Project bank accounts are on the way out on State Government projects. What replaces them is a trust created by law, with less paperwork for head contractors and far less room for error.
Money paid for subcontractors’ work on Western Australian Government construction projects will soon sit in a trust created by statute, not by contract.
The Building and Construction Industry (Security of Payment) Amendment Bill 2026 passed its third reading in the Legislative Council on 13 October. The state government announced its passage on 23 October.
For head contractors and first tier subbies, the protection is familiar. How it is created and enforced is not.
What has WA Parliament passed?
The bill amends the Building and Construction Industry (Security of Payment) Act 2021. Its centrepiece is a statutory construction trust for eligible State Government construction contracts.
The trust will replace project bank accounts, known as PBAs. Since 2019, PBAs have been required on State Government projects where the construction component is $1.5 million or more, including GST, under the WA Procurement Rules.
The threshold for the new scheme will be set by regulation. According to the explanatory memorandum, the intention is to mirror the PBA threshold of $1.5 million including GST, with exemptions for some low risk contracts, such as those purely for professional services or long term maintenance.
Why is WA replacing project bank accounts?
PBAs did their job. The explanatory memorandum credits them with protecting subcontractors from head contractor insolvency. The cost was paperwork.
Each PBA relied on a trust deed poll and a PBA agreement, plus a deed of release or priority deed poll. The Department of Finance has also advised subcontractors to register on the Personal Property Securities Register to protect their claim if a head contractor fails.
The government told Parliament that PBAs had proven administratively burdensome and could not be sustained in the long term.
Under the new law, none of those documents are needed. The Act defines the trust and grants the security interest itself, so subbies no longer need to register individually.
How does a construction trust work?
The head contractor is the trustee. Its first tier subcontractors are the beneficiaries, each to the extent of their contractual entitlement. The head contractor keeps a beneficial interest in what remains, being its margin and overheads.
The head contractor must open a separate construction trust account with a recognised financial institution within 10 business days of entering the contract, unless the contract sets a different period. A standard transaction or deposit account will do, provided the words “trust account” appear in its name.
The principal pays progress payments into that account. The head contractor pays subcontractors out of it, based on certified amounts, written agreements, or a decision by an adjudicator, expert, arbitrator or court.
Trust money cannot be used for the head contractor’s other debts or mixed with other funds. It is kept out of the pool available to creditors if the business fails.
If the account is short on the day a subcontractor is due to be paid, the head contractor must top it up from its own funds immediately, then pursue the principal for what it is owed.
Less paperwork, in exchange for tighter accountability.
What is a construction trust?
A construction trust is a trust created automatically under Western Australia’s Building and Construction Industry (Security of Payment) Act 2021 over payments on eligible State Government construction contracts. The head contractor is the trustee and its first tier subcontractors are the beneficiaries. The money is held in a dedicated account and is kept separate from the head contractor’s own assets if it becomes insolvent.
What changes for head contractors on government jobs?
Every claim a head contractor makes to a State agency principal must come with a claim statement in an approved form. It sets out whether each subcontractor has been paid in full and, if not, who is owed, how much and why. It takes the place of the statutory declarations used under PBAs.
This applies wherever a State agency is the principal and the head contractor is a private business, trust contract or not.
The principal may withhold all or part of a payment if the head contractor breaches the construction trust or retention trust rules, or does not pay subcontractors in full and on time. That power is discretionary.
It also has teeth. If an adjudication application was lodged before payment is withheld on these grounds, it is taken to be withdrawn. It can be brought again once the withholding ends.
The bill also clears the way for same day payment. The Act’s general ban on pay when paid clauses will not apply to State agency contracts that require subbies to be paid on the day the head contractor is paid. The explanatory memorandum’s example has subcontractors paid on business day 15, ten business days earlier than the statutory maximum of 25.
Who is not covered by WA construction trusts?
Protection stops at the first tier of subcontractors. Second tier subbies are not beneficiaries. The explanatory memorandum says this avoids pushing trustee compliance costs onto small businesses further down the chain.
The exception is related entities. Where a subcontractor is linked to the party above it through family or ownership, a separate trust is created at that level, so work cannot be routed through related companies to sidestep the scheme.
Private projects are not captured. Government trading enterprises, such as water corporations, port authorities and DevelopmentWA, can opt in.
The scheme applies only to contracts first entered into after it starts. Existing PBA contracts will run their course. Most of the bill starts on a date to be fixed by proclamation, once regulations are made and guidance is issued. No start date has been announced.
WA’s existing retention trust scheme continues alongside it. A construction trust account cannot double as the retention trust account for the same contract.
How does WA compare with Queensland and NSW?
Payment protection for subbies varies widely from state to state.
Queensland built the broadest statutory trust framework in the country. As part of its Building Reg Reno reforms, it paused the further rollout of trust accounts to private projects below $10 million in February 2025. Trust accounts still apply to eligible Queensland Government contracts of $1 million or more, and to private and other contracts of $10 million or more.
The Queensland Productivity Commission later found little evidence that project trust accounts had reduced unpaid work in the industry. It recommended a review, and removal if the costs outweigh the benefits. In its formal response, the Queensland Government noted that recommendation and said work was underway to ease the burden on trustees.
In New South Wales, the main statutory trust requirement covers retention money held by head contractors on projects valued at $20 million or more.
WA has gone the other way. Rather than winding back, it has written its PBA model into law and stripped out the paperwork.
What will this mean on site?
For first tier subbies, the substance of the protection does not change. The money paid for their work is held on trust. What changes is that the protection exists by force of law from the moment the payment right arises, without deeds or individual registrations.
For head contractors, the trade is less paperwork, in exchange for tighter accountability. A late or inaccurate claim statement is grounds for withholding, and that withholding can halt an adjudication already underway.
The design is now in place. Whether it works will come down to the same thing every trust scheme does: whether the money is actually in the right account when a head contractor gets into trouble.
Frequently asked questions
Statutory construction trusts under the Building and Construction Industry (Security of Payment) Act 2021 will replace project bank accounts on eligible State Government construction contracts. The trust is created by law, so the trust deeds and agreements used for PBAs are no longer needed.
No start date has been announced. Most of the amendment bill starts on a date fixed by proclamation, after regulations setting the threshold and exemptions are made and industry guidance is issued. The scheme will apply only to contracts entered into after it starts, and existing PBA contracts will continue under PBAs.
Generally, no. Beneficiaries are the head contractor’s first tier subcontractors. A separate trust is created further down the chain only where a subcontractor is a related entity of the party above it, through family or ownership links.
No. The scheme applies to construction contracts with State agencies above the threshold set by regulation, intended to be $1.5 million including GST. Government trading enterprises can opt in, but private projects are not covered.
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Last updated: 28 October 2026
General Information Only: This article provides general information only and does not constitute legal, financial or professional advice. Security of payment obligations depend on the contract, the parties and the jurisdiction. Readers should seek independent professional advice about their own circumstances.
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