensible amendments came out of that, and they have my full support. The Hon. I.F. Evans House of Assembly The Hon. I.F. Evans: What was that one? Mr KENYON House of Assembly Mr KENYON: It was a meeting put forward by an industry group that we attended. They suggested that the time within which the adjudicator had to make the adjudication should not start until they knew the papers had been served, otherwise the time for response would be very compressed. So it is to stretch that out and make it easier for respondents. Apart from that, it is very straightforward. There are a number of people to thank. I thank Chris Rankine, who is here, and other members of the industry groups. They have been great supporters of this legislation, and I appreciate that. The member for Hartley played a pivotal role on a number of occasions, and I appreciate her assistance. It would not be possible without the contributions of the member for Torrens and the way she has assisted getting it through the parliament. I thank her for her strong support for the bill. The Hon. John Darley and his excellent staff need to be thanked. If the truth be known, it is probably more his bill than mine. It has been a very valuable experience for me to be involved, but I think the Hon. John Darley has had a lot more to do with it than me, and a longer involvement than me, and he should be thanked for his contribution. His staff is excellent. He has done very well to employ those people—Connie and Jenny, in particular, are very sharp. I thank John Thomas, who put me onto the bill in the first place when I sat down at a contractors' dinner. He pointed out that this bill was in existence and that it should be supported. I thank the Attorney-General for his patience with me, and I also acknowledge the patience of parliamentary counsel. I commend the amendments and the bill to the house. The Hon. I.F. EVANS House of Assembly The Hon. I.F. EVANS: So there is no understanding— The Hon. M.J. Atkinson House of Assembly The Hon. M.J. Atkinson: Misunderstanding. The Hon. I.F. EVANS House of Assembly The Hon. I.F. EVANS: Well, that depends what I want to say. Just so there is no misunderstanding—about what I meant when I said 'so there is no understanding'—the Liberal Party took a position when David Ridgway was the small business spokesman, which must have been five or six months ago, to support the principle of this bill, and I know that some people have been running around certain organisations suggesting that we were not supporting the bill. Far from it: we supported the principal bill from the time David Ridgway took it to the party room as small business shadow. I think I am right in saying that I am the only member of the house to actually go to Queensland and look at how this bill operates, even though this is based on the New South Wales model. I went to Queensland— The Hon. M.J. Atkinson House of Assembly The Hon. M.J. Atkinson: That is why you went to the Gold Coast? The Hon. I.F. EVANS House of Assembly The Hon. I.F. EVANS: No, I didn't, actually. I went to Brisbane to meet with Michael Chesterman, who is the registrar in the Queensland Building Services Authority, which is the regulatory body for the Queensland government for building matters per se. I went to meet Mr Chesterman rather than the New South Wales people because he had done a review of this sort of legislation not only in Australia but also worldwide, and I think he is generally acknowledged as having reasonable knowledge on this particular issue. It is unfortunate that the amendments were defeated by the government, and others, in the upper house because I think they actually improved the bill. As the house knows, I come from the building industry so I have a reasonably good knowledge of the issues that relate to the contracting stream in building contracts. I think it is a mistake of the house to have an unregulated adjudicator and nominating authority. We support this bill as it is—we will let you have the bill. However, if this side of the house is in government after the election, I say to the industry groups that we will be instantly reviewing this legislation, not to stop it but to make sure it is going to work. To put some industry groups out of their misery we will not be going down the Western Australian line; it will be the eastern states' line and, I suggest, the Queensland line, more than likely. I think it is dangerous to have unregulated, unlicensed nominating authorities and adjudicators. This bill now allows those people to be unlicensed and, therefore, not supervised by a government agency. Mr Chesterman puts to me very good reasons why there should be a government overseer of the regulating authorities. I am not going to hold the house now because I can count, and for the last four years it has been 30 to 15, and it still is today. So I am not going to hold the house long as to why we think that issue is important. The Hon. M.J. Atkinson interjecting: The Hon. I.F. EVANS House of Assembly The Hon. I.F. EVANS: Well, we might win by 30; we could pick up that many seats. I'm not sure. We support the amendments, but I say to the industry groups that my concern about this bill is this: this bill has really not been through what would be the normal process of a substantial bill promoted by government. And let's make no mistake, it is essentially promoted by the member for Newland—and I congratulate him on his efforts—with the support of government. The government really has not thrown the whole department behind it to provide advice and to deal with all of the consultation processes as a government normally would. What is the result of that? The result of that is that we have the government only a month ago saying, 'Well, the banks are in. The member's own amendment brings in banks'. So the opposition ring up the banking industry in Sydney and say, 'Have you seen these amendments?' 'No, no-one's spoken to us about it.' So we flick them over to the banking industry, and they write back a letter, which I read into the Hansard. They said, 'Well, actually, this is going to place a cost component on the whole housing industry in South Australia,' and then the industry groups went berserk. And, as the member for Newland said a minute ago, because of the industry groups they are now withdrawing it. So, after three or four years of discussion about this bill, no-one had even spoken to the bank industry, the government moves its own amendment, and now today they are withdrawing it. Then the government say, 'Well, look, we're going to put homeowners in.' So they put in homeowners and, lo and behold, the upper house says they don't want homeowners in, so they take it out. Go and speak to Queensland. They are about to put them in, and they are going to extend, in actual fact, the provisions of the adjudicators, the whole system. They are going to extend it not only to financial disputes but a whole range of other things. If anyone had bothered to do any research on it the house would know that. So this side of the house say we support the principle, we support where this bill is heading. We say it has been through a terrible consultation process, and that is evident by the amendments that have been moved left, right and centre, and positions changing from week to week. We think that it is dangerous for an industry bill to go through that sort of process, because we think that mistakes and unintended consequences will result. However, we gave a commitment to the industry groups that we would not obstruct the bill; so we are not going to obstruct the bill, but we have made our view very clear. We think there are some issues that still need to be improved in this bill, and if we are successful after the election the act will remain. We will review it and we will improve it. We are not going to rescind it, we are not going to abolish it or anything like that. You will have a security of payment system guaranteed, but we think there are some improvements to be made. With those few words, we are happy to support the bill so that the industry can get a tick off before the election. We are crystal clear about where we are going after the election in relation to this particular legislation. I thank Parliamentary Counsel for their efforts in briefing the opposition, to all of the industry groups, whether it be the NBA, the HIA, all of the subcontracting groups represented by Chris Rankine and others and the Civil Contractors Association. I just thank them for their input into this. It has been a very complex piece of legislation, and the way it was handled made it even harder. The opposition is pleased to support it. Mr KENYON House of Assembly Mr KENYON: I do not necessarily disagree with a lot of what the member for Davenport has said but we now have a bill that, with any luck, is about to become an act. From there we can make improvements as we go; however, the first and biggest step is to get the act. I urge honourable members to get to that point, and we will proceed further after the election. Motion carried.