QBCC under fire over software issues linked to new project trust accounts

Queensland’s embattled building industry regulator faces another headache over the roll out of new laws designed to ensure security of payment for subbies.

Minister for Public Works Mick de Brenni. Picture: NCA NewsWire / Dan Peled

A New Year’s Day change to laws designed to ensure security of payment for Queensland building contractors has gotten off to a rocky start after warnings that problems were looming.

In another headache for the embattled industry regulator, it has emerged that common accounting software needed to operate new “project trust accounts’’ cannot generate the payments.

One builder reportedly had to splash out $25,000 for an upgrade while others are finding appropriate software nearly impossible to source.

“No one is prepared. No one is ready for it,’’ an industry insider said about the sweeping overhaul, which has been opposed by peak bodies such as Master Builders.

Minister for Public Works Mick de Brenni. Picture: NCA NewsWire / Dan Peled

Under a series of phased changes, the Queensland Building and Construction Commission from January 1 requires certain private sector and government contracts valued at $10m or more to use the project trust accounts.

The threshold then drops to $3m on July 1 this year and falls to $1m on January 1 2023. Estimates suggest that more than 5000 construction projects will eventually be impacted.

But trouble signs emerged months ago that the transition would be fraught.

A QBCC “regulatory guide’’ from October even acknowledges the software issue and flags leniency for those who violate the laws, which are aimed at stopping subbies from getting shafted by unscrupulous or cash-strapped builders.

“The QBCC is aware of challenges with computerised accounting platforms being unable to keep trust records to the requirements of the legislation,’’ it says.

“With this in mind, the QBCC will exercise discretion when responding to breaches of trust record keeping requirements that occur because of software inadequacies.”

Public Works and Procurement Minister Mick de Brenni said Wednesday that he had taken expert advice around industry readiness as part of an extensive consultation process.

But he would not answer questions about the software problems or why the implementation of the laws was not delayed as a result.

“The advice we received was that industry was ready to proceed with this stage,’’ Mr de Brenni said.

“We consulted extensively with industry as we developed our security of payment reforms, and have taken a phased approach to implementation to give businesses plenty of time to prepare.
“Our suite of building industry reforms, including project trust accounts, are there to ensure Queensland tradies are getting paid what they are owed in full, on time, every time.”
A QBCC spokesperson said the agency had “worked closely with building industry stakeholders and financial institutions to ensure they understand their obligations’’.

Shadow Minister for Housing and Public Works Tim Mander. Picture: NCA NewsWire / Dan Peled

But Tim Mander, the shadow Minister for Housing and Public Works, slammed the government for what he called “another administrative bungle”.

“It is nothing short of irresponsible if Minister De Brenni ordered these changes despite knowing of the software shortcomings. This is just another failure of the QBCC to add to a long list under the leadership of Mick De Brenni,’’ he said.

Industry groups warned Mr de Brenni that businesses were not ready for the complicated changes in the lead up to January 1.

In a letter to him in November, Master Builders CEO Grant Galvin called unsuccessfully for a 12-month delay in implementing the laws since the industry was already under pressure from pricing and supply chain challenges.

Master Builders Queensland CEO Grant Galvin

In addition to the accounting difficulties, critics allege the laws contain a raft of flawed loopholes and will create new headaches for a sector already doing it tough.

“There is no question the laws will impose a significant administrative burden and increase costs of building projects at a time when the industry is struggling,’’ a senior building industry figure said.

“Assurances by the QBCC to industry that it initially will take a ‘soft’ regulatory approach is of little comfort to contractors facing potential imprisonment and heavy fines. Such undertakings can be withdrawn at the whim of the regulator and cannot be relied on.

“This situation will be exacerbated when the new legislation widens to progressively capture smaller projects over the next 12 months.”

Even supporters of security-of-payment schemes caution that the QBCC’s actions are deeply flawed.

Michael Chesterman, a Helix Legal executive who spent more than 20 years as a compliance manager at the QBCC’s regulatory predecessor, is among the sceptics.

“When it comes to the plight of subcontractors getting paid, a glance at my CV will reveal that I have a demonstrated record for supporting subcontractors in obtaining improved payment outcomes,” he wrote in a note to clients of the construction industry law firm in November.

“However, I have always had concerns that trusts…will cause a considerable deal of disruption to the industry in their implementation and not deliver all-embracing improvements for subcontractors because of their limited application.

“I am still of the view that the majority of the value of construction work carried out in Queensland will not be protected by statutory trusts.”