The Commonwealth Department of Treasury has released the Government Response to the Review of Security of Payment Laws. This is the Government’s response to Mr John Murray AM’s Review of Security of Payment Laws published in May 2018 (see our update on the Murray Review here).

The Government’s Report generally expresses support for the recommendations in the Murray Review, and acknowledges the significant changes to security of payment legislation already made across Australian jurisdictions following its release.

Emphasising that security of payment is the responsibility of the States and Territories, the Report instead highlights the wider policy levers available at a federal level and already in use, to tackle vulnerabilities in the construction industry. These include:

• the work of the National Construction Industry Forum;
• supporting prompt payment in supply chains of Commonwealth construction projects through the Commonwealth Supplier Code of Conduct and other relevant policies;
• penalties for businesses that include unfair contract terms in standard form contracts with consumers and small businesses, introduced in the Treasury Laws Amendment (More Competition, Better Prices) Act 2022 (Cth); and
• a range of other measures.

The Report also acknowledges the Murray Review’s recommendations regarding project bank accounts and deemed statutory trusts, which have not been widely adopted to date. The Report notes that such measures may increase ‘red tape’ and project costs, potentially leading to additional insolvencies for small and medium participants in the sector.

The Report can be found here.