The Western Australian Government has released the draft Building and Construction Industry (Security of Payment) Amendment Bill 2025 (WA) (the Bill) for public consultation. The Bill proposes to amend the Building and Construction Industry (Security of Payment) Act 2021 (WA) (the Act), including replacing the existing Project Bank Account (PBA) model with a statutory construction scheme.

Currently, the PBA regime in the Act requires parties to State Government construction projects, to enter a deed of trust pursuant to which one party, typically the head contractor, establishes an account where payments are held in trust for certain subcontractors and suppliers. The proposed scheme, intends to simplify that trust arrangement, reducing the administrative burden to the parties, improving payment certainty, and providing enhanced protections for subcontractors. Under the proposed scheme, trusts will be automatically created by force of law when a subcontractor undertakes work, a payment is received, or money is deposited into a trust account. There will no longer be a need for subcontractors to execute trust deeds, or register security interests.

Upon creation of the trust, the trustee must open a trust account whereby:

• the principal will become a beneficiary;
• the head contractor will be both trustee and beneficiary in respect of advance payments for its costs or margin, and any leftover trust funds after subcontractors are paid; and
• subcontractors receive a beneficial interest in their payment entitlements.

Under the arrangement, the head contractor will not owe trustee duties to subcontractors which they have not directly contracted with. The proposed scheme also clarifies that funds held in a construction trust account cannot be accessed by the trustee’s creditors, thereby protecting subcontractor entitlements in the event of insolvency.

Other key changes in the Bill include:

• Head contractor statements: Head contractors must declare subcontractor payment status to principals, who may withhold payments for non-compliance;
• Simplifying Service of Documents: Adjudication applications and responses will not be invalid merely because copies were not provided to the other party; and
• Pay when paid provisions: These provisions will be enforceable in State-led contracts where subcontractor payments are aligned with payments to head contractors.

Draft regulations have been prepared, and are open for public comment until 14 November 2025. We will continue to monitor developments closely and provide updates as the consultation progresses.

A full version of the proposed Bill can be found here.