South Australia wants to make it easier for subcontractors to get paid by principal contractors.

South Australia’s small business commissioner has proposed new laws to ensure subcontractors receive prompt payment from principal contractors.

Proposed changes include:

  • Penalising principal contractors who try to intimidate subcontractors out of chasing payment
  • Establishing alternative dispute resolution services
  • Educating the industry about the Building and Construction Security of Payment Act
  • Requiring directors of principal contracting firms to sign statutory declarations confirming that subcontractors have been paid
  • Implementing procedures to ensure subcontractors who work on government projects over $1 million are paid on a regular basis

The small business commissioner’s proposal follows a review of the Building and Construction Security of Payment Act.

Minister for Small Business Martin Hamilton-Smith said the issue of intimidation by principal contractors was one of the most concerning issues raised.

“Prompt payment for these

[subcontractor] businesses often means the difference between staying afloat or going under, and this is a top priority for government,” he said.

Kate Carnell, the Australian small business ombudsman, welcomed the South Australian government’s actions.

“Payment times are a growing concern for small businesses across all sectors of the economy; delayed payments can have significant ramifications for small business owners, who more often than not, operate on extremely tight margins,” she said.

“I’m pleased to see action being taken on behalf of small business owners in the building industry, to expedite payment times and combat any heavy-handedness in regards to potential disputes over money owed.”