WA Parliament passes further subcontractor payment protection reforms

Western Australia Parliament has the Building and Construction Industry (Security of Payment) Amendment Bill 2026, which has significant impacts for subbies on Government Projects. 

The changes are intended to improve insolvency protections, streamline administration, and address a number of practical issues that have arisen since the SOP Act commenced.

So what has changed?

A Shift From Project Bank Accounts to Construction Trusts

A new statutory construction trust scheme (Trust Scheme) to replace the existing contractual Project Bank Account (PBA) framework currently required on eligible government projects valued at $1.5 million or more.

Rather than relying on complex trust deeds and security documentation, the trust Scheme creates a trust arrangement - which is intended to:

• reduce administrative burden on head contractors;
• strengthen protections in the event of insolvency;
• eliminate the need for subcontractors to register security interests under the PPSA; and
• allow trust accounts to be established with any recognised financial institution.

The Trust Scheme will apply to State Government construction contracts exceeding the prescribed threshold (expected to remain $1.5 million including GST) and associated first-tier subcontracts.

What does this mean for Builders?

The current PBA mechanism will be replaced with a simpler trust arrangement which means that head contractors will no longer have to establish and maintain the detailed trust structures and security arrangements under the current PBA framework. 

Monies received are deemed to be hold on trust, which means when a builder becomes insolvent, those funds are not lost and are maintained in trust for the subcontractors. 

However, head contractors will be required to give government principals “claim statements” confirming that subcontractors have been paid. 

If subcontractors have not been paid, principals will have the power to withhold payment to head contractors until subcontractors have been paid. 

What does this mean for Subcontractors? 

If a head contractor becomes insolvent, the trust funds will be generally protected from other creditors, which should improve the likelihood of subcontractors being paid for work they have performed. 

The trust also applies to the head contractor’s right to receive payment from the principal, providing an additional layer of protection for subcontractors. 

Amendments to the SOP Act

The Bill also makes a number of practical amendments to the adjudication regime under the Building and Construction Industry (Security of Payment) Act 2021 (WA), including:

• You no longer have to worry about serving adjudication and review adjudication documents on others within 1 business day - the timing requirements for serving these documents are not entirely clear, but the amendments appear to provide flexibility so long as service occurs within a reasonable time
• If you are a day late in service, that won’t impact the validity of your claim (in light of decisions like Tackelly No 8 Pty Ltd as trustee for Tackelly No 8 Trust v Reward Interiors Pty Ltd t/as Reward Group [2025] NSWSC 300), reducing the risk of technical challenges to adjudication outcomes.
• Greater flexibility for review adjudicators - review adjudicators can now take into account the costs of the original adjudication when deciding who should pay the costs of a review. This may discourage parties from pursuing reviews that have little prospect of success.
• Confirmation that same-day payment arrangements are allowed – The Bill confirms that payment clauses in State Government contracts and first-tier subcontracts can align payment dates throughout the contracting chain. In practice, this means subcontractors can be paid on the same day that the head contractor receives payment from the government principal.

Why It Matters 

These reforms continue to strengthen Western Australia's security of payment laws. The new trust regime is the most significant change, but the changes to the adjudication process are also important. They are intended to make the process simpler and reduce disputes about technical requirements, allowing parties to focus on the substance of the dispute.

For contractors and subcontractors working on State Government projects, the reforms will introduce some new requirements. In return, they should provide greater protection for payments, particularly where insolvency issues arise, and give parties more certainty about how and when they will be paid.

This article was written by Nikita Stankoski, Lawyer, Construction