Curran ClareCLARE CURRAN (Labour—Dunedin South): Mr Deputy Speaker I am sure that the House would rather listen to my dulcet tones. I presume that people remember the events of Waitangi Day 2013 when Mainzeal began to collapse. There was a massive repercussion from that resulting in more than $150 million owed to creditors and a very major flow-on effect to much of the construction industry. It sent a ripple of horror really through our construction industry as to how this could happen and what could be done to ensure that it did not happen again. As a result of that the Construction Contracts Act was passed in this House in 2015 with the support of the House—with the support of the Labour Party members. In fact we had pushed for a bill around retention moneys to be put forward much sooner to ensure that contractors had some protections should there be collapses in the future. That bill was passed but the story was not over.The reason that this bill is being pushed through now—and the Government I know is very keen to pass it—is that this bill the bill that went through the Commerce Committee the Regulatory Systems (Commercial Matters) Amendment Bill contains clause 138 which provides for the retention moneys to be held in trust from 31 March this year which happens to be the end of next week. That is a very important clause and it has led to a lot of uncertainty with the construction industry as to what the impact of that will be. So there is a lot to be discussed in these three cognate bills or however they are being described and they are all very different: my colleague Sue Moroney was talking about paid parental leave before and here am I talking about retention moneys and trying to ensure that there are protections for the construction industry. But the reason why this bill must pass is to ensure that that provision which is in the bill that was passed in 2015 can actually be legal because there is another piece of legislation that provides how that will happen.However when we were hearing submissions on this in the select committee there was a lot of confusion and consternation from the players within the construction industry about what that clause would mean particularly around the definition of liquid assets" and how that would actually apply. The Ministry of Business Innovation and Employment (MBIE) had to go back and do further consultation with stakeholders including head contractors subcontractors lawyers accountants banks insurance providers and the Parliamentary Counsel Office which ultimately has resulted in an amendment coming out of the select committee as to how that trust requirement will be enacted ultimately providing an alternative arrangement to that trust requirement.What it means is—and this is quite important; it might sound boring to people but I am sure going back to Mainzeal and how that actually occurred that if you cannot have a system that works and operates effectively for retention moneys to be collected then we do leave ourselves open to more risk. So it was important that we got the legislation right. Labour supports it but I do think it is important to hear the history of it and the fact that it is now 2017 we are 4 years on from the Mainzeal collapse and we still have not quite sorted it. It does show how long and involved these processes can be. Perhaps they could have been dealt with more quickly but hopefully this piece of legislation will address it and actually ensure that there is protection for all of those levels of contractors should there be a failure by the main contractor so that the ones below do not end up going out of business having their tools locked up losing thousands hundreds of thousands—and in some cases millions of dollars—and having a really severe effect on the whole of the construction industry.Going back to the alternative arrangement for the trust requirement—I will go to the policy intent which was to allow payers the flexibility to protect retention money in ways other than holding cash. MBIE's discussions with stakeholders assisted in the development of a workable proposal and that was only after they had to go back to the stakeholders. The new proposal—the amendment in this piece of legislation before us—is to have two options. The primary option was to hold the retention money on trust in the form of cash or other liquid assets that are readily converted into cash and that is basically what the 2015 legislation provides for.Alternatively—and that is what the difference is in this legislation today—MBIE proposes that payers will have the option to purchase a narrow class of financial instruments such as insurance products or bonds to provide third-party protection of retention money. These proposed financial instruments will not be held on trust but will be subject to strict requirements. That is the difference in the legislation. One of the reasons for that is that we had the Registered Master Builders Association and other submitters—Civil Contractors New Zealand—who came before the select committee and virtually begged us to remove the ambiguity that they perceived was in the 2015 legislation and was proposed to be in this legislation which was bringing into action this clause that all of the retention moneys be held in trust from 31 March which is at the end of next week.The clarifying thing about 31 March is that it means that anything before 31 March—so it is not retrospective—is not covered; it applies only to retention moneys held in trust after 31 March. But the ambiguity that they asked us to sort out was around what liquid assets meant and how that would apply. Their concern was that they would have to go and borrow money basically to ensure that there was retention money and that it was going to be an extra cost to them if they were the lead contractors.This is actually only one part of these quite extensive bills that are before us today. But the reason why it is so important for it to pass is that that clause in that 2015 contracts bill which is now an Act requires that from 31 March retention moneys have to be held in trust and therefore the legislation has to be in place. That is my understanding of it anyway and it is quite important. I think it is important that the House understands the history of it and how this goes back to a really significant collapse in one of our major industries which it has taken 4 years to sort out."