Lees-Galloway Iain: Construction Contracts Amendment Bill — In CommitteeText is incorporated into the Bound VolumeLees-Galloway Iain: Construction Contracts Amendment Bill — In Committee[Sitting date: 22 September 2015. Volume:709;Page:6846. Text is incorporated into the Bound Volume.]IAIN LEES-GALLOWAY (Labour—Palmerston North): It is a pleasure to rise and speak on Part 2 of the Construction Contracts Amendment Bill a part that appears to be significantly amended by the Minister for Building and Housing’s Supplementary Order Paper 106. Can I say at the outset that on this side of the Chamber we acknowledge the interest and enthusiasm from the Minister in the issues addressed by the Supplementary Order Paper. I understand from speaking with colleagues who were on the Commerce Committee that the interest in this issue of retentions and this issue of trying not to give a cast-iron guarantee but to provide more security of payment to small-business people and to tradespeople in particular is something that this Minister has picked up. That enthusiasm was absent before the current Minister took over the role so I want to acknowledge that the Minister has decided to pick this up. That is probably why it has been a long time between drinks as far as this legislation’s progress through the House is concerned as the Minister has been working on this Supplementary Order Paper with officials. So we appreciate that that has taken some time.I agree though with Ria Bond that time is money and we are talking about people who are not big-business people. They are not people with large accounts. They are people who are going from one contract to the next and it is money in money out for most people. So the fact that this has been something that has taken considerable time for Parliament and the Government to reach this point on will have been concerning and devastating for a lot of people who were affected by some of those high-profile collapses and for other people who have not had their stories told in the media and who have had to face the issue of not being able to recover payments from principal contractors.These changes are significant though. It is a shame that the changes have not been put before the select committee and that the Minister has not assured us that he has consulted. We do not know exactly the scope of that consultation and with whom it has been carried out but I think that with this level of amendment to the legislation we are almost in Part 2 dealing with an entirely different piece of legislation from what the select committee considered. It is shame that the amendments have not had a chance to go back to the select committee.I want to look at new Subpart 2A in proposed clause 8BC which relates to the retention money. This sets out in quite some detail how retention money is to be dealt with and how parties have to put that money into trust and what they can and cannot do with that money. One bit that was of interest to me—and I would appreciate the Minister in the chair the Hon Nick Smith taking a call on this—is new section 18F under Subpart 2A which deals with the investment of retention money. This may be something that has been addressed but new section 18F(1) says: “Retention money may be invested by party A in accordance with the Trustee Act 1956 …”.I have to be honest. I do not know what limitations the Trustee Act 1956 places on the types of investment that money can be used for. But then 18F(2) concerns me a little bit. It says: “If upon the realisation of any investment the amount received is—(a) less than the amount invested party A must make up the difference between the amount invested and the amount realised:”. In other words it envisages the possibility that party A could invest that money into something that actually leads to a loss and some of that retention money is lost as a result of that. Of course in the legislation there is an expectation that that loss would be made up when any payment to party B had to be made. But in the event that party A meets some unfortunate circumstances and finds it difficult to make their payments to party B—which is exactly the type of situation that we are envisaging here; it is exactly the reason why money should be set aside in trust so that there is some more security around those payments to party B—or if party A finds themselves in financial difficulty they may have some trouble making up that difference between what they actually put in trust and what they are able to recover from it if there is a loss as a result of investing that money.So I would appreciate some clarification from the Minister as to exactly what restrictions and limitations are placed upon the types of investment that that money can be used for. If there are no limitations—and as I said I do not know what the Trustee Act 1956 says about this—then there is the potential there for that money to be invested in something that is high risk and that could result in exactly the opposite of what this part of the legislation seeks to achieve which is to have money put aside securely so that it is available for payment to be made. So I would appreciate some advice on that from the Minister or from any member opposite who has some knowledge about how that is potentially going to work.The other provisions under section 18 do appear to be all about protecting the money. There is interest on late payments. That is to be expected under any contract. There is protection of retention money under section 18H which says that “Retention money—(a) is not available for the payment of debts of any creditor of party A (other than party B): (b) is not liable to be attached or taken in execution under the order or process of any court …” and section 18E(1) talks about the use of retention money and says it cannot be used “other than to remedy defects in the performance of party B’s obligations under the contract.” So the purpose of that money is quite clear in other parts of Subpart 2A. But I just wonder whether that ability to invest that money is really in line with those—The CHAIRPERSON (Lindsay Tisch): I am sorry to interrupt the honourable member but the time has come for me to report progress.House resumed.The Chairperson reported the Accident Compensation (Financial Responsibility and Transparency) Amendment Bill without amendment the Passports Amendment Bill (No 2) with amendment the Tariff (Free Trade Agreement between New Zealand and the Republic of Korea) Amendment Bill without amendment and progress on the Construction Contracts Amendment Bill.Report adopted.