Towards the reduction of construction insolvency: examining the "supporting statement" requirement in New South Wales

Introduced as a measure to improve security of payment, the requirement that a head contractor provide proof that it has paid its subcontractors as a condition precedent to its own entitlement to be paid by the principal has for some time been a common provision in Australian standard form construction contracts. Recognising that allegations of some head contractors swearing false statutory declarations in relation to their contractual proof of payment obligations have been longstanding, the New South Wales Parliament has recently enacted a statutory requirement for head contractors to provide proof of payment in the building and construction industry. By examining the statutory provisions, and analysing their likely implications, this article investigates whether the proof of payment requirements are likely to have more “bite” than their contractual cousins and therefore be more effective at improving security of payment and reducing insolvencies in the building and construction industry.