Young Jonathan: Construction Contracts Amendment Bill — Second ReadingText is incorporated into the Bound VolumeYoung Jonathan: Construction Contracts Amendment Bill — Second Reading[Sitting date: 20 March 2014. Volume:697;Page:16948. Text is incorporated into the Bound Volume.]JONATHAN YOUNG (National—New Plymouth):Thanks to the previous speaker Shane Jones. You were stealing my light thank you. Thank you for the opportunity to stand and speak on this Construction Contracts Amendment Bill. The last speaker did speak about an issue that we canvassed very strongly in the Commerce Committee and that was around the area of retentions and security of payment and yes we were assured that the Minister for Building and Construction and his officials are working on this.There is a longstanding issue regarding retentions in the building sector. Please enter here that the member Shane Jones says he has got a solution because he obviously did not have one when he was the Minister 5 or so years ago. This problem has been around for a long time. We were concerned to hear during submissions that contractors were using retentions as working capital. They were having payments delayed or holding retention amounts disproportionate to the contract prices. And all the time this was undermining the sector’s growth and development in terms of its own productivity.It is important to understand that the building and construction sector is vital to our economy. It employs around 8 percent of our workforce and contributes around 4 percent of our gross domestic product. We know of course how important this sector is down in Christchurch. It is important that what this bill is achieving is recognised because at the very heart of this bill there is reform of and improvement in the disputes resolution processes in the construction sector. One of the areas that creates a lot of frustration of course is when there is disagreement and when perhaps a construction company has funds tied up when an owner of a property is unhappy and there is this logjam really of progress that takes place. That does not benefit anybody. So this bill is designed to create some streamlining and improvements in this disputes resolution process and also to support the Building Act reform programme by making improvements to accountability in the construction sector and maintaining efficient functioning of the private disputes resolution market as well.The principal amendments proposed in the bill would remove most of the distinctions between the treatment of residential and commercial contracts under the Act so that they would be seen as similar. It would extend the scope of the Act to apply to contracts for design engineering and quantity surveying work as well because all three are very much part of the construction process. So it brings these areas within the scope of the Act. It removes the distinction between the enforcement of payment determinations and those relating to rights and obligations and of course it makes the enforcement process more efficient. All of this will certainly serve to make progress in the processes of working through a contract if there is a dispute.There are many different areas of work that we did. I will not touch on all of them but I just want to touch on progress payments. It is very important for the industry that payments are received in due time. We recommended inserting new clause 8B “to delete the term ‘progress’ from the payment provisions. This amendment would allow parties to agree to a single payment on completion of work. This is particularly relevant to small construction works that are completed within a few weeks. We believe this amendment is desirable to make it clear that contracting parties are free to agree their own payment terms.” So it also brings some flexibility in that.I commend this bill to the House in my closing comments here knowing that it is going to bring considerable improvements. We also understand that the Minister and his officials are doing some work around retentions and security of payment.