Thursday, 11 September 2025

Building Legislation Amendment (Fairer Payments on Jobsites and Other Matters) Bill 2025

Statement of compatibility

Danny PEARSON (Essendon – Minister for Economic Growth and Jobs, Minister for Finance) (11:09): In accordance with the Charter of Human Rights and Responsibilities Act 2006, I table a statement of compatibility in relation to the Building Legislation Amendment (Fairer Payments on Jobsites and Other Matters) Bill 2025:

Opening paragraphs

In accordance with section 28 of the Charter of Human Rights and Responsibilities Act 2006 (the Charter), I make this statement of compatibility with respect to the Building Legislation Amendment (Fairer Payments on Jobsites and Other Matters) Bill 2025 (the Bill).

In my opinion, the Bill, as introduced to the Legislative Assembly, is compatible with the human rights protected by the Charter. I have this opinion for the reasons outlined in this statement.

Overview of the Bill

The purpose of the Bill is to amend the Building and Construction Industry Security of Payment Act 2002 (Security of Payment Act), the Building Act 1993 (Building Act) and to make minor amendments to several other Acts.

Since 1 July 2025 the Victorian Building Authority has been trading as the Building and Plumbing Commission (the Commission) so, for convenience and to align with the Second Reading Speech, this Statement of Compatibility refers to the Commission.

Part 2 of the Bill amends the Security of Payment Act to implement many of the recommendations of the Report, Parliamentary Inquiry into employers and contractors who refuse to pay their subcontractors for completed works, prepared by the Legislative Assembly’s Environment and Planning Committee.

Part 3 of the Bill amends the Building Act to improve the requirements for registration as a building surveyor or a building inspector, to clarify the requirements for when a relevant building surveyor is required to give an information statement to a person who has applied to the surveyor for a building permit and to enable the Commission to issue a code of conduct applicable to registered and licensed plumbers.

Part 4 of the Bill amends the Environment Effects Act 1978 (Environment Effects Act) to enable fees to be prescribed and imposed to recover the cost of assessments prepared by the Minister, deciding whether certain conditions have been met and advice and assistance given by the Secretary under that Act.

Part 5 of the Bill amends the Heritage Act 2017 to clarify that emissions reductions targets and risks associated with impacts of climate change, which are required to be considered under section 12(2A) of the Planning and Environment Act 1987 (Planning and Environment Act) for an amendment to a planning scheme, do not need to be taken into account when a decision is made under section 56 (relating to adding or amending places on, or removing places from, the Victorian Heritage Register) and section 180 (relating to implementing World Heritage Environs Areas and Strategy Plans) of the Heritage Act 2017.

Part 6 of the Bill amends the Planning and Environment Act to widen the scope of matters that may be included in an enforcement order of the Victorian and Civil Administration Tribunal (VCAT) to ensure that there is no net loss to biodiversity as a result of an unauthorized removal, destruction or lopping of native vegetation that was carried out in contravention of a planning scheme, a condition of a planning permit or an agreement under section 173 of the Planning and Environment Act.

Human rights issues

The human rights protected by the Charter that are relevant to the Bill are the right to freedom from forced or compulsory labour under section 11(2), the right to property under section 20, the right to a fair hearing under section 24(1), and the right to be presumed innocent under section 25(1).

The right to freedom from forced or compulsory labour – section 11(2)

Section 11(2) of the Charter provides that a person must not be made to perform forced or compulsory labour. ‘Forced or compulsory labour’ does not include work or service that forms part of normal civil obligations. While the Charter does not define ‘normal civil obligations’, comparative case law has considered that to qualify as a normal civil obligation, the work or service required must be provided for by law, must be imposed for a legitimate purpose, must not be exceptional and must not have any punitive purpose or effect (Faure v Australia (Human Rights Committee Communication No 1036/2001)). This has extended to obligations to undertake work in order to maintain compliance with regulatory standards.

Part 6 of the Bill amends section 119 of the Planning and Environment Act to widen the scope of matters that VCAT may include in an enforcement order under Division 1 of Part 6 of the Planning and Environment Act. Under new sections 119(2) and (3) of the Planning and Environment Act, the Bill will enable an enforcement order to require certain persons to plant, protect and regenerate native vegetation on the land on which an unauthorized removal, destruction or lopping of native vegetation occurred or on any other land. I am of the view that an enforcement order requiring a person to plant, protect and regenerate native vegetation on the land on which the contravention was committed or on any other land would be imposed for a legitimate purpose, would not be exceptional and would not have any punitive purpose or effect and as such, would not constitute a limit on this right.

This is because an enforcement order is confined in its application to the legitimate purpose of responding to a contravention of the law. Under section 114(1) of the Planning and Environment Act a person may apply for an enforcement order only if a use or development of land contravenes or has contravened, or, unless prevented by the enforcement order, will contravene the Planning and Environment Act, a planning scheme, a condition of a permit or an agreement under section 173 of that Act. Additionally, new section 119(3) of the Planning and Environment Act (to be inserted by the Bill) will provide that, when considering what to order in an enforcement order relating to native vegetation, VCAT may exercise its power for the purposes of achieving or advancing a provision of a planning scheme that relates to native vegetation. This will also direct the purpose of an enforcement order and make the work required to be undertaken – planting, protecting and regenerating native vegetation to offset that which was illegally removed, destroyed or lopped – unexceptional and not punitive. Additionally, an enforcement order requiring a person to plant, protect and regenerate native vegetation is not the only option available to VCAT. VCAT may alternatively order the person to acquire a biodiversity offset, which is explained below in relation to the right to the protection of property.

Therefore, an enforcement order requiring a person to plant, protect and regenerate native vegetation may be imposed only for the legitimate, non-punitive purpose of requiring the person, who has been found to have been partly or wholly responsible for a contravention of a planning law relating to the protection of native vegetation, to contribute to mitigating the loss of native vegetation (and the related loss of biodiversity) caused by the contravention.

For these reasons, I consider the Bill to be consistent with the right to freedom from forced or compulsory labour under section 11(2) of the Charter.

The right to property in section 20

Section 20 of the Charter provides that a person must not be deprived of their property other than in accordance with law. There are three elements to this right:

1. The interest interfered with must be ‘property’, which includes all real and personal property interests recognised under the general law;

2. An interference of concern must amount to a ‘deprivation’ of property, that is, any ‘de facto expropriation’ by means of a substantial restriction in fact on a person’s use or enjoyment of their property; and

3. A deprivation of property may only be ‘in accordance with law’ in that the law must be adequately accessible and formulated with sufficient precision to enable the person to regulate their conduct.

Limiting the effect of certain provisions in construction contracts

Part 2 of the Bill will amend the Security of Payment Act to regulate the legal effect of certain types or classes of provisions of construction contracts and, to the extent that the right to property includes the value of a contractual right to a party to the contract, it will limit the right to property under section 20 of the Charter.

Clause 11 of the Bill inserts a new section 12(1B) of the Security of Payment Act to provide that a term or provision in a construction contract has no effect to the extent that it provides for the payment of a progress payment or the release of a performance security later than the day occurring 20 business days after a payment claim is served under Division 1 of Part 3 of that Act in relation to the progress payment or a performance security claim is served under Division 1A of Part 3 of that Act in relation to the performance security.

To the extent that clause 11 of the Bill limits the right to property, I am of the view that this clause is precise and appropriately prescribed, is not arbitrary and is in accordance with the law. This is because new section ‍12(1B) is necessary to clarify that the payment terms set out in new section 12(1) and (1A), which is also inserted by clause 11 of the Bill, are intended to provide a standard for the maximum period of time in which a progress payment becomes due and payable or a performance security must be released and to ensure this standard cannot be contradicted or overridden by the terms of a contract. New section 12(1B) of the Security of Payment Act is justified as it promotes the protection of subcontractors who don’t have the bargaining power to negotiate more favourable contract terms that impose unreasonably long periods of time, being more than 20 business days, before a respondent is required under the contract to pay a progress payment or release a performance security after a claimant has served a claim on the respondent for either of these entitlements.

Section 13 of the Security of Payment Act makes ineffective in certain circumstances, for the purpose of the payment of money owing, a “pay when paid” provision in a construction contract. Clause 12 of the Bill amends the definition of “pay when paid provision” in section 13(2)(c) of that Act so that section 13 will also make ineffective a provision in a construction contract that makes any of the following contingent or dependant on the operation of another contract: the liability to pay money owing, the due date for payment of money owing, a person’s right to claim money owing and a person’s right to claim the release of a performance security.

To the extent that clause 12 of the Bill limits the right to property, I am of the view that this clause is precise and appropriately prescribed, is not arbitrary and is in accordance with the law. This is because the certain types of ‘pay when paid provisions’ are already taken to be ineffective under section 13 of the Security of Payment Act and clause 12 of the Bill will be in accordance with the law as it adds only two new types of rights under a contract – that are contingent or dependent on the operation of another contract – that will be made ineffective under section 13 of the Security of Payment Act: a person’s right to claim money owing (under new s.13(2)(c)(iii)) and a person’s right to claim the release of a performance security (under new s.13(2)(c)(iv)). The description of these types of contractual provisions is very precise and is not arbitrary because the purpose of clause 12 is to promote the protection of potentially disempowered subcontractors who could otherwise have payments unreasonably and unfairly withheld because of the actions of head contractors and their principals. There is no less restrictive means reasonably available to achieve the purpose that clause 12 of the Bill seeks to achieve.

Clause 13 of the Bill inserts a new section 13A of the Security of Payment Act to provide, under section ‍13A(1) that a notice-based time bar provision of a construction contract may be declared to be unfair in relation to a particular entitlement under the contract if compliance with the provision is not reasonably possible or would be unreasonably onerous. Notice-based time bar provisions in contracts provide that certain entitlements under the contract are contingent on a party to the contract giving a notice to the other party within a specified timeframe. Failing to give notice within that time defeats the contractual right to the claim. Under new section 13A(3)(a) of the Security of Payment Act, a notice-based time bar provision of a construction contract that is declared to be unfair has no effect on the particular entitlement that is the subject of an adjudication or proceeding in which it was declared to be unfair.

To the extent that clause 13 of the Bill limits the right to property, I am of the view that this clause is precise and appropriately prescribed, is not arbitrary and is in accordance with the law. This is because the types of entitlement to which clause 13 applies (under the definition of “notice-based time bar provision in new section ‍13A(8) of the Security of Payment Act) are drafted precisely; they are an entitlement to be paid, an extension of time for doing a thing that affects an entitlement to be paid and an entitlement to the release of a performance security. Clause 13 is not arbitrary because the circumstances in which the power can be exercised are confined. Before making a declaration of unfairness about such a provision, the person making the declaration must form the view that the notice-based time bar provision is not reasonably possible or would be unreasonably onerous. Additionally, new section 13A(5), (6) and (7) also specify the matters that the person making the declaration must take into account and must not take into account before declaring the provision to be unfair. New section 13A(2) empowers only certain persons (an adjudicator, a court, an arbitrator and an expert) to make a declaration. Further, under new section 13A(3) the declaration has effect only for the purpose of the adjudication or proceeding over which that person is presiding and the notice-based time bar provision will continue to have effect in other circumstances or proceedings arising under the relevant contract or a related contract. Clause 13 is justified as it promotes the protection of potentially disempowered subcontractors who could otherwise have payments unfairly withheld, or performance securities retained, by head contractors.

Clause 16 of the Bill inserts a new section 14B of the Security of Payment Act to provide that a provision of a construction contract has no effect to the extent that it provides that the earliest day for service of a payment claim in respect of any type of progress payment must be on a day that is later than the last day of each named month in which the construction work was carried out or the related goods and services were supplied; or provides that a payment claim for a milestone payment (within the meaning of paragraph (c) of the definition of “progress payment”) must be served less frequently than once a month.

To the extent that clause 16 of the Bill limits the right to property, I am of the view that this clause is precise and appropriately prescribed, is not arbitrary and is in accordance with the law. This is because new section ‍14B is necessary to clarify that the payment terms set out in new section 14A, which is also inserted by clause 16 of the Bill, are intended to provide a minimum standard for the earliest day and frequency of serving payment claims and to ensure this standard cannot be contradicted or overridden by the terms of a contract, apart from allowing for any earlier day for serving a payment claim that is permitted under the contract (refer to new section 14A(3)). Clause 16 is justified as it promotes the protection of subcontractors who don’t have the bargaining power to negotiate more favourable contract terms compared to terms that delay for unreasonably long periods of time a subcontractor’s right to serve a claim for payment for their provision of work, goods or services. There is no less restrictive means reasonably available to achieve the purpose that clause 16 of the Bill seeks to achieve because it is intended to override a certain type of provision of a contract.

Clause 20 of the Bill inserts a new section 17D into the Security of Payment Act to provide that a provision in a construction contract that purports to do any of the following has no effect: override the right of a claimant to serve a performance security claim under new section 17A of the Security of Payment Act, provide that the earliest day on which a performance security claim may be served is before the earliest day referred to in new section 17B of that Act, and provide that the latest day on which a performance security claim may be served is after the latest day referred to in new section 17C of that Act.

To the extent that clause 20 of the Bill limits the right to property, I am of the view that this clause is appropriately prescribed, is not arbitrary and is in accordance with the law. This is because new section 17D is necessary to clarify that the rights to claim the release of a performance security conferred under new sections 17A, 17B and 17C of the Security of Payment Act are intended to provide a minimum standard for the right to make this type of claim and to ensure this minimum standard cannot be contradicted or overridden by the terms of a contract. There is no less restrictive means reasonably available to achieve the purpose that clause 20 of the Bill seeks to achieve because it is intended to override certain types of provisions of a contract.

Clause 20 also inserts a new section 17H(3) into the Security of Payment Act to provide that the requirements in new section 17H(1) and (2) of the Security of Payment Act are taken to form part of every construction contract and are to have effect despite any other provision of the contract that purports to override these requirements. To the extent that clause 20 of the Bill limits the right to property, I am of the view that this clause is appropriately prescribed, is not arbitrary and is in accordance with the law. The requirements in new section 17H(1) and (2) are that if a party holding a performance security intends to have recourse to the whole or a part of a performance security under a construction contract, the party must first give the party providing the security under that contract at least 5 business days’ notice in writing of this intent, or any longer period of notice that is provided for in the contract. The written notice must identify certain details about the performance security. New section 17I(3) is necessary to ensure that the mandatory process under new section 17I(1) and (2) will set a minimum standard. The mandatory requirements that will be taken to form part of every construction contract are reasonable, easy to comply with and they will not override any longer period of notice that a contract may require. There is no less restrictive means reasonably available to achieve the purpose that new section 17H of the Security of Payment Act seeks to achieve because it is intended to affect construction contracts.

Clause 53 of the Bill amends section 52(1) of the Security of Payment Act to insert a power to prescribe in regulations made under that Act a provision or a class of provision in a construction contract or in a class of construction contract that is to be taken to be of no effect and the circumstances in which a such a provision may be excepted from having no effect. To the extent that clause 53 of the Bill limits the right to property, I am of the view that this clause is precise and appropriately prescribed, is not arbitrary and is reasonable. Clause 54 of the Bill will insert new section 54(10) of the Security of Payment Act to provide that any such regulation will not apply to a provision of a construction contract entered into before the commencement of any such regulation. I also note that any regulations made under this new regulation making power will be assessed for compatibility with the Charter under the requirement for the Minister to certify a Human Rights Certificate.

Each of the Bill’s clauses referred to above that limit one party’s right to property by regulating the legal effect of certain provisions in construction contracts also support the property rights of the other party to the contract. These clauses aim to achieve a fair and reasonable balance between the competing property rights of all the parties to a construction contract, after taking into account the relatively different financial resources and negotiating powers of head contractors and subcontractors as informed by the “Parliamentary Inquiry into employers and contractors who refuse to pay their subcontractors for completed works” and for this reason these clauses are justified.

Fees

Part 4 of the Bill amends the Environment Effects Act to enable fees to be prescribed in regulations and imposed under that Act to recover the cost of assessments by the Minister, and advice and assistance given by the Minister or the Secretary, under that Act. A requirement to pay fees in the form of money, where money is a form of property interest recognised by law, engages the right to property.

The deprivation of property will be in accordance with the law because the power to impose a fee will be confined to the exercise of a function by the Minister or the Secretary under the Environment Effects Act. The amount of the fees imposed may only be prescribed by regulations and the regulation making power enables this amount to differ according to different circumstances. This will further enable the fees to be reasonably referrable to the various costs incurred by the State in the performance of each of the functions to which each prescribed fee will relate. The Bill also provides for significant flexibility as the regulation making power inserted by the Bill will allow for the fees to be reduced or waived (in part or in full) and refunded if necessary.

Enforcement orders relating to native vegetation

Part 6 of the Bill will insert new section 119(2) and (3) into the Planning and Environment Act to enable an enforcement order to require certain persons to plant, protect and regenerate native vegetation on the land on which an unauthorized removal, destruction or lopping of native vegetation occurred or on any other land, which may include other land owned or under the control of the person against whom the order is made or land of a third party. In this respect, the Bill engages the right to property that is land and imposes a restriction in fact on a person’s use or enjoyment of their property.

This deprivation of property will be in accordance with the law because a person’s right as to how they use or enjoy land that they own or occupy, or hold an interest in, is not absolute; it is limited by the Planning and Environment Act and the planning scheme. The Planning and Environment Act and the planning scheme set out clear and precise requirements for how a person can obtain approval for the proposed use and enjoyment of their land and this enables the person to regulate their conduct.

Under section 114(3) of the Planning and environmentact, an enforcement order may only be made against one or more of: the owner or occupier of the land, any other person who has an interest in the land and any other person by whom or on whose behalf the use or development was, is being, or is to be carried out. Therefore any deprivation of this property right is limited in its application to a person who is found by VCAT to be wholly or partly responsible for a use or development of land that contravenes or has contravened, or, unless prevented by the enforcement order, will contravene a planning scheme, a condition of a planning permit or an agreement under section 173 of that Act (refer to section 114(1) of the Planning and Environment Act).

New section 119(2) and (3) of the Planning and Environment Act will also enable an enforcement order to direct any person or persons against whom it is made to take any other action in relation to any other land for the purposes of achieving or advancing a provision of a planning scheme that relates to native vegetation. A provision of a planning scheme that relates to native vegetation is clause 52.17 of the Victoria Planning Provisions, which provides that its purposes are: (i) to ensure that there is no net loss to biodiversity as a result of the removal, destruction or lopping of native vegetation, and (ii) to manage the removal, destruction or lopping of native vegetation to minimise land and water degradation. The first purpose of clause 52.17 incorporates the “Guidelines for the Removal, Destruction or Lopping of Native Vegetation” published by the then Department of Environment, Land, Water and Planning (2017) (the Guidelines). The Guidelines are incorporated into all planning schemes in Victoria as they are included in the Table to clause 72.04 of the Victoria Planning Provisions.

Therefore, Part 6 of the Bill will enable VCAT, using an enforcement order, to direct the person against whom it is made to pay for a biodiversity offset, if an offset is available. The Guidelines (on page 13) explain that the biodiversity loss from the removal of native vegetation is required to be offset in accordance with the Guidelines. Offsets are designed to compensate for the biodiversity value of native vegetation only, not its other values.

In this respect, a requirement to pay in the form of money for a biodiversity offset, where money is a form of property interest recognised by law, engages the right to property. This deprivation of property will be in accordance with the law because a person’s right as to how they use land they own or occupy, or hold an interest in, is not absolute; it is limited by the Planning and Environment Act and the planning scheme and, if relevant, any conditions of a planning permit or an agreement under section 173 of the Planning and Environment Act. VCAT’s power to make an enforcement order under Division 1 of Part 6 of the PE Act is confined to a contravention of the law and, under section 114(3) of the PE Act, the order may only be made against one or more persons who have been found by VCAT to be wholly or partly responsible for the contravention.

For these reasons I consider the Bill to be consistent with the right to property under section 20 of the Charter.

The right to a fair hearing – section 24

Section 24 of the Charter provides that a person charged with a criminal offence or a party to a civil proceeding has the right to have the charge or proceeding decided by a competent, independent and impartial court or tribunal after a fair and public hearing.

Clause 34 of the Bill will substitute section 28R of the Security of Payment Act to set out a procedure for a claimant who has been provided with an adjudication certificate under section 28Q of the Security of Payment Act to file the adjudication certificate as a judgment for a debt due to the claimant in a court of competent jurisdiction for the unpaid portion of an amount payable or to be released under section 28M of that Act.

New section 28R does not include current section 28R(4), the latter of which provides that judgment in favour of a person is not to be entered under this section unless the court is satisfied that the person liable to pay the amount due has failed to pay the whole or any part of that amount to that first-mentioned person. This requires the court to determine whether the respondent is liable to pay an amount to the claimant, which duplicates the process of a claim undergoing an adjudication process and becoming the subject of an adjudication determination, the latter of which must be certified by the relevant authorised nominating authority. New section 28R does not require the court to make such a finding. In this respect, clause 34 of the Bill engages the right to a fair hearing, which has been held to encompass a right of access to courts to have one’s civil claims submitted to a judge for determination. However, the right to access the courts is not absolute and may legitimately be limited by the needs and resources of the community and individuals.

This limitation on the right to a fair hearing by a court is within the law and is reasonable. The purpose of the limitation is to support the object of the Security of Payment Act, which section 3 of that Act states is to provide a statutory right to receive and recover progress payments and to the release of a performance security using the means of a procedure set out in the Security of Payment Act. In the course of an adjudication of a claim presided over by an adjudicator, the Security of Payment Act as amended by the Bill gives a respondent several opportunities to dispute a claimant’s claim for a progress payment or for the release of a performance security. This includes being given two opportunities to serve on the claimant a payment schedule (under sections 15 and 18) or a performance security schedule (under new sections 17E and 18A) and, if the matter goes to adjudication, lodging an adjudication response (under section 21) which may include any schedule already served, and making a further submission to the adjudicator (under section 22) if requested. Therefore, the respondent receives a fair hearing of their position and views during the adjudication process.

The object of the Security of Payment Act would be defeated if, after following the timely and streamlined process under that Act, a respondent could delay the right of a claimant to have an adjudication determination (endorsed as an adjudication certificate) readily enforced by a court by re-litigating matters already considered and determined under the adjudication process. Additionally, sections 3(4) and 47 of the Security of Payment Act preserve the right of a person to bringing separate proceedings under the relevant construction contract.

Also under clause 34 of the Bill, new section 28R(4) re-enacts current section 28R(5) by providing that if the respondent commences a proceeding to have the judgment set aside, the respondent is not entitled to commence a cross-claim against the claimant, to raise any defence in relation to matters arising under the construction contract or to challenge the adjudication determination. New section 51(2) of the Security of Payment Act, which is substituted by clause 52(2) of the Bill, provides that it is the intention of section 28R of the Security of Payment Act, as amended by the Bill, to alter or vary section the jurisdiction of the Supreme Court under section 85 of the Constitution Act 1975.

Clause 52(2) of the Bill will limit or prevent the bringing of proceedings in relation to enforcement of an adjudication determination that is the subject of an adjudication certificate. In this respect, the Bill engages the right to a fair hearing, which has been held to encompass a right of access to courts to have one’s civil claims submitted to a judge for determination. However, the right to access the courts is not absolute and may legitimately be limited by the needs and resources of the community and individuals.

This limitation on the right to access the jurisdiction of the Supreme Court is within the law and is reasonable. The purpose of the limitation is to support the object of the Security of Payment Act, which section 3 of that Act states is to provide a statutory right to receive and recover progress payments and to the release of a performance security using the means of a procedure set out in the Act. The intent is to enable this by setting out a timely, streamlined process under the Act. The object of the Security of Payment Act would be defeated if, after following the timely and streamlined process under that Act, a respondent could delay the right of a claimant to have an adjudication determination (endorsed as an adjudication certificate) readily enforced by a court by re-litigating matters already considered during the adjudication process. Additionally, sections 3(4) and 47 of the Security of Payment Act preserve the right of a person to bringing separate proceedings under the relevant construction contract.

Clause 47 of the Bill amends section 46 of the Security of Payment Act which provides that an adjudicator is not personally liable for anything done or omitted to be done in good faith in the exercise of a power or the discharge of a duty under the Security of Payment Act or the regulations made under that Act, or in the reasonable belief that the act or omission was in the exercise of a power or the discharge of a duty under the Security of Payment Act or the regulations made under that Act. Section 51(1) of the Security of Payment Act, which is substituted by clause 52(1) of the Bill, provides that it is the intention of section 46 of the Security of Payment Act, as amended by the Bill, to alter or vary section 85 of the Constitution Act 1975.

Clause 52(1) of the Bill engages the right to a fair hearing as it will limit or prevent the bringing of proceedings against an adjudicator in relation to how they adjudicated a dispute under the Security of Payment Act. The limitation on this right is reasonable and justified as it is necessary to encourage appropriately qualified persons to act as adjudicators of disputed claims under the Security of Payment Act. It is also intended to support the independence and impartiality of adjudicators by providing them with an immunity from civil proceedings where they exercise their statutory powers and discharge their statutory duties in good faith. The limitation on the right is also subject to a qualification. Section 46 of the Security of Payment Act will protect an adjudicator only to the extent that they exercise their statutory powers and discharge their statutory duties in good faith; it does not protect an adjudicator who acts with misfeasance.

For these reasons I consider the Bill to be consistent with the right to a fair hearing under section 24 of the Charter.

The right to be presumed innocent – section 25(1)

Section 25(1) of the Charter provides that a person charged with a criminal offence has the right to be presumed innocent until proven guilty according to law. The right is relevant where a statutory provision allows for the imposition of criminal liability without the need for the prosecution to prove fault.

Clause 39 of the Bill substitutes section 41(2) of the Security of Payment Act with a new section 41(2) and inserts new section 41(3) of the Security of Payment Act to restate the current offence under section 41(2) as two offences in relation to a requirement under section 41(1) of the Security of Payment Act. Section 41(1), as amended by clause 39 of the Bill, provides that if an adjudication determination has been made in respect of a construction contract, the respondent must, on the demand of the claimant, give to the claimant within 10 ‍business days a notice in the prescribed form that sets out the name of any person, such as a principal, from whom the claimant may be able to recover the adjudicated amount or part of the adjudicated amount. New section 41(3) of the Security of Payment Act provides it is an offence if the respondent fails to give a notice to the claimant under section 41(1). The offence against new section 41(3) is a strict liability offence because it does not require proof that a respondent intentionally, knowingly or recklessly failed to give a notice to the claimant. In this respect, the Bill engages the right to be presumed innocent.

To the extent that new section 41(3) limits the presumption of innocence, I consider that this limitation is reasonable, proportionate and justified. The offence against new section 41(3) is directed at the respondent’s conduct – whether the respondent has provided a notice under section 41(1) in response to a claimant’s demand for certain information within the required period of time. It is reasonable for this offence to not require that the prosecution prove whether the respondent knew that they had not complied with section 41(1), or was reckless about this fact, because it is reasonable to assume that a respondent knows of their own actions in relation to giving a notice to the claimant. The offence under new section 41(3) is also reasonable because the amendment to section 41(1) will specify a reasonable period of time in which the respondent is required to give a notice, which will make it easier for a respondent to understand how they are to regulate their conduct. A respondent charged with this offence can also raise the defence that they held an honest and reasonable belief in a mistaken fact.

For these reasons, I consider the Bill to be consistent with the right to be presumed innocent under section ‍25(1) of the Charter.

Conclusion

I am therefore of the view that the Bill is compatible with the Charter.

The Hon Gabrielle Williams MP

Minister for Transport Infrastructure

Minster for Public and Active Transport

Second reading

Danny PEARSON (Essendon – Minister for Economic Growth and Jobs, Minister for Finance) (11:09): I move:

That this bill be now read a second time.

I ask that my second-reading speech, except for the section 85 statement, be incorporated into Hansard.

Incorporated speech as follows, except for statement under section 85(5) of the Constitution Act 1975:

The Bill amends the Building Act 1993 (Building Act), the Building and Construction Industry Security of Payment Act 2002 (Security of Payment Act), the Planning and Environment Act 1987 (Planning and Environment Act), the Heritage Act 2017 (Heritage Act) and the Environment Effects Act 1978 (Environment Effects Act).

The main purpose of the Bill is to deliver a series of important construction, building and housing-related amendments including:

• Amendments to the Security of Payment Act as part of the Government’s response to the Parliamentary Inquiry into employers and contractors who refuse to pay their subcontractors for completed works.

• Amendments to the Building Act to improve the effectiveness of the Victorian Building Authority as a regulator. Since 1 July 2025, the Victorian Building Authority has been trading as the Building and Plumbing Commission so for convenience this speech refers to the regulator as the Building and Plumbing Commission (the Commission). The Bill improves the regulator’s effectiveness by delivering building surveyor and building inspector registration reforms, by enabling the Commission to create a code of conduct for licensed and registered plumbers, and by making minor changes to the information statement requirements for building surveyors.

The Bill will also deliver a series of planning-related amendments to:

• The Planning and Environment Act to widen the scope of enforcement orders issued by VCAT to require native vegetation offsets amongst other remedies;

• The Environment Effects Act to enable cost recovery fees to be charged; and

• The Heritage Act to clarify the types of decisions that need not have regard to climate change impacts.

These reforms will improve outcomes for all participants in the building industry, including practitioners, consumers, industry associations and subcontractors. This Bill is part of a broader package of the Allan Victorian Government’s reforms to Victoria’s regulatory framework for housing, building and construction matters.

Amendments to the Security of Payment Act in response to the Parliamentary Inquiry into employers and contractors who refuse to pay their subcontractors for completed works

Security of payment problems in the building and construction industry have been repeatedly acknowledged by Australian governments over the last 100 years. Recent government-initiated reviews have examined systemic poor payment and abusive contracting practices in the building and construction industry. Such practices take advantage of the highly fractured nature of an industry where subcontractors complete over 80 ‍per cent of construction work – reportedly the highest proportion in the world – to pass financial risk down the construction contracting chain. Such practices contribute to high levels of financial insecurity for subcontractors and other participants in the building industry, which are reflected in historically high, insolvency rates in the industry.

Victoria’s Security of Payment Act, like its counterparts in other jurisdictions, has two main objectives:

• First, to ensure that the vast majority of persons who carry out construction work or supply related goods and services under a construction contract are entitled to receive, and can recover, progress payments for carrying out that work and for supplying of those goods and services; and

• Second, to provide such persons with access to a quick, inexpensive process for resolving payment disputes that arise without the need for expensive litigation in courts.

An effective security of payment framework is particularly important for the building and construction industry due to unique structural vulnerabilities that characterise it, such as the hierarchical contracting structure for most construction projects.

Although the Security of Payment Act was enacted in 2002 and amended in 2006, it was not reviewed again until 2023. John Murray AM’s December 2017 report to the Federal Government noted the need for greater harmonisation of security of payment legislation across Australia.

In November 2022, the Andrews Labor Government committed to launch an inquiry to ‘crack down on bosses and contractors who refuse to pay their subcontractors for completed work’. Following through on this commitment, an inquiry was referred to the Legislative Assembly’s Environment and Planning Committee (Committee), which examined the Security of Payment Act’s effectiveness and its consistency with other jurisdictions’ legislation, resulting in a comprehensive report tabled in November 2023.

The Committee’s 216-page report included nine factual findings and confirmed the same chronic and persistent problems with larger firms’ contracting and payment practices observed in other Australian jurisdictions since 2002. Based on those findings, the Committee provided 28 recommendations for reform, which the Government supported in its October 2024 response. The Government supported in full 16 of the Committee’s recommendations for targeted reforms to the Security of Payment Act. These reforms are generally referred to as ‘Tranche 1 reforms’ and are the subject of the amendments contained in this Bill.

Twelve other Committee recommendations were supported either in principle or in part because they warrant additional consideration or stakeholder consultation. These ‘Tranche 2 reforms’ which are not contained with this current Bill will seek to further improve conditions in Victoria’s construction and building industry and are the subject of ongoing stakeholder consultation.

Making claims for progress payments

To implement the Committee’s recommendations 3 and 7, the Bill makes numerous changes to the Act’s procedures for claiming progress payments and claiming the release of performance securities. The Bill will remove provisions establishing ‘reference dates’ for the purposes of calculating when a payment claim must be made. The current Security of Payment Act’s complex and confusing formulae for determining ‘reference dates’ are replaced with a new, simplified process for determining when payment claims may be made, which will effectively be the last day of each named month in which the work was carried out or the related goods or services were supplied. The Bill also repeals the ‘excluded amounts’ and ‘claimable variations’ regime to implement recommendations 2 and 19 of the Committee’s report.

The Bill will also make it clear that parties to construction contracts have a right to claim progress payments ‍– including milestone payments – no less frequently than monthly and makes invalid any contractual provision to the contrary. The Bill provides for maximum payment terms, capping contractual periods of time for payment at 20 business days and establishing a default 10-business day term for progress payments where a construction contract is silent on this point. This amendment implements recommendation 8 of the Committee’s report.

The Bill provides that termination of a contract does not affect the entitlement of a person to submit a final payment claim. It expands the current Security of Payment Act’s absolute limit in which a payment claim can be served from three to six months, to align Victoria’s legislation with the legislation of several other jurisdictions. The Bill provides that no more than one progress payment claim may be submitted for each month, with certain exceptions.

Creating a clear right to claim release of a performance security

Significantly, the Bill will make it clear that the release of a performance security, such as retention money or a bond or guarantee, provided by contractors’ and subcontractors’ to ensure the satisfactory completion of their contractual obligations, is a proper subject for claims under the Security of Payment Act and that these claims may also be adjudicated under the Act. This will implement recommendation 9 of the Committee’s report.

The Bill sets out the procedures and processes for serving and responding to claims for the release of performance securities given under a construction contract. The Bill also recognises the entitlement of a party holding the benefit of a performance security to have recourse to it. However, the party may do so only after giving at least five business days’ notice of the party’s intent to exercise that right, which allows the party who provided the security to forestall that action, such as through negotiation or by going to court.

Adjudication of disputed claims and enforcing adjudication determinations

The Bill also improves many of the Security of Payment Act’s provisions relating to the process and procedure for adjudicating disputed claims for progress payments and for the release of performance securities. Significantly, the Bill implements recommendations 15 and 16 of the Committee’s Report by repealing or amending provisions in the Act that have allowed respondents to insert new reasons for non-payment of a claim that were not previously identified by the respondent in a payment schedule. This amendment makes it clear that respondents will be given two opportunities to explain, in a payment schedule or in a performance security schedule, the reasons why they are not wholly accepting what is being claimed by a subcontractor. Any reasons not included in a schedule will not be permitted to be raised by a respondent or considered by an adjudicator during an adjudication process. The Bill also gives adjudicators more time to determine adjudicated disputes and gives the parties the chance to give an adequate extension of time for a determination to be made, to facilitate better-reasoned determinations and avoid disputes from ‘timing out’ if an adjudication is not resolved quickly enough. This amendment implements the Committee’s recommendation 17.

Another key amendment is that the Bill will enable adjudicators and other persons presiding over a proceeding to declare that a notice-based time bar provision in a construction contract, after taking into account various matters set out in the Bill, is unfair if compliance with the provision is not reasonably possible or would be unreasonably onerous. The effect of such a declaration is to make the provision of no effect for the purposes of that adjudication or proceeding. The Bill also inserts a power to prescribe in regulations that a type or a class of provision in a construction contract is of no legal effect, which may be in certain prescribed circumstances and may be subject to prescribed exceptions. These amendments will implement the Committee’s recommendations 5 and 6.

Finally, the Bill implements the Committee’s recommendation 26 to simplify and expedite the process for enforcing unpaid adjudication determinations in court as a judgement debt.

Other amendments

The Bill makes also several miscellaneous amendments to the Security of Payment Act. It will exclude from the definition of ‘business day’ the period from 22 December to 10 January during which the construction and building industry typically closes for business. This will implement recommendation 4 of the Committee’s report. The Bill widens the power of the Minister to make guidelines relating to the authorisation of authorised nominating authorities, which are the businesses that recruit and provide the adjudicators. This will include requiring fee sharing arrangements between an authorised nominating authority and its adjudicators to be made publicly available, as requested in the Committee’s recommendation 24.

The Bill also implements recommendation 11 of the Committee’s report to expressly require the Commission to take on a greater educational role by providing information and other materials related to the Security of Payment Act to builders and other building practitioners, authorised nominating authorities and adjudicators and to promote the security of payment laws to the construction and building industry generally. Recommendation 20 of the Committee’s report is implemented by the Bill by authorising modern methods of service of all notices and other documents, including by email or other electronic means prescribed by regulations.

Section 85(5) of the Constitution Act 1975

Danny PEARSON: I make the following statements under section 85(5) of the Constitution Act 1975 (Constitution Act) of the reasons why it is the intention of this bill to alter or vary that section.

Clause 52 of the bill substitutes section 51(1) of the Security of Payment Act to provide that it is the intention of section 46 of the Security of Payment Act, as amended by clause 47 of the bill, to alter or vary section 85 of the Constitution Act.

Section 46 of the Security of Payment Act, as amended by clause 47 of the bill, will provide that an adjudicator is not personally liable for anything done or omitted to be done in good faith in the exercise of a power or the discharge of a duty under the Security of Payment Act or the regulations made under that act, or in the reasonable belief that the act or omission was in the exercise of a power or the discharge of a duty under the Security of Payment Act or the regulations made under that act. The reason for limiting the jurisdiction of the Supreme Court is to encourage appropriately qualified persons to act as adjudicators of disputed claims under the Security of Payment Act and to support their independence and impartiality by providing them with an immunity from civil proceedings where they exercise their statutory powers and discharge their statutory duties in good faith. For this purpose to be achieved it is necessary that the immunity that section 46 provides to adjudicators applies to the Supreme Court.

Clause 52 of the bill also substitutes section 51(2) of the Security of Payment Act to provide that it is the intention of section 28R of the Security of Payment Act, which is substituted by clause 34 of the bill, to alter or vary section 85 of the Constitution Act.

New section 28R will set out a procedure for a claimant, who has been provided with an adjudication certificate under section 28Q of the Security of Payment Act, to file the adjudication certificate as a judgment for a debt due to the claimant in a court of competent jurisdiction for the unpaid portion of an adjudicated amount payable or to be released under section 28M(1) of that act. New section 28R(4) provides that if the respondent commences a proceeding to have the judgment set aside, the respondent is not entitled to commence a cross-claim against the claimant, to raise any defence in relation to matters arising under the construction contract or to challenge the adjudication determination. The reason for this restriction is to provide a timely, streamlined process for enforcing the adjudicated amount as a debt by disallowing certain grounds on which a respondent might otherwise seek to challenge a claimant’s action to enforce an adjudication determination. This provision will not prevent a person from bringing separate proceedings under the construction contract to recover any amount allegedly overpaid or underpaid or to have recourse to, or have released, the whole or a part of a performance security. Sections 3(4) and 47 of the Security of Payment Act, the latter of which is amended by clause 48 of the bill, preserve this right.

Incorporated speech continues:

Enable the Commission to approve a code of conduct for plumbers

The Building Act enables the Commission to approve and publish codes of conduct for the various categories of building practitioners. The Commission has utilised this power to create a code of conduct for building surveyors, which has improved their professional accountability.

Registered and licensed plumbers are critical practitioners in the built environment. Plumbing work is directly linked to public health, water services, consumer protection and the structural integrity of Victoria’s infrastructure. This Bill will enable the Commission to approve and publish a code of conduct for plumbers.

A code of conduct will establish rules and principles by which all licensed and registered plumbers should operate and will help standardise and regulate plumbers’ behaviour. Ensuring professional accountability in the plumbing industry is critical to ensure that Victorian consumers are safe, practitioners operate with integrity, and buildings are safe, sustainable and durable.

Improve building surveyor and building inspector performance through registration reform

The Bill reforms how building surveyors and building inspectors are registered, in response to key recommendations of both the Building Confidence Report by Professor Peter Shergold AC and Ms Bronwyn Weir and the Government’s Expert Panel on Building Reform.

Specifically, the Bill establishes two new registration pathways for these categories of practitioners, each grounded in clear and objective competence benchmarks to ensure that, on registration, building surveyors and building inspectors will have the knowledge, skills and experience necessary to successfully perform their authorised work.

Pathway One to registration offers the most efficient route for new entrants who hold the recognised qualifications and practical experience requirements. It aims to avoid the Commission duplicating an assessment of an applicant’s competence, which will have already been assessed as part of the applicant having attained the approved prescribed qualifications and the prescribed amount of supervised practical experience. Removal of the duplication of effort will be achieved by aligning these qualifications and practical experience with the competence criteria. This will make the pathway to registration in Victoria more certain, faster and appealing to new entrants.

Pathway Two to registration offers a flexible route for those changing careers, particularly from related building professions. It will enable tailored recognition of prior learning and experience, together with any required ‘top up’ training to demonstrate an applicant holds the required competence for registration. This pathway is intended to support growth in the supply of registered building surveyors and building inspectors in Victoria.

The Bill also establishes an approvals framework to support implementation of the new pathways to registration. The Commission will be able to approve prescribed qualifications for Pathway One and approve the types of ‘top up training’ that will assist a person to obtain registration via Pathway Two.

The Commission will also be able to approve appropriately qualified persons to assist it with assessing applications for registration, including advising the Commission whether a prescribed qualification should be approved for the criteria under Pathway One and whether an applicant meets the registration criteria under Pathway One or Pathway Two. This is intended to reduce the regulator’s assessment burden and support timely registration decisions, while maintaining assessment quality.

The Commission will be required to approve clear and objective competence standards for registration, which is expected to lift building surveyor and building inspector performance by ensuring these registered practitioners are competent to carry out the work authorised by their registration. After registration, the approved competence standards will also be able to inform practitioner guidance, including practitioner auditing, by serving as a clear and objective measure of practitioner performance. The introduction and integration of these competence standards into the building surveyor and building inspector registration scheme is also expected to speed up registration decision times, especially under Pathway One, as there will be less need for the Commission to reassess an applicant’s competence.

Changes to building surveyor information statement requirements

Consistent with the Government’s commitment to promote and protect the interests of consumers of building work, the Building Act requires relevant building surveyors to provide their clients with an information statement that clearly details their role and responsibilities under building legislation. This requirement will be brought into effect through supporting regulations.

The Bill improves consumer access to this information by requiring the surveyor to provide the statement to their client at an earlier stage in the building permit process. Minor amendments will bring forward the required stage for giving a statement to no later than 10 business days after the relevant building surveyor applies to the Commission for a building permit number, rather than in relation to when the building permit is issued.

Amend Environment Effects Act 1978 to enable cost recovery fees to be charged

The Bill amends the Environment Effects Act 1978 to require proponents to pay a prescribed fee for the assessment of an environment effects statement and for other services provided under that Act. The assessment of environment effects statement has been undertaken by the Government with no mechanism to recover any of the cost associated with this critically important assessment process. The ability to recover costs will ensure that the Government can continue to carry out high quality assessments of the environmental impacts of works, in line with Victorians’ expectations and the user-pays principal.

The process of prescribing fees in regulations will be subject to a separate, regulatory impact process. The collection of user-pays fees will support a faster assessment of environment effects statement in line with the Government’s initiatives to cut red tape and speed up environment effects statement processes as announced in this Government’s 2024 Economic Growth Statement – Victoria: Open for Business.

Widen scope of enforcement orders to require native vegetation offsets

The Bill amends the Planning and Environment Act to strengthen the consequences for the illegal removal, destruction or lopping of native vegetation by expressly enabling VCAT, as part of an enforcement order, to require a person take remedial action on ‘other land’, not only on the land on which the contravention was committed, and to acquire biodiversity offsets on other land.

These amendments will ensure that, if native vegetation has been destroyed or removed without a planning permit or in contravention of the conditions of a planning permit or a section 173 agreement, the vegetation and biodiversity loss can be offset through the planting, protection and regeneration of native vegetation on another site, if that cannot be achieved on the land where the vegetation was destroyed, lopped or removed from, or it can be offset by the acquisition of a native vegetation biodiversity offset on other land. This approach is consistent with the purpose of native vegetation controls in the Victoria Planning Provisions, which seek to ensure that there is no net loss to biodiversity as a result of the removal, destruction or lopping of native vegetation.

This amendment will address a long-standing gap in the enforcement of illegal native vegetation removal and will act as a further deterrent to those wishing to remove native vegetation, without first obtaining a permit, by removing the perverse incentive that exists as a result of the current inability for an enforcement order to require the purchase of biodiversity offsets.

The Bill makes various other technical and consequential amendments, including two amendments to the Heritage Act 2017 to exclude requirements to consider emissions reductions targets and the risk arising from climate change under section 12(2A) of the Planning and Environment Act 1987 when amending or removing places on the Victorian Heritage Register and when implementing World Heritage Environs Areas and Strategy Plans.

I commend the Bill to the house.

Michael O’BRIEN (Malvern) (11:12): I move:

That the debate be adjourned.

Motion agreed to and debate adjourned.

Ordered that debate be adjourned for two weeks. Debate adjourned until Thursday 25 September.