In the world of construction, getting paid on time isn’t always a given, especially for subcontractors. Small businesses often find themselves chasing payments or bearing the financial fallout from delays further up the contracting chain. It’s a long-standing problem, and in 2016, the Australian Government decided it was time to step in and seek a better solution.
Enter the Murray Review – a national review of Australia’s Security of Payment (SOP) laws.
What is the Murray Review?
On 21 December 2016, the Australian Government commissioned a review of existing SOP legislation to identify how payment protections in the construction industry could be improved across the country. The review was led by Mr John Murray AM, a respected legal and construction industry expert.
The final report, Review of Security of Payment Laws: Building Trust and Harmony, was released on 21 May 2018. It offered 86 recommendations, with one key message front and centre: Australia needs a nationally consistent approach to SOP laws.
On 14 March 2025, the Commonwealth finally released its long-awaited response to the Murray Review, a move that suggests the government is now taking security of payment issues more seriously. The seven-year delay underscores the previous government’s inaction in responding to the review’s findings.
Why Was It Needed?
The construction industry has long been plagued by payment issues. Smaller subcontractors, who are often the most vulnerable parties in the supply chain, face prolonged payment terms, unfair contract clauses, delayed progress payments, and, in some cases, no payment at all. These issues are amplified by the power imbalance between developers, head contractors, and subcontractors.
The Murray Review highlighted how different states and territories had developed their own versions of SOP laws, leading to a patchwork of rules that made it harder for businesses operating across jurisdictions. This inconsistency, the report argued, undermined fairness, efficiency, and trust in the sector.
Key Themes from the Review
Rather than focus solely on technical reforms, the Murray Review emphasized broader structural and cultural shifts that would improve payment practices across the board. Major areas of focus included:
- National consistency: A harmonised legislative framework would reduce confusion and ensure equal protections across all states and territories.
- Stronger protections for subcontractors: Including faster payment timeframes and easier enforcement processes.
- Statutory deemed trusts: To ensure that progress payments are securely passed down the chain and not misused.
- Fairer contracts: Addressing unfair terms that often put smaller players at a disadvantage.
Federal Government Response
Though the Commonwealth Government isn’t the main legislative authority in this space – security of payment laws largely fall under state and territory jurisdiction – it has a clear role in leadership and policy guidance.
On 14 March 2025, the Commonwealth released its long-awaited response to the Murray Review. It supported the goal of national alignment but acknowledged its limited legislative power to enforce SOP laws across states. Instead, it committed to leading from a policy and coordination perspective.
The Commonwealth is also working on broader initiatives to support payment fairness and industry integrity, including:
- Tackling illegal phoenix activity
- Making unfair contract terms more easily identifiable
- Supporting fair practices through the National Construction Industry Forum (NCIF)
- Developing the Secure Australian Jobs Code
It also continues to champion prompt payment culture through mechanisms like:
- The Payment Times Reporting Scheme
- The Supplier Code of Conduct
- The Payment Times Procurement Connected Policy
These tools aim to make late payment not just bad practice — but bad business.
Does this mean anything on a practical level for Victoria’s SOP laws?
With extensive experience in construction law, we closely follow developments in this space. The Commonwealth may not have the direct power to legislate SOP reform, but its active engagement, policy guidance, and public commitment to subcontractor protections play a powerful role in shaping state-based reform – including in Victoria.
We believe that the recent efforts by both federal and state governments mark a significant shift toward a fairer and more consistent framework for builders, subcontractors, and developers alike. Ultimately, improving payment security isn’t just about legislation – it’s about building trust and ensuring a sustainable, ethical future for Australia’s construction industry.
Status of Victoria’s SOP laws
In Victoria, the Security of Payment regime is governed by the Building and Construction Industry Security of Payment Act 2002 (Vic). The state has shown a strong commitment to reform in line with the Murray Review.
In March 2023, the Victorian Parliament launched an inquiry into builders and developers who withhold payment from subcontractors. The final report, tabled in November 2023, included 28 recommendations aimed at strengthening payment protections.
In response, the Victorian Government supported 16 recommendations in full and 12 in principle or in part. Crucially, many of the proposed changes would repeal amendments made in 2006 and bring the Act more in line with other states – a step toward harmonisation. New legislation is expected to be introduced by mid-2025.
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