Woods Megan; O'Connor GregThird ReadingHon Dr MEGAN WOODS (Minister for Building and Construction): I present a legislative statement on the Construction Contracts (Retention Money) Amendment Bill. I move that the Construction Contracts (Retention Money) Amendment Bill be now read a third time.ASSISTANT SPEAKER (Hon Jacqui Dean): I'll just say that that legislative statement is punished—published. Ha ha! I feel punished; I don't know. That legislative statement is published under the authority of the House and can be found on the Parliament website.Hon Dr MEGAN WOODS: I move That the Construction Contracts (Retention Money) Amendment Bill be now read a third time.It's with a great deal of satisfaction that I now begin the bill's final progress and passage through this House. I want to begin by acknowledging and thanking my predecessor the Hon Poto Williams who introduced this bill in June 2021.I think everybody in this House knows why we need this bill. The Construction Contracts Act 2002 regulating construction contracts included processes for dealing with payments and disputes under a construction contract and the protection of retention money. The Construction Contracts (Retention Money) Amendment Bill this bill strengthens and clarifies the retention money requirements that sit under that Act.The changes made by the bill contribute to the Government's building system reforms by providing fairer outcomes for subcontractors when things go wrong. That is one of the important things that we have in place that we have a structure and a system in place for when those things do go wrong. Retention money is an amount of money held back from a payment under a construction contract as security for performance. Holding retention money is voluntary; however when retention money is held it must be held on trust by the head contractor for the benefit of the subcontractor. An independent review by KPMG in 2019 on the effectiveness of the retention money regime found that while there was overall compliance with the regime a number of those businesses who were surveyed were using retention money as working capital and co-mingling money. This is an issue because it increases the risk of subcontractors not being paid for the work they have done particularly when the head contractor becomes insolvent before paying out the subcontractors' retention money.The changes in this bill safeguard those subcontractors who are often—and too often—the first to miss out in the event of a construction company becoming insolvent. It gives those greater protections for subcontractors' retention money. The bill clarifies and strengthens the requirements. The key changes that we're seeing here include clarifying the existing trust requirement and improving the transparency of how retention money is held. It introduces offences penalties and defences and clarifies how retention money is administered in the event of insolvency.By strengthening the trust requirement the bill mitigates the risks with the use of retention money as working capital by head contractors. It clarifies that the trust requirement will almost also mean that the money becomes clearly identifiable and separate from other assets held by the head contractor and the bill also introduces offences for those who fail to comply with the retention money requirements. It also clarifies holding accounting and reporting requirements for that retention money and under the bill head contractors will have a role in providing subcontractors with updated retention money records on a regular basis.People need to know what is occurring. This will aid compliance and better allow subcontractors to know when head contractors have not complied with their obligations. This also helps to address the power imbalance between subcontractors and head contractors where subcontractors are often unable to enforce their rights.Finally this bill clarifies how unallocated withdrawals or deposits from a bank account used to hold retention money between subcontractors is held.The majority of the submissions received by the Transport and Infrastructure Committee generally supported the policy intent behind the bill. Submitters' feedback has been considered throughout the development of the bill and since select committee the bill has been further amended through a Supplementary Order Paper to clarify that the chief executive of the Ministry of Business Innovation and Employment will enforce the retention money regime. This is in response to submitters' feedback that clarity on enforcement will help deter non-compliance with the regime. These changes will ensure that there are strict penalties in place for companies who fail to meet their obligation to those who carry out their work. I would like to thank the members of the committee that put the work into making these changes at the committee stage.The changes made today provide important protections for subcontractors so that they can be certain their payment is being kept safe. It can't be used for any other purpose and will be there for them should the head contractor's business fail. The bill clarifies and strengthens the regime. It will ensure that risk is fairly managed across contractors subcontractors and clients. These changes are planned to come into force six months after this Act receives Royal assent. I'd like to thank the many people across the building and construction sector who gave their time to help make this bill what it is. As I've already thanked the committee I'd also like to thank the officials and the Parliamentary Counsel Office who worked on the bill. I commend this bill to the House.DEPUTY SPEAKER: The question is that the motion be agreed to.