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Legislative Council - Fifty-First Parliament, Third Session (51-3)
2009-12-02 Daily Xml
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BUILDING AND CONSTRUCTION INDUSTRY SECURITY OF PAYMENT BILL

Second Reading

Adjourned debate on second reading.

(Continued from 19 November 2009. Page 4095.)

The Hon. D.W. RIDGWAY (Leader of the Opposition) (12:03): I rise, on behalf of the opposition, to indicate that we will be supporting the bill. I note that we have this bill, which has come from the House of Assembly, and one on the Notice Paper that the Hon. Mr Darley has introduced. My recollection is that the Hon. Nick Xenophon introduced it in this chamber and the Hon. Mr Darley is progressing it. Notwithstanding that, I think that this bill will ensure that the Hon. Mr Darley will not need to proceed with his bill later in the day.

The opposition has always supported security of payment legislation, a policy that we took to the last election, and we are very happy now that we have reached this point where we have a bill before us, although the one that has been proposed does require some amendment. It is interesting to note that the Hon. Mr Darley has an amendment to remove the banks and financial institutions from this legislation. That is something that I do not think occurs anywhere else in the nation; in any other state that has security of payments legislation the banks are included. So, I indicate that the opposition will certainly be supporting Mr Darley's amendment.

The shadow minister in the other place, Iain Evans, recently travelled to Queensland and met with Mr Michael Chesterman, who is the adjudication registrar in Queensland (he is like the compliance officer or the registrar of the scheme). This bill does not propose to have a registrar of adjudicators or some governance model from overseas, and, clearly, that is what is needed. You cannot have adjudicators out in the marketplace without somebody lining them up with responsibilities. For example, if you have a small issue of, say, a $10,000 claim on a residential property, if there is a dispute you need to have an adjudicator who has experience and is qualified to deal with those issues. Likewise, if you have a dispute over a multistorey, multimillion dollar issue, clearly, you would need an adjudicator who had the responsibility and also the expertise to understand those issues.

Of course, the role of the registrar in the Queensland model, and certainly in other states, is to actually collect the information from the aggrieved parties, make a judgment as to how difficult and complex the issue may be, and then line up the adjudicators with the particular clients so that there is an outcome where you are matching up people with the same skills.

We understand that the HIA, the MBA and some of the other major stakeholders had a concern about not having a registrar involved to act in this way, because they saw an opportunity for fees to spiral out of control. It appears that has not been the case in Queensland, and to protect everybody in Queensland every decision of the adjudicator is published on a website, and I think there are currently some 2,000 decisions on that website.

As I said, the HIA, the MBA and other stakeholders were concerned that the market forces would not prevail in relation to price, although it seems that that is working in Queensland, where market forces are keeping the fees being charged reasonable, shall we say. So, we are proposing some amendments, and the first would be to make the Commissioner of Consumer Affairs the registrar for the adjudicators and the nominating authorities. Clearly you have somebody who is responsible and acts in that role. We also propose an amendment to allow for different classes of registration of adjudicators. Again, that is to give some clarity to the registrar as to who has suitable qualifications to deal with particular issues.

It seems to be working well in Queensland. There has been a significant amount of debate as to whether we have the Western Australian or eastern states model. I have also been advised that currently the Northern Territory model in some industry circles is seen as the best model, although I am not sure whether it is. I am sure there will be more tinkering with this legislation after the election, irrespective of the result of the election, but the opposition sees this measure as a step in the right direction to give some certainty to players in the industry, both tradespeople and clients of those people, whether small domestic homes or multi-million dollar projects are involved. It is a step in the right direction, and we will be moving the amendments that I have outlined. I also indicate that we will support Mr Darley's amendment to remove banks and financial institutions from the scheme. As we have a significant amount of business to deal with today, I will not prolong the debate any further. We support the bill.

The Hon. J.A. DARLEY (12:10): I rise to indicate that I will support the bill. Members will no doubt be aware that the bill is essentially the same as that introduced by me in September 2008. Members will also recall that the bill I introduced in 2008 was the same as that introduced by my predecessor Nick Xenophon in 2007, so it is an issue with which we would all by now be familiar.

The bill seeks to provide for progress payments for persons who carry out construction work or supply related goods and services under construction contracts. In short, it will ensure that contractors receive regular payment for work that has been completed, without which they simply cannot afford to carry on their businesses. As members would be aware, the bill is based on what is broadly referred to as the East Coast Model, as adopted by New South Wales, Victoria and Queensland. The alternative model is the West Coast Model, as adopted by Western Australia and the Northern Territory.

I will briefly discuss the different aspects of the legislation shortly, but before I do that I foreshadow that it is my intention to move a series of amendments to the bill. The first lot of amendments relate to recognised financial institutions, and the effect of them will be to ensure the act does not apply to construction contracts that form part of a loan agreement, a contract of guarantee or contract of insurance. Another amendment relates to adjudicators' fees. The amendment is intended to overcome any concerns regarding unreasonable adjudication fees by providing for the option of having those fees prescribed by regulation.

I will also move amendments that relate to the inclusion of owner builders in the scheme. Presently the only states considering including owner builders in their respective security of payment schemes are Queensland and Tasmania. In New South Wales they are specifically excluded from the legislation. At the outset I wish to make clear that I do not necessarily think that owner builders should be excluded from the ambit of the bill, but I believe that additional mechanisms are required to ensure a level playing field for owner builders, particularly home owners.

Whilst I agree in principle with the argument that all participants in the building and construction industry ought to be treated equally, I also acknowledge that owner builders and, more specifically, home owners may have little or no experience in the building and construction industry. As was proposed in Tasmania, there is merit in having additional mechanisms in place to ensure that those individuals are afforded special consideration as a result of their lack of experience within the industry. On that basis I foreshadow that I intend to revisit this issue during the next session of parliament in order to give further consideration to the Tasmanian legislation. I might also add that stakeholder representatives with whom I have been meeting are in consensus with regard to all the proposed amendments. In relation to the last mentioned amendment, they also agree that owner builders should be included in the scheme but are sympathetic to the concerns I have raised with them.

Finally, I will also move a number of minor amendments that are simply intended to make the bill clear in terms of the relevant time frames applicable to the determination of an adjudication application and circumstances where either the claimant wishes to discontinue an adjudication application or an adjudicator chooses to withdraw from an adjudication application. I was recently invited to attend a professional development information night held by the South Australian Chapter of the Institute of Arbitrators and Mediators Australia. These amendments are the result of suggestions made by one of the speakers at that event—Mr David Campbell-Williams—as a means of improving the current bill.

As mentioned previously, there are, as we know, two different models of security of payment legislation. Members will have no doubt been contacted by industry representatives with differing opinions on which model is the preferred option for South Australia I think. It is fair to say that the Master Builders Association and the Housing Industry Association are in favour of the Western Australian model, if any. Stakeholders who represent electricians, communications contractors, air-conditioning installers, mechanical services, plumbers, ventilation installers, refrigeration and air-conditioning technicians, civil contractors, machine and plant operators, plumbers, tilers and plasterers, amongst others, on the other hand have been lobbying for security of payment legislation based on the New South Wales model, and they have been doing so for good reason.

As highlighted by Philip Davenport in a paper entitled 'A summary of adjudication acts in Australia' and at the risk of repeating what has been said in the past, the key difference between the two models is as follows: the New South Wales, Victorian and Queensland legislation all provide a similar statutory right to the party—namely, the claimant—who is contracted to provide construction work or related goods and services, to make progress payment claims against the other party to the contract, being the respondent.

The acts all provide for the claimant to have disputed progress payment claims adjudicated. Where the respondent fails to serve a payment schedule within a set time frame, they create a statutory debt and they also allow the claimant to suspend work if the statutory debt is not paid on time. The procedures for adjudication are very similar under each of the acts. The Victorian legislation differs in that after a determination the respondent has the option of providing security for the adjudicated amount as opposed to paying it. The Queensland legislation differs in that it creates an adjudication registrar and adjudicators, and authorised nominating authorities must be registered.

Under the Western Australian and Northern Territory legislation, there is no automatic statutory debt when a payment schedule is not issued in time. The contractor has a right to progress payment only if the construction contract provides for that right. The contract provides how the principal is to respond to a claim for payment. Where no response is provided or where a response is not provided within the prescribed time frame, the contractor is entitled to the claimed amount only if this is provided for in the contract.

The Western Australian and Northern Territory acts have no provisions similar to that in the other acts to the effect that the claimant can recover the amount as a statutory debt and, in proceedings, to recover the amount, the respondent cannot bring any cross-claim against the claimant or raise any defence in relation to matters arising under the construction contract. The legislation also differs in that it does not give the claimant a right to suspend work if there is no payment schedule and the claimed amount is not paid on time.

The right to suspend work arises only if the principal fails to pay the contractor in accordance with a determination by the adjudicator. The only similarity between the two models is that, like the Queensland legislation, the Western Australian and Northern Territory legislation provides for registration of adjudicators. The acts do provide for the adjudication of payment disputes and either party may initiate adjudication. This precis highlights the shortcomings of the Western Australian model, which is far too restrictive.

I am advised that on 19 November Tasmania also passed a bill dealing with the same issue. The bill is expected to receive royal assent on 17 December. For the most part, that legislation is also based on what has been referred to as the New South Wales or East Coast model. It departs from the New South Wales model only in the sense that, like the bill before us today, Tasmania has also opted to include some additional provisions not included in the New South Wales legislation.

I am further advised that on 19 November the Australian Capital Territory also passed a bill based on the New South Wales legislation. The New South Wales model has been referred to as a tried and tested legislative framework. It is considered a benchmark model for security of payment legislation. It provides much more protection for the person who undertakes to carry out construction work or to supply goods and services than the model available in Western Australia and the Northern Territory.

It is, in short, the preferred model, and I will go so far as to suggest that those who oppose this legislation on the basis that it is based on the New South Wales legislation do so out of self-interest. The mere fact that every other jurisdiction has chosen to follow the New South Wales legislation highlights that it provides the most ideal model.

In concluding, I would, once again, like to acknowledge the cooperation and the work that has been done by key stakeholder bodies who have been lobbying for this legislation for years—some for as many as 20 years. The include: the National Electrical and Communications Association, the Air-Conditioning and Mechanical Contractors Association, the Association of Wall and Ceiling Industries of South Australia, the Plumbing Industry Association of South Australia and the Civil Contractors Federation of South Australia. Their efforts follow on from recommendations made by the Cole royal commission into the building and construction industry in 2003. The fact that we are finally dealing with this bill is a tribute to years of hard work on their part, and they ought to be commended for their efforts.

As already mentioned, Tasmania and the ACTU have very recently implemented security of payment legislation, so South Australia is now the only state without legislation of this type. This legislation is long overdue in South Australia, and I am keen to see its expedient passage through the parliament.

I commend Mr Tom Kenyon MP (in another place) for progressing this matter and I, too, urge all honourable members to support the bill.

Bill read a second time.

Committee Stage

In committee.

Clauses 1 to 3 passed.

Clause 4.

The Hon. D.W. RIDGWAY: I move:

Page 4, lines 17 and 18 [clause 4, definition of adjudicator]—Delete the definition and substitute:

adjudicator means a person who is registered as an adjudicator under Part 3A;

As I indicated in my relatively brief second reading comments, we are moving a range of amendments to establish the Commissioner of Consumer Affairs as the registrar for adjudicators and nominating authorities. So, this first amendment deletes the definition and substitutes: 'a person who is registered as an adjudicator under Part 3A'. All the other amendments relating to this are somewhat consequential, so I will move this one to test the will of the chamber.

The Hon. R.P. WORTLEY: We reject this amendment, mainly because we will be opposing Part 3A of the bill. This bill is heavily based on the New South Wales model. There are about 5 million people in New South Wales. It has the largest contractor workforce, and it works quite well. So, we will oppose all the amendments put up by Mr Ridgway.

The Hon. D.G.E. HOOD: I think we will get to the substantive debate as the amendments are presented, but I indicate that we intend to support the amendments.

The Hon. A. BRESSINGTON: I indicate that I will not be supporting the amendments, the reason being probably poor lobbying on behalf of the Hon. David Ridgway. The only feedback that we have actually had is from industry, which has indicated that it does not support these amendments. In an ideal world, yes, it would be desirable, but the industry is quite happy with the bill as it is, with the Hon. John Darley's amendments. That is essentially what I have based my decision on.

The Hon. J.A. DARLEY: While I appreciate what the honourable member and the opposition are trying to achieve by moving these amendments, I indicate that I will not be supporting them. These amendments will essentially result in a restructure of the way the scheme operates in South Australia and, at this late stage, I do not think we should be going down that path. I would like to see this bill pass in its current form, and perhaps we can address these concerns later down the track.

The committee divided on the amendment:

AYES (9)
Brokenshire, R.L. Dawkins, J.S.L. Hood, D.G.E.
Lawson, R.D. Lensink, J.M.A. Lucas, R.I.
Ridgway, D.W. (teller) Schaefer, C.V. Wade, S.G.
NOES (10)
Bressington, A. Darley, J.A. Finnigan, B.V.
Gago, G.E. Gazzola, J.M. Holloway, P.
Parnell, M. Winderlich, D.N. Wortley, R.P. (teller)
Zollo, C.
PAIRS (2)
Stephens, T.J. Hunter, I.K.

Majority of 1 for the noes.

Amendment thus negatived.

The CHAIRMAN: Mr Ridgway, do you want to move all your amendments to clause 4?

The Hon. D.W. RIDGWAY: I indicated to the Hon. Mr Hood that I would pursue them but, clearly, I do not have the support, which is disappointing. I wonder whether Mr Hood wants to make some comments and whether he would like me to move another of these amendments. Certainly, I will be moving an amendment in relation to the different classes of registration of adjudicators, but this is a range of amendments to appoint the Commissioner for Consumer Affairs as a registrar and, clearly, that is not going to be accepted.

The Hon. D.G.E. Hood: I will speak to this one.

The Hon. D.W. RIDGWAY: I will move amendment No. 2 so that Mr Hood can make some comments. I move:

Page 4, lines 19 and 20 [clause 4, definition of authorised nominating authority]—Delete 'authorised by the Minister under section 28 to nominate persons to determine adjudication applications' and substitute:

who is registered as an authorised nominating authority under Part 3A

The Hon. D.G.E. HOOD: I thank the Hon. Mr Ridgway for that. Briefly, we intended to support these amendments, and I say that because we met with a number of industry groups and there seems to be a good deal of support amongst them for the amendments. There were some dissenting voices, and we would all acknowledge that. No doubt we have all been lobbied fairly extensively on this bill, but I think, on the whole, the amendments strike a particularly good balance. I agree with the Hon. Mr Ridgway that there is no point going through them if they are clearly going to lose, but I want to put on the record that we were sympathetic to them and intended to support them. Also, I think, by and large, it is the position of industry.

Amendment negatived.

The Hon. J.A. DARLEY: I move:

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;

This amendment relates to recognised financial institutions. For the sake of convenience, I will speak to amendments Nos 1 to 3 together in so far as they relate to recognised financial institutions. The effect of these amendments will be to ensure that the bill does not apply to construction contracts that form part of a loan agreement, a contract of guarantee or a contract of insurance. It effectively deletes the amendment passed in another place and reinstates the bill to its former position.

Financial institutions are specifically excluded from the New South Wales legislation. According to Mr Ian Gilbert, Director of Retail Regulatory Policy of the Australian Bankers Association, this is thought to have been a deliberate policy decision that enjoyed general bipartisan support in New South Wales, and this decision reflects the recognition and understanding of the risk to the construction industry in New South Wales if bank finance construction contracts were included. Mr Gilbert, on behalf of the Australian Bankers Association, has expressed concerns about the potential impact that the inclusion of financial institutions will have, both on the banking industry and the building industry. Mr Gilbert states:

The meaning of 'construction contract' would include both the head contract with an owner and the subcontracts between the head contractor and the subcontractor. Despite the terms of the contract a party to a construction contract may claim progress payments according to the legislation which may have cash flow implications for head contractors and owners flowing through to financiers. A claim would be unpredictable and therefore a relevant event in a bank's assessment of its credit risk exposure.

Mr Gilbert goes on to say:

Feedback from members of the ABA indicates that if bank financed construction contracts are to be covered in the South Australian bill, a bank would need to undertake additional due diligence to ensure that its developer/owner/customer would have the ability to meet the call of a subcontractor in the event that the bank determined not to make the progress payment because of, for example, a concern over the loan to value ratio if the payment were to be made at that stage of the construction.

Further, a claim for progress payment outside the normal terms of the construction contract could place additional stress on the cash flow of the bank's developer/owner/customer, potentially increasing the risk to the bank. This may result in a broader approach by banks to credit risk in this industry in SA. How much this would impact is unclear but the effect would need to be taken into consideration deal by deal. A bank may have to review its standard form construction finance contracts and its credit risk assessment to account for untimed progress payment claims.

Another implication with the Amendment is that it will, in effect, disturb the contractual relationship between a bank and its customer where an assessed and prudent provision of finance according to the terms of the associated construction contract is displaced by an unpredictable and untimed alternative obligation reached by an adjudicator that may have the effect of the order of the court.

Similar concerns have been raised by Mr Phillip Davenport, chief adjudicator and trainer from Adjudicate Today. By way of background, Mr Davenport has over 40 years' experience in construction law and has worked as an adjudicator in New South Wales, Queensland and Victoria. He is also the author and co-author of a number of books on construction law. He is regarded as an authority in this area. Mr Davenport highlights that banks would potentially incur two risks as a result of the inclusion of financial institutions: the first is being sued for progress payments by the borrower; and the second is being pursued by the borrower's contractor. As highlighted by Mr Davenport, under the legislation banks are not in a position to defend claims for progress payments from their customers, namely, the developers and owners or their customers' contractors.

Given that financial institutions will probably have to review their standard form contracts, the inclusion of financial institutions may also result in more red tape as a result of having to create new documentation applicable to contracts entered into in South Australia. It would probably be fair to assume that these costs will be passed on to the customers.

There is a very real concern that, in addition to an increase in red tape and compliance costs, banks simply will not be willing to lend to the developer or owner if that involves the risk of their being sued for progress payments—and, according to Mr Davenport, this is the precise reason for their exclusion from the New South Wales legislation. This same reasoning also extends to insurers and other financial institutions being excluded from the legislation. I strongly urge all members to support these amendments.

The Hon. D.W. RIDGWAY: As I indicated in my second reading contribution, the opposition will be supporting the amendment. It is interesting to note that the sponsor of this bill in the other chamber included the financial institutions (banks) by actually consulting with them. So, I am a little concerned that the member opposite, the Hon. Mr Wortley, talks about not supporting amendments and having a particular point of view. I just wonder how widely the government backbenchers have consulted on this bill. Notwithstanding that, we will be supporting this amendment.

The Hon. R.P. WORTLEY: We will be supporting this amendment. I think the sentiments expressed by the Hon. Mr Darley are quite appropriate. In regard to the comments made by the Hon. Mr Ridgway, there has been extensive consultation by the sponsor of this bill. I will read excerpts from a letter from Christopher Rankin of the Air Conditioning and Mechanical Contractors' Association. This is also signed by the organisations that support the bill: the Air Conditioning and Mechanical Contractors Association; the Australian Wall and Ceiling Association, Mr Bernie Biggs; the Civil Contractors Federation, Mr Peter Nolan; the National Electrical and Communications Association, Mr Larry Moore (an absolute legend in the industry, of course); the National Fire Industry Association South Australia, Christopher Rankin; the Plumbing Industry Association (South Australia), Andrew Clarke; the Refrigeration and Air Conditioning Contractors Association, Mr Larry Moore again; and the Master Painters Association (SA), which actually sent me a letter saying, basically, that it supports the bill introduced by Mr Tom Kenyon. Obviously, the opposition leader has it totally wrong. There has been wide consultation on this—

The Hon. D.W. Ridgway interjecting:

The CHAIRMAN: Order!

The Hon. R.P. WORTLEY: Our main concern was that the people who were actually building these in the construction industry, the many thousands of contractors, were treated fairly. That is what this bill is all about: protecting them and ensuring that they are paid for the work they do.

The CHAIRMAN: Order! We are not going to have the bill debated.

The Hon. R.P. WORTLEY: The government supports the amendment.

The Hon. D.G.E. HOOD: That was our primary concern in the bill, and I think this amendment largely addresses that concern. Members may have seen Family First make some comments about this issue on, I think, Channel 7 a couple of weeks ago. In my best estimation, this amendment remedies what we perceived to be an issue with the bill, so Family First is very happy to support the amendment.

Amendment carried; clause as amended passed.

Clauses 5 and 6 passed.

Clause 7.

The Hon. J.A. DARLEY: I move:

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 the loan agreement, a contract of guarantee or 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 Contracts Act 1995) on such part of the 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.

There are two elements to this amendment. The first relates to the exclusion of financial institutions from the scope of the bill, and I refer honourable members to what I have said already on that. In this regard the amendment is consequential.

The second element seeks to exclude from the ambit of the bill a construction contract for the carrying out of domestic work where the party for whom the work is carried out resides or proposes to reside in. The meaning given to domestic building work is the same as that provided by the Building Work Contractors Act 1995, namely:

(a) the whole or part of the work of constructing, erecting, underpinning, altering, repairing, improving, adding to or demolishing a building; or

(b) the whole or part of the work of excavating or filling a site for work referred to in paragraph (a); or

(c) work of a class prescribed by regulation;

At present, the only states considering including owner-builders in their respective security of payment schemes are Queensland and Tasmania. In New South Wales, they are specifically excluded from the legislation.

As mentioned in my second reading contribution, I wish to make it clear that I do not necessarily think that owner-builders should be excluded from the ambit of the bill, but I do believe that additional mechanisms are required to ensure a level playing field for owner-builders, particularly homeowners. That being said, I also acknowledge that owner-builders—and, more specifically, homeowners—may have little or no experience in the building and construction industry. I think there is merit in having additional mechanisms in place to ensure that those individuals are afforded special consideration because of their lack of experience within the industry.

Members will recall that during my second reading contribution I mentioned that I was recently invited to an information night held by the South Australian chapter of the Institute of Arbitrators and Mediators Australia, as was Mr Tom Kenyon MP. A lot of support for the amendment was expressed on the night, particularly from the two speakers, who have extensive experience in construction law. Without additional safety mechanisms I do not think that the inclusion of owner-builders will be well received. On that basis I propose to exclude owner-builders from the scope of the legislation. I urge all honourable members to support the amendment.

The Hon. D.W. RIDGWAY: The opposition supports the amendment.

The Hon. D.G.E. HOOD: Again, very briefly for the record, I think this amendment is related to the previous amendment, and for the same reasons we will be supporting it.

The Hon. R.P. WORTLEY: I indicate that we support the amendment.

Amendment carried.

The Hon. J.A. DARLEY: I move:

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

This amendment forms part of a series of amendments related to the exclusion of financial institutions from the scope of the bill and is consequential in nature. Based on the reasons already provided in that regard, I urge all honourable members to support this amendment.

Amendment carried; clause as amended passed.

Clauses 8 to 16 passed.

Clause 17.

The Hon. D.W. RIDGWAY: I move:

Page 13, lines 36 and 37 [clause 17(6)]—Delete 'a person who is eligible to be an adjudicator as referred to in section 18' and substitute:

an adjudicator whose registration authorises him or her to be an adjudicator in relation to the dispute that is the subject of the application

I guess this will be a test clause in relation to the registration of different classes of adjudicators. We see it as important that we have that registration so that, when you are looking to appoint adjudicators and decide on who can adjudicate on what issues and the expertise of the adjudicators to be able to handle certain cases, especially if they are complex in nature or many hundreds of thousands or millions of dollars, it seems sensible to the opposition to have a grading system or classification of adjudicators so you are matching people with appropriate skills to handle the issues they are dealing with or the conflict or complaints they are trying to adjudicate on. I will not go on any longer. Members are well aware of the intention of our amendments, and we see this as a test clause for the following amendments.

The Hon. D.G.E. HOOD: This is another issue that Family First raised in the media, and this amendment really nails the situation by fixing what we saw as a potential issue in the bill—not necessarily a problem in all cases, but certainly the potential to create a problem. To our understanding, this will right that situation and therefore we support the amendment.

The Hon. R.P. WORTLEY: The government opposes this amendment. The reason is that this bill is based on the New South Wales legislation. It operates quite efficiently, and it is basically recognised as probably the best system of all, so we oppose the amendment.

The Hon. J.A. DARLEY: I will also not support this amendment.

The Hon. A. BRESSINGTON: I am not supporting the amendment, either.

The committee divided on the amendment:

AYES (9)
Brokenshire, R.L. Dawkins, J.S.L. Hood, D.G.E.
Lawson, R.D. Lensink, J.M.A. Lucas, R.I.
Ridgway, D.W. (teller) Schaefer, C.V. Wade, S.G.
NOES (10)
Bressington, A. Darley, J.A. Finnigan, B.V.
Gago, G.E. Gazzola, J.M. Holloway, P.
Parnell, M. Winderlich, D.N. Wortley, R.P. (teller)
Zollo, C.
PAIRS (2)
Stephens, T.J. Hunter, I.K.

Majority of 1 for the noes.

Amendment thus negatived; clause passed.

Clauses 18 to 20 passed.

Clause 21.

The Hon. J.A. DARLEY: I move:

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

Members will recall that during my second reading contribution I mentioned that I recently attended a professional development information night in order to discuss the bill. At that event, one of the key speakers suggested a number of minor amendments aimed at improving the current bill, and this is one of those amendments. Clause 21 of the bill deals with adjudication procedures. Currently, subclause (3) provides:

(3) Subject to subsections (1) and (2), an adjudicator is to determine an adjudication application as expeditiously as possible and, in any case—

(a) within 10 business days after the date on which the adjudicator notified the claimant and the respondent as to his or her acceptance of the application; or

(b) within any further time that the claimant and the respondent may agree.

The amendment relates to circumstances where no agreement has been reached between the claimant and the respondent regarding an extended time frame. The reason for this amendment is to overcome the timing disconnect that sometimes can occur between the 10 day time frame within which the adjudicator is required to make a determination and the period within which a respondent becomes aware of the adjudication and may be entitled to lodge an adjudication response. I am advised that in some instances (and this may be where the claimant is a little careless in the service of documents) the adjudicator is actually required to make a determination in circumstances where the respondent has been served only one or two days prior to the expiration of the 10 days. Sometimes this timing disconnect can lead to situations where the adjudicator is making a determination without having a complete set of documents and therefore a complete picture before him or her.

The amendment effectively will ensure that the 10-day time frame for the determination applies after the date on which the respondent has either lodged an adjudication response or the date on which the respondent receives a copy of the adjudication application. It will ensure that the respondent receives the full benefit of process and that the adjudicator has 10 full business days within which to make a determination based on a complete set of documents relating to the application. This is a very sensible amendment and I urge all members to support it.

The Hon. D.W. RIDGWAY: The opposition supports the amendment.

The Hon. R.P. WORTLEY: With regard to subclause (3), will the honourable member advise how the adjudicator will become aware of the date on which the respondent received a copy of the adjudication application?

The Hon. J.A. DARLEY: I am advised that in practice an adjudicator who accepts an adjudication application, or in some cases the nominating authority to whom the application has been referred, would ask the claimant, or both the claimant and the respondent, for details about when the respondent was served with the adjudication application, and that would be the date that applies to subclause (3).

In cases of a default adjudication, it would still be open to the respondent to argue that they did not know about the application. If the nature of the claim was outside the jurisdiction of the adjudicator, there would be nothing preventing the respondent from lodging an objection on jurisdictional grounds. I have spoken to adjudicators who work in this field in other states and they have advised me that there is a big emphasis on adjudicators being aware of the relevant dates for an adjudication application. These sorts of issues in particular all form an important part of the extensive training provided to adjudicators by nominating authorities.

The Hon. R.P. WORTLEY: I thank the honourable member for his answer and indicate that we support the amendment.

Amendment carried; clause as amended passed.

Clauses 22 to 25 passed.

Progress reported; committee to sit again.

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