Genter Julie Anne: Construction Contracts Amendment Bill — First ReadingText is incorporated into the Bound VolumeGenter Julie Anne: Construction Contracts Amendment Bill — First Reading[Sitting date: 11 June 2013. Volume:691;Page:11008. Text is incorporated into the Bound Volume.]JULIE ANNE GENTER (Green):Tēnā koe Mr Speaker. Tēnā koutou e te Whare. I rise to speak on the Construction Contracts Amendment Bill in its first reading. The Green Party will be supporting this bill at least to the Commerce Committee. I would like to note that most of the changes in the bill are actually relatively minor. Many of them are neutral. Some positive changes in the bill include the requirement for adjudicators to hold a pre-adjudication conference to answer questions about the process and a requirement for all adjudication notices to contain a statement of the respondent’s rights and obligations and a brief explanation of the adjudication process. These measures will make the process more transparent and understandable to participants. We think that is a desirable and good outcome.One negative change we are concerned about that we will be exploring in the select committee is the move to shorten from 15 working days to 5 working days the amount of time defendants have to apply to the District Court to oppose a plaintiff’s application for a determination to be in force by entry as judgment. Although the clause wouldrequire adjudicators to give a respondent additional time to serve a written response on the claimant if additional time is necessary owing to the size and complexity of the claim the shortening of time could have negative impacts on the fairness of adjudication and that is what we are concerned about particularly where a claimant is unable to hire a legal representative for financial or other reasons.One of the things I would like to bring up is what is not in this bill. Back in 2010 the Government undertook a review of the Construction Contracts Act 2002 and there were two significant recommendations out of that review that have not been taken up by the Government for legislative change. Those two exceptions were strengthening remedies for non-payment and ensuring a mandatory scheme for security of payment. Both of those actually became very relevant earlier this year when Mainzeal Property and Construction went into receivership. Of course one of the reasons that Mainzeal Property and Construction went into receivership was poor corporate governance by people like Dame Jenny Shipley and other friends of the National Party. It turns out that it looks like annual reports had not been sent to shareholders for several years and there are certainly none publicly available so it is impossible to know what sorts of directors’ fees the board of directors were receiving right up until the time that they exited the board. That was right at the end of last year or early this year.Another reason for Mainzeal Property and Construction’s problems was the leaky buildings. Of course that is as it should be. It was involved in a number of buildings that turned out to have significant problems. But I think that is worth pointing out because this Government seems to be opposed to all types of regulation and seems to be on the side of “Oh well less regulation is always going to get a better outcome.” The leaky building problem which has been enormously costly to taxpayers and to homeowners is a perfect example of where light-handed regulation actually ends up costing society and the economy quite a lot more in the long run. So it is much better to have that regulation in place to ensure that the problem does not start rather than to say: “Oh well look we want to reduce compliance costs and we want to free up red tape.” It is like the Housing Accords and Special Housing Areas Bill which is currently before the House. The Government wants to get rid of any oversight by the Resource Management Act and wants to remove any requirement to comply with district plan regulations in order to get houses built cheaply and quickly with no consideration of what the long-term impacts will be and there will be long-term impacts.The Green Party is not supportive of regulation for the sake of regulation but let us be honest: it does serve a purpose and it serves an important economic purpose. It is not just a cost imposed on business; it actually can be there to ensure that there are better long-term outcomes. In the economy as it currently exists there is a huge incentive for players to maximise their short-term profit with no consideration of the long-term impacts on people the environment or indeed the economy. It is really the role of Government to have that oversight. When Government gets too close to vested interests—as we have here in New Zealand at the moment; we have a Government that is very clearly looking out for its mates and a number of vested interests—then the lawmaking suddenly is not providing long-term oversights in the interests of “New Zealand Inc.” but rather is under pressure from vested interests to remove regulations that in many cases might be useful and important economically important in order that those vested interests might make another big profit this year and never mind what is going to happen in the future.So to go back to Mainzeal Property and Construction the problem with Mainzeal is that we have subcontractors hard-working tradespeople who are likely not going to be paid because of that company going under. This was flagged as a problem during the review of the Construction Contracts Act 2002. The Building Research Association ofNew Zealand commissioned market research in September 2010 to scope the nature and extent of contractors not getting paid. The key findings of the research included that 61 percent of respondents had instances of non-payment in the previous 5 years. That is pretty significant—61 percent of respondents had had instances of non-payment in the previous 5 years. Most respondents indicated that the total amount of non-payments was under $50000 but there were cases of non-payments of over $500000. Here in this Construction Contracts Amendment Bill we have the opportunity to ensure that there are mechanisms available to address this problem.One of these could be a mandatory security of payment scheme. The Government came back and said: “Oh well security of payment measures are already available in the market and people can freely engage in them or not.” But that really misses the point that the purpose of a mandatory scheme would be to ensure that nobody is disadvantaged by other people being willing to not accept security of payment. If one were a subcontractor and going for a job for a big construction company like Fletcher’s which is pretty much a dominant player in the market that company could say to the subcontractor: “Well there’s someone else who will do your job without security of payment.” We do not want to have to go in for that because it is going to cost us more money. So the competitive incentive means that people are less likely to choose to have the security of payment measure and that is the purpose of making that mandatory. We need some insurance because it is simply not fair that when large property management construction companies go under subcontractors do not get paid. They are the guys who actually have to feed their families. They are not the guys who are jet-setting around like the corporate boards of directors hanging out in the Koru Club.The Green Party would like to see what comes out of the select committee submissions process in terms of what the public has to say what the stakeholders have to say and whether indeed the stakeholders do feel that there is scope within this bill to address this issue of non-payment. We would then like to see some amendments to the bill to deal with that problem because it has been a problem this year in 2013 and it will doubtless continue to be a problem in the future. We need to look after the workers and people of New Zealand. Thank you.