WA law makes head contractors trustees on state building jobs

A subcontractor’s progress payment on a Western Australian government building job will soon be held in a trust that exists because the law says so, not because a contract was drafted to create one. The Legislative Council gave the Building and Construction Industry (Security of Payment) Amendment Bill 2026 its third reading on 13 October, and the state government made the passage public on 23 October, The Good Builder reported. Head contractors keep the job of holding those funds on trust for subbies; the bill just changes the mechanism that puts them there. For builders chasing state work, that means one piece of compliance paperwork disappears from every bid.

Why it matters

The system being replaced, project bank accounts, asked a head contractor to stand up a fresh trust deed poll and PBA agreement on every single job, then unwind it afterwards with a deed of release or priority deed poll. On top of that, the Department of Finance had been telling subcontractors to separately register their own interest on the Personal Property Securities Register in case a head contractor entered external administration. Government told the Parliament this had become too much administrative weight to keep carrying.

The bill cuts that layer out entirely. Because the trust and its security interest are now written straight into the Act, a subcontractor is covered automatically and never has to lodge its own registration to get that protection. A head contractor’s actual obligation is unchanged, it still has to keep subcontractor money ringfenced from its own business account, only now a statute does the creating and the enforcing instead of a pile of job-by-job contract documents. What that protection is worth when it fails is a question this desk has already covered, in a Perth builder’s $6 million trail of destruction.

The new trust only reaches as far as the first tier down from the head contractor. It is also confined to work let directly by state agencies: government trading enterprises get the choice to join voluntarily, and privately funded projects sit outside the scheme altogether.

The numbers

$1.5 million including GST is the figure that has triggered a mandatory PBA on state work since 2019, set under the WA Procurement Rules. The Act leaves the new trust’s own threshold to a future regulation rather than fixing it in the legislation, but the explanatory memorandum signals the government wants to carry the same $1.5 million line across, carving out exemptions for low-risk categories like pure professional-services work and long-term maintenance contracts.

What’s next

There is no commencement date yet. Proclamation brings most of the bill into force, and that is contingent on the threshold regulation, the exemption list and industry guidance all being finalised first. Once it does start, only contracts signed from that date forward fall under the trust, leaving every PBA already in place to run out under the rules it was created under.