The Building and Construction Industry (Security of Payment) Amendment Bill 2026 (WA) (Bill), which has been declared urgent by Parliament, was introduced in the lower house in February 2026, and to the upper house two weeks ago, on 12 May 2026.
The proposed amendments make it clear that the rules are stricter, and the stakes are higher, when it comes to engaging with government principals.
Since 2019, it has been State Government policy that project bank accounts (PBAs) are used on government projects where construction components are valued at $1.5 million or more. The Bill proposes amendments to the Building and Construction Industry (Security of Payment) Act 2021 (WA) (SOP Act) which when passed, will introduce a statutory construction trust scheme intended to protect payments from principals to head contractors (trustee) and their first‑tier subcontractors on government projects, in line with the current PBA framework.
The scheme will not apply to down-stream subcontractors or private projects the state is not involved with, and certain contracts may be exempted by the regulations; as is the case with the current PBA procurement policy, the statutory trust scheme will apply to most head contract and first-tier subcontracts where the principal is a State Agency[1] or a Government Trading Enterprise[2] (Trust Contracts) and the value of the works is more than $1.5 million, and there will be an additional mechanism to allow parties to opt-in to the scheme in unusual or bespoke contracting scenarios.
If a contract is a Trust Contract then the SOP Act will automatically create a construction trust when the first payment is made in respect of the Trust Contract, minimising the administrative burden on head contractors, who as both trustee and beneficiary, will be required to open a trust account but will not need to prepare and enter into complex PBA deeds as part of the project documentation.
Head contractors will be obliged to open a construction trust account within 10 business days after entering into a Trust Contract (or a different period if specified in the contract), and to notify the principal and each beneficiary of the details of the trust account ‘as soon as practicable’ after it is opened. The Head Contractor will be required to open a separate construction trust account for each Trust Contract they are party to and, if the parties have selected retention moneys as their preferred form of security under a Trust Contract;
The construction trust will operate in much the same way as a PBA; the times for payment claims under the Trust Contracts and tier-one subcontracts will be aligned; the principal will make payments into the construction trust account, and the head contractor, acting as trustee, will make payments out. The circumstances in which payments out of the construction trust will be allowed are limited and include:
Importantly, the head contractor will be responsible for covering any shortfall between the amount available in the trust account and the amount to be paid out, and amounts in construction trusts will be quarantined from the head contractor’s general assets and creditors; even if the creditors have obtained court order entitling them to payment. This will help to secure down-the-chain rights to payment in the event that the head contractor becomes insolvent and may reduce the need for subcontractors to individually register security interests on the Personal Property Securities Register.
The Bill will introduce a new requirement for payment claims under a Trust Contract; parties making payment claims (i.e., the head contractor and the first tier subcontractor) will be required to give the other party to the contract (i.e., the principal and the head contractor) a written statement setting out whether each subcontractor engaged in connection with the Trust Contract has been paid, and if not, providing details of which subcontractors have not been paid, the amounts which remain unpaid, and the reasons they remain unpaid (Claim Statement).
If a Claim Statement is not given on time, or if the recipient of a Claim Statement reasonably believes that the Claim Statement is misleading or deceptive, or does not comply with the requirements of the SOP Act; or that the head contractor has not complied with its obligations in respect of statutory trusts, then the principal will be entitled to withhold payment. If a principal elects to withhold payment then they must, as soon as reasonably practicable, give the head contractor notice in writing of the amounts being withheld and the reasons for withholding payment.
The express statement (in section 55) that the SOP Act does not exclude the exercise of parties’ rights under their contracts, or any civil proceedings will remain but if payment is withheld in relation to a Claim Statement then;
The message to head contractors on government projects is clear: comply with your trust accounting obligations and submit your Claim Statement on time or face severe consequences.
As the SOP Act is presently drafted, ‘pay when paid’ provisions have no force or effect (see section 14(2)). If the bill is passed, this will not be the case for contracts where the principal or the head contractor is a State Agency[3] and the contract contains a provision requiring a head contractor or subcontractor to pay an amount owing in connection with the contract on the same day that the amount is paid (or where another construction contract, requires, facilitates or gives effect to that provision).
The amendment is designed to ensure that State agencies can facilitate same-day payments to head contractors and first-tier subcontractors, which should help speed up supply chain payments. It will apply to all contracts where the principal or head contractor is a State Agency, even if the contract is not a Trust Contract.
Under the SOP Act as it stands, a claimant must give a copy of an adjudication application to the respondent within one business day after the application is made. If the respondent gave a payment schedule in response to the payment claim, it may give a response to the adjudication application. That response must be given to the adjudicator within 10 business days after receiving a copy of the adjudication application, and a copy must be provided to the claimant within one business day after that. The adjudicator must then determine the adjudication application within 10 business days after:
The amendments proposed by the bill remove the one business day time frame for providing a copy of the application or response to the opposing party; copies must be given, but there will no longer be a time limit on when, alleviating the mad scramble that often accompanies service on an individual, or a party headquartered in another state. Further, an application or response will not be invalidated by a failure to provide a copy – although a failure to provide the application to a respondent at all will impact the timeframe for the overall adjudication process.
While the amendments to the SOP Act proposed by the bill are largely reasonable and sensible, they will introduce some procedural and compliance changes parties to construction contracts (especially contracts involving a state government entity and getting it wrong could have significant, short-term impacts for head contractors and tier-one subcontractors.
If you have questions about the proposed amendments, or the SOP Act more generally, don’t hesitate to reach out to our Projects, Infrastructure and Construction Team; we would be happy to help.
This article was written by Belinda Wong, Partner and Briony Whyte, Senior Associate Construction