News & Views

On Monday 13 November 2023, NECA together with Ms Dai Le, Federal Member for Fowler hosted a roundtable at Parliament House Canberra to discuss unfair contract terms within the construction industry.

The roundtable included a range of industry representatives including the Specialist Contractors Association (SCA), Master Plumbers Australia & New Zealand (MPA), Refrigeration & Air Conditioning Contractors Association (RACCA), and Air Conditioning & Mechanical Contractors Association (AMCA) who provided invaluable insight into the problems besetting subcontractors in the Australian construction industry.

The use of unfair contract terms is placing unnecessary pressure on an industry that is already facing unprecedented challenges including escalating labour and material costs, skills shortages, and supply chain issues.  Australian subcontractors are calling for removal of unfair contracts terms for the construction industry.

While the government aims to establish efficient and cost-effective processes by awarding contracts to head contractors, it is crucial to ensure that fair terms granted to head contractors also cascade to the subcontractor in full.

Industry representatives expressed their concerns directly to government, including to the Honourable Dr Andrew Leigh MP, Assistant Minister for Competition, Charities and Treasury, and Assistant Minister for Employment whose work was also instrumental in the development and release of the Commonwealth Government’s Unfair Contract Terms (UCT) Reform Bill, which came into effect on 9 November 2023.

Additional attendees at the meeting were Federal MP Andrew Wallace, as well as a number of advisors from the offices Minister Burke and Minister Collins, as well as staffers representing Federal Opposition Leader Susan Ley, Senator David Pocock, Senator Barbara Pocock and Zali Steggall MP.

SCA raised its concern in relation to significant deviations from Standard Form Contracts. It is understood that legal practitioners are allowed to pay a fee to Standards Australia in order to modify the clauses of Standard Form Contracts to effectively suit their clients’ needs. SCA raised concerns that any such practices can carry significant risks of unfair contract terms being embedded in Standard Form Contracts to the detriment of subcontractors.

A big thank you to SCA President Andrew O’Connor for his notable contribution and for providing detail regarding the unfair contract terms as they pertain to subcontractors being required to provide warranties for design and document accuracy, and indemnity against errors contained within these documents as provided by the principal contractor. Concerns were also raised regarding the nil qualifying cause of delay with costs and limitless consequential losses.

To ensure government policy effectively promotes fairness in contracting for all industry participants with a logical allocation of risk, and as an outcome of the roundtable, a joint industry submission comprising a range of recommendations will be developed and submitted to the Commonwealth Government.