Little Andrew: Construction Contracts Amendment Bill — First ReadingText is incorporated into the Bound VolumeLittle Andrew: Construction Contracts Amendment Bill — First Reading[Sitting date: 11 June 2013. Volume:691;Page:11006. Text is incorporated into the Bound Volume.]ANDREW LITTLE (Labour):I take this call on the Construction Contracts Amendment Bill and I make the point in light of what the last speaker Jonathan Young has just said that he said there is actually a case for doing nothing in an area that is crying out for attention. It is very easy to say that this is all too hard and it is all too complex that there is business risk wherever you look but actually what is happening in this industry today is that good people and good businesses are being ripped off by the shysters the snake oil salesmen the shiny arses—if I can use that term which is well known in the industry—who are not interested in a good-quality industry but are interested only in ripping people off.The only challenge for this Government when considering this bill is whether it has got the cojones to stand up to that type of conduct and do something meaningful that is going to be good for the trades the tradespeople the trades businesses and the small subcontractors who at the moment are the victims of the ever-rapacious corporate shysters who are operating in this industry day in day out.There is only one rule that counts and it is not about business and about business risk. It is called the “golden rule” and it is very simple: who has the gold makes the rules. That party if any knows it because it lives it and breathes it every day: who has the gold makes the rules. Tau Henare has woken up now because he understands that rule. If you have got the money if you have got the dosh you decide what happens. That is what it comes down to.That is why small-business people tradespeople who work their guts out work to get their trade and go off to set up their little business. They want a slice of the action and they want to help out. They want to do good things. They love their craft they love their trade they love making stuff especially when it is a building. They like to know that what they are doing is helping business or helping families. But hey go into business and they then cannot get paid the contractor price. That is what is happening.When we have a look at Mainzeal Property and Construction we see a symptom of a bigger problem. It is a giant corporate business run by shysters. The directors we knoware National Party acolytes from way back and they care not what happens to the small man. They do not care what happens to the little man but I in name and in deed stand for the little bloke. That is me and that is what the Labour Party is.Hon Member: That’s why they call you Mr Little.ANDREW LITTLE: That is right. They call me “Mr Little for the little man”—not just across New Zealand but in Taranaki especially.In fact it was only yesterday that I received a letter from a Wanganui businessman who at the age of 23 went out and set up his own business. He got his trade and at the age of 23 went out and set up his own construction-related business. He has done very well but the big complaint he says is that when it is time to send the invoice and get paid what do the big construction companies do? They say “Oh no.” and they will nit-pick and fiddle around. They will fiddle-faddle and they fudge and they will mudge and say: “Oh no we’re not going to pay the full price because you were 1 hour overdue or because you did not use this particular material.”Never mind that the job is perfectly good a good-quality job and never mind that he and his employees have put their hearts and souls into it and got the job done; the big companies will fiddle-faddle around nickel-and-dime it and try to squeeze down the price. The small-business man knows he has to pay his staff and pay his bills and he wants to get the cash as quickly as possible so he is forced compelled stood over to discount the job just so he can get the cash going. That is how the industry operates.We are left wondering whether there is anything in this bill that is actually going to fix that problem. More adjudication in the existing system is not going to help that problem. What needs to happen is that control needs to be taken over the cash for the job so that it is held independently and so that if there is dispute the owner of the job or the developer or the head contractor does not have an interest in holding on to the cash for as long as possible—because they will not have it. Likewise if there is a genuine dispute over the quality of the work let the holder of the cash—an escrow account holder or a trustee holder—determine it. They have no interest in holding on to the cash unnecessarily so let them become the referee.That is what the Labour Party is proposing. Labour members will vote for the bill to get it in front of a select committee so we can have this debate and hear from all the businessmen from Wanganui and all the small-business people—the little people whom I represent. We will call them all in to let them have their say and be part of that debate. Let us hear from them. Let us hear what they want to see happen so they can get access to the cash that is properly owed to them and so that when they tender for a job with an acceptable margin on it and employ people as a result with confidence they are going to get paid for the job they are not then held over a barrel and made to negotiate after the job is done from a position of weakness because you have got shysters and shonky head contractors who operate in this business as they do at the moment.That is the answer to the problem: follow the money. Follow the golden rule—who has the gold rules—and hand over the contract of the cash for the job to an independent party. If the developers are bold enough to enter contracts and get into the job it means they have got the credit lines open. It means they have got their money sorted out or they can draw down on their credit lines and place the money into an escrow account. Let the job get done and then if there is an argument have an argument with a genuinely independent third party who has got control of the cash and can make sensible decisions in the interests not only of the developer the owner or the head contractor but also of the subbie as well.The thing about the Labour Party is that it wants to see good business. The members on the other side always talk of Labour not being the party of business. Labour is a party of business. The difference is that Labour is the party of ethical business of goodbusiness. Labour is not opposed to the market but it reserves its right to criticise bad practices in the market.The construction industry at the moment is full of bad and shonky practices and Labour wants legislation that is going to address that and is going to give the little guy a chance to get into their business get started and enter contracts with confidence reliably understanding knowing and being sure that they are going to get paid at the end of it—paid a fair price for the work they do. That will help to give confidence in the industry. It will help to lift quality in the industry and nothing less than that is needed.We have had the experience—up to 1987 when the then Labour Government changed the law at the time—of the contractors’ lien and the lien over work and over labour. It was honoured in its breach. Head contractors were meant to reserve a part of the construction price and keep it aside. In reality it simply became a cheap way of head contractors funding their own cash flow and it did not work. Many subcontractors were critical of it at the time—funny how many of them are not so critical today. But actually it was a provision in the old legislation—from 1947 I think it was—that simply was not utilised extensively and was if anything honoured in its breach and so it was repealed at the time.It was thought that that was a good idea. We in our party have revisited that and we know that problems still exist and that something needs to be done about them. Having a piece of legislation that adds to or creates some special avenues in relation to adjudicated disputes as this does does not go far enough in our view. But we have a Minister for Building and Construction who at least appears to be open to new ideas—less so on plumbers and gasfitters as we see. But perhaps when it comes to the broader construction industry he may be open to more radical ideas. And let us face it: the Minister for Building and Construction is a man of radical ideas. He does not get them through his own caucus very often but here is an occasion where he has got the bill up this far and he may well be open to ideas that are actually going to help the small players in the industry help the small subcontractors make a difference keep the cash flowing and keep people in work.This is at a time where our construction industry needs every bit of help it can get in terms of a good-quality regulatory framework. We have massive construction now under way in Christchurch and construction now picking up out of Auckland and across the country but the businesses the enterprises and the workers in the industry need to know that this House takes seriously having in place a regulatory framework that will keep the cash flowing give integrity to the system and give people confidence so that we can all proceed to know that we have a construction industry that is good for the economy at large.