Clark David: Construction Contracts Amendment Bill — First ReadingText is incorporated into the Bound VolumeClark David: Construction Contracts Amendment Bill — First Reading[Sitting date: 11 June 2013. Volume:691;Page:11013. Text is incorporated into the Bound Volume.]Dr DAVID CLARK (Labour—Dunedin North):Well “salivating” may be an exaggeration I fear from Colin King the member opposite but it is a pleasure to rise to speak to this bill the Construction Contracts Amendment Bill which is an attempt to accelerate the adjudication process. It falls woefully short of what is possible and members opposite know that. They know that this is not a strong bill. We heard from the member Colin King that they need to get a grip on how to do this better that it is an important issue and so on. He did not say how they were going to do it because that is lacking in this bill. It is not really there. He has got nothing much to talk about. I feel a bit sorry for him being asked to stand up and speak on this bill when it is a bill that does not really get to where we need to go.New Zealanders are paying far too much for power at the moment—New Zealanders are paying far too much for power.Hon Tau Henare: So what’s that got to do with this bill?Dr DAVID CLARK: This member may ask what that has got to do with this bill and that is the right question to ask Mr Henare. That is the right question to ask because that is where I am going and that is what I want to talk about. This bill does nothing to correct that. In fact it is going to make the problem worse—it is going to make the problem worse. John Key is on the side of the big energy companies New Zealanders are paying too much for power and what is this bill going to do?I want to take you through a thought experiment. Imagine a construction project—let us say a major dam—for building more energy capacity for our country. What happens when we build a major dam? Of course there is a principal contractor—Hon Tau Henare: Oh I don’t know. Do you add water?Dr DAVID CLARK: Mr Henare says we add water. Well you know that is an enlightened contribution. We might leave it at that for the moment but we add water. We add water—we certainly do. But we have got a main contractor when we build a dam. We also have many many many subcontractors who hire employees and who set out to put their backs into a major construction project believing that they are making a difference for New Zealand because we know that energy is essential to run so many businesses and that we cannot afford to have blackouts in this country. They are doing something because they think they are making a contribution.The sad thing is that those energy companies are still going to charge too much because the model is broken because this Government has done nothing to correct for the rising power prices. When the rest of the world’s power prices have remained flat since the recession they have been rising in New Zealand rising faster than inflation for a very long time and this Government is on the side of the energy companies. John Key says that we are paying what is appropriate for power. Well no New Zealander thinks that is true. No New Zealander believes that. Power prices are rising too fast.This bill attempts to speed up adjudication processes. So let us say that there is a dispute while the Government is building another power plant to charge New Zealanders too much for power because that is what it likes to do. By the way I should mention that the Labour Party has an excellent solution to this rising power price problem called NZ Power. I would encourage members opposite and also any members of the public at home watching to look up the Labour Party website search for NZ Power and see just how their power bills will come down—by between $230 and $330 per family per year—under a Labour Party policy. We care that New Zealanders are paying too much for power. We care that New Zealanders are paying too much for power unlike them opposite.So let us go through this thought experiment. Come back to the building of this construction project which is a dam as it happens—Mr Assistant Speaker you are reminding me to come back to that point and I will. What happens when there is adispute? Well currently—there is silence opposite. Many of the members opposite do not understand what would happen.Hon Member: They’re wondering what would happen.Dr DAVID CLARK: They are wondering what would happen. They know that the power prices will go up; they are embarrassed about it. But what actually happens is that there is an adjudication if there is a dispute and currently the small players—the subcontractors—end up settling because they cannot afford to be without cash. This is a very real problem in our economy. The little guy always gets squeezed. We have seen it with Mainzeal Property and Construction and several speakers referred to Mainzeal before. This bill is an attempt to address a serious problem and that is why the Labour Party will be supporting its referral to a select committee.The adjudication of disputes is the material covered in clause 11 onwards in Part 2 of the bill. It lays out the compliance with the Act. It lays out the appointment of an adjudicator how a pre-adjudication conference would work how the response to the adjudication claim would work and how the special provisions for adjudication—if approved—for charging for an order sought by a claimant would all work. You know there are serious matters dealt with in this bill under these clauses but it will not work. That is the point. That is what is wrong with this legislation. It needs some serious work. That is why we are sending it to a select committee so that it can have the serious work it needs to actually make a difference.We have proposed a solution to these issues. Labour is consulting on two options. Clayton Cosgrove has done some very good work on this—my colleague the Hon Clayton Cosgrove. One is contractors’ liens and the other is the statutory construction trusts proposal. We are taking these options out to the industry for assessment and comment. We as Labour Party people can see that the solutions—so-called—proposed by this Government are not going to work so we are developing a response from the Opposition.We are trying to help those guys opposite out. They cannot seem to find a way through. Maybe they do not want to. Maybe they are actually incredibly happy with the rising power prices and with the inefficient system for solving disputes because they are not on the side of the little guy. They do not care if the little guy gets beaten up in the disputes. Maybe that is what really sits under it all. Those members are quite happy with the situation where the little guy gets squashed and the big company powers through—excuse the terrible pun—because they want to see the big guys get ahead. We have seen that with the way they have done their tax policy where all of the value of the 2010 tax cuts went to the top earners and very little went to those at the bottom—40 percent went to the top 10 percent of earners in those 2010 tax cuts and just 2 percent of the value of them went to the bottom 20 percent of earners in New Zealand.But this bill provides an opportunity for Labour to highlight that we are already taking steps to ensure that subcontractors are protected and paid for the work they have done in the event of a construction company collapse. We have seen it with Mainzeal. It is the subcontractors who are hit the hardest when a construction company fails. Subcontractors are nearly always the last in the queue. They are the last in the creditor queue and they often miss out on the money they are owed. So this process where they are trying to reach an agreement so that they get some of the cash as quickly as they can and they settle because they cannot do the court costs—all of those things—really does not solve the problem. This is a halfway measure. It is a halfway kind of typical National Party solution. Those members want to be seen to be doing something. They want to be seen to be doing something in this area because the public recognises it is a problem. It is typical timid National Party policy.We can look at the Labour solutions. The NZ Power one I have already talked about—the way in which the rising power prices will be tackled by Labour. Again you see the same thing in the housing affordability area. You hear Nick Smith talking about a big gain but only Labour has a plan to build 10000 houses a year to address this housing problem.Hon Tau Henare: I thought it was 100000.Dr DAVID CLARK: Yes it is. Mr Henare says that he thought it was 100000. It is 100000 over 10 years Mr Henare. It is an excellent policy and I hope he will consider crossing the floor to support it because I know that deep down he is concerned about housing in New Zealand. He is concerned about it. There are members opposite earnest backbenchers hard-working backbenchers who are embarrassed to support these halfway measures because they realise that this is about an issue of fairness. It is about fairness for the little guy making sure those subcontractors are not the last ones in the queue and are not the ones who are missing out.The thing I would say to them—those ones who share that concern—is that it is a real concern to share. But there are ways of doing something about it. There are ways of doing something about it as the Labour Party has demonstrated—the contractors’ liens and the statutory construction trusts. We are going around the country talking with the industries actually engaging with them and asking: “What would work for you? How do we make sure that the little guy is looked after? How do we make sure that you get the money that’s owed to you and you’re not done over by the major contractor who secures the big end of the deal?”—the ones who are making all the money the ones who are charging the high power prices that Mr Key thinks are just fine for New Zealanders.We are on the side of those small businesses that are trying to grow because they are the heart and soul of our economy those small businesses. They are ordinary New Zealanders working hard every day because they think it is the right thing to do and because they want to improve our economy. But this Government will not even address the fundamentals. It will not put pro-growth tax reforms through. It will not look at having a universal KiwiSaver. It will not address monetary policy. Everything is stacked against small business—those exporters who want to help address the balance of trade deficit that New Zealand suffers under. It is the worst current account deficit in the developed world. It is worse than that of Greece now and it is projected to be worse than Greece for a long time to come.These things all hurt small businesses because the cost of borrowing goes up. Then we have this halfway measure of legislation put forward by this Government which will not speed up adjudication processes in any kind of meaningful way. What we see is people wanting to be seen to be doing something but not actually doing anything. They do not want to do anything and that is the problem with this Government. It is not prepared to tackle the big issues. It is not prepared to tackle power prices which are crippling businesses. It is not prepared to tackle housing affordability. And here it is not prepared to attack the issue of proper adjudication processes.Dr Cam Calder: What a pleasure it is to rise—The ASSISTANT SPEAKER (H V Ross Robertson): Hang on. I have not called the member yet. The member must wait to be called but the member can stand and seek the call.Dr Cam Calder: Mr Assistant Speaker.The ASSISTANT SPEAKER (H V Ross Robertson): I call the honourable member Cam Calder.