Significant Reforms on the Horizon for Security of Payment in Victoria's Construction Industry
Like similar regimes in other States, the Building and Construction Industry Security of Payment Act 2002 (VIC) ("Victorian SOPA") was intended to reduce insolvency in the construction industry and enhance cash flow for subcontractors. Inconsistencies with other States and perceived deficiencies led to a parliamentary inquiry in March 2023, resulting in 28 recommended legislative reforms. On 17 October 2024, all of those recommendations received official support from the Victorian Government (in full, in part or in principle).
The recommendations focus on bringing Victoria's regime into line with other States and simplifying the claims process. For example, the Victorian Government has supported recommendations to repeal the "excluded amounts" and "non-claimable variations" provisions that are unique to Victoria. Other significant recommendations include enabling adjudicators and courts to void notice-based time bars and other construction contract terms deemed to be "unfair". The proposed changes represent a significant widening of the scope of the Victorian SOPA to become very claimant friendly and, if adopted, will likely result in a significant increase in the use of the regime in Victoria. It is not yet clear when the recommendations will be formally considered for adoption, but reform is on the horizon.
