Outcomes of Developer Review Panel
Proposed reforms for developers in Queensland’s building and construction industry.
The independent Developer Review Panel (Panel) appointed under the Queensland Building and Construction Commission Act 1991 (Qld) (QBCC Act) has proposed a more stringent framework for developers in the building and construction industry in Queensland.
Late last year, the Panel released its discussion paper on the role of property developers operating in the Queensland building and construction industry. Click here to read our analysis of the discussion paper.
Following extensive consultation with various stakeholders in the industry, the Panel has now tabled its final report.
Released in June 2023, the report provides a suite of recommendations which set the benchmark for a higher standard for developers in Queensland. A copy of the final report can be found here.
This article provides a summary of the five key recommendations proposed by the Panel and the rationale for these recommendations.
The report outlines some of the issues surrounding the high rate of insolvencies in the construction industry in Queensland which continuously challenges the sustainability of the sector.
The Panel determined that developers play a central role in ‘setting the tone’ of projects, and their behaviour has an impact on security of payment, solvency, and building quality and safety in various ways. Given that developers are not subject to the same regulatory framework as others in the industry, such as contractors, architects and engineers, they are seen to have a commercial advantage.
The proposed recommendations seek to create in the Panel’s view a more level playing field, resolve some of the issues identified, minimise regulatory burden, and provide the Queensland Government with additional insights to inform future policy development.
The recommendations are founded on an accreditation system which seeks to ensure that accredited developers meet minimum standards, including ‘fit and proper’ person thresholds and educational requirements.
Recommendation 1: Establish an accreditation, disclosure and registration framework for developers
Under this framework, a developer should be prevented from entering into a contract that will require a project trust account unless they obtain and maintain an accreditation.
The Panel has proposed minimum requirements for a developer to obtain and maintain accreditation which include fit and proper requirements for Persons of Influence (POIs), minimum education requirements, and a code of conduct.
The framework also provides for disclosure obligations for accredited developers relating to appropriate finance for the completion of proposed contracts. The framework would be supported by a regulator.
All development activities undertaken by accredited developers would need to be registered with relevant identifying information.
A public register of accredited developers and registered development activities would be made available.
Rationale for Recommendation 1
The core finding of the Panel was that developers, along with financiers, play a key role in setting the tone of a project and influencing payment security, solvency, and building quality and safety.
It was identified that there was a lack of consistency in the approach of developers together with a limited means of encouraging more professional behaviour.
The accreditation framework seeks to assign value to professional behaviour among developers in order to promote a baseline level of professional behaviour.
Observations in relation to Recommendation 1
Queensland introduced a new project trust regime that is contained within the Building Industry Fairness (Security of Payment) Act 2017 (BIF Act). This included the establishment of the Project Trust Account (PTA).
PTAs are required for eligible contracts in Queensland. A head contractor is required to establish one PTA in respect of each ‘eligible contract’ for ‘project trust work’. The PTA is used for the remittance of any project payments.
The PTA framework has a phased implementation, the first phase having started on 1 March 2021, and the last phase currently planned to start on 1 October 2025.
PTAs are currently required for State Government and Hospital and Health services contracts valued at $1 million or more.
From 1 January 2022, the regime was extended to the private sector and the broader government sector, to include contracts valued at $10 million or more.
The monetary threshold for the private sector and the broader government sector is set to drop to $3 million or more from 1 March 2025.
As of 1 October 2025, the threshold for the private sector and the broader government sector will be further lowered to $1 million or more. In other words, the threshold for all contracts that are eligible for a project trust under the BIF Act will be $1 million or more from 1 October 2025.
If the Queensland Government implements the proposed accreditation framework in relation to developers, this would mean that developers who are not accredited would effectively be prevented from entering any contracts that are eligible for a project trust under the BIF Act in which the contract price is $1 million or more as from 1 October 2025.
Recommendation 2 – improve industry education
Under this recommendation, minimum educational requirements for developers would be implemented, which include continuing professional development (CPD).
Rationale for Recommendation 2
Currently, developers are not subject to any educational requirements. It is suggested that this is associated with substandard procurement practices, unfair contracting, and the unreasonable allocation of risk across contracts.
In the Panel’s view, the educational requirements would contribute to consistency and improvement of standards across the industry.
The Panel has recommended that accredited developers are required to keep a record of CPD courses and hours undertaken. Furthermore, a failure to do so will constitute a breach of the developer’s code of conduct which would render the developer liable to disciplinary action.
Recommendation 3 – Clarify developer responsibility in relation to non-conforming building products
The QBCC Act was amended in 2017 to establish a chain of responsibility for non-conforming building products (NCBPs). It introduced duties for supply chain participants to ensure that building products are safe and fit for purpose.
Developers however are not specifically captured under the ambit of the QBCC Act. As such, there is uncertainty as to whether they are actually included in the chain of responsibility for NCBPs.
The Panel recommends an amendment to make it clear that developers are included and to promote a consistent approach across the development industry.
Rationale for Recommendation 3
The rationale behind this recommendation is to ensure that developers can be held accountable under circumstances where they influence and direct the use of certain products in a building.
Recommendation 4 – Clarify developer responsibilities in relation to fairness in contracting in Queensland
This recommendation proposes a further amendment to the QBCC Act in order to clarify that developers are included in fairness in contracting provisions.
The QBCC Act provides for both mandatory and prohibited conditions in respect of building contracts to be prescribed by regulation. Where prohibited conditions are included in a contract, they are automatically void. It is an offence to enter into a contract with prohibited conditions. It is also an offence to enter into a contract which does not contain mandatory conditions.
Rationale for Recommendation 4
The main driver behind this recommendation is the extent of the practice of unreasonable transfer of risk under building contracts. The Panel was told that there is a perception that developers use the power imbalance in the contractual chain in their favour to impose burdensome contractual terms on contractors.
Recommendation 5 – Promote the uptake of digital tools for recording design and construction information
It is recommended that a digital platform is established to capture building and construction data which includes the ability to track variations from an original design, trace the age and origin of building products, and plan and find efficiencies in asset management.
Rationale for Recommendation 5
The Panel stated that strong support was shown during the consultation process for the use of a digital platform. The Panel has considered that there are a number of ways in which this technology could be of great benefit to stakeholders. The Panel has considered that the technology would provide a comprehensive record of buildings which would assist in assessing compliance with design and construction standards. It would also alleviate the challenges related to missing documents which is often experienced at handover of a building. Maintenance and management of buildings would be easier and more efficient, the Panel has considered.
While there are currently some tools available, such as Building Information Modelling (BIM), the Panel is of the view that a wider class of innovative tools is needed.
South-East Queensland has entered a period of significant development and growth, particularly in the lead up to the 2032 Olympic Games. We are hearing that there are capacity constraints across the state within the sector and that this will only intensify in the coming years.
While the recommendations clearly propose a more stringent framework for developers in the building and construction industry in Queensland, the fundamental question is whether the proposed recommendations will have any impact.
The State Government will be considering the Panel’s recommendations and will need to decide whether to adopt them. If you would like to share any views or have any questions, our team is here to help – please feel free to get in touch with any of the authors listed below.
This publication covers legal and technical issues in a general way. It is not designed to express opinions on specific cases. It is intended for information purposes only and should not be regarded as legal advice. Further advice should be obtained before taking action on any issue dealt with in this publication.