Twyford PhilPHIL TWYFORD (Labour—Te Atatū): I just want to follow on from my colleague Clare Curran talking about in Part 4 the provisions in this bill around retentions. There are two main things that the bill does in relation to retentions. The first is about the timing of the retentions and the bill clarifies that the new provisions inserted by the Construction Contracts Amendment Act that would require retentions to be held in trust for those for whom the money is being held would not apply to contracts that were in place prior to 31 March of this year. That is the timing issue that Clare Curran was referring to.The other main provision really is clarification or perhaps an expansion of the definition of the financial instruments that can be used to meet the terms of the retentions requirements. The wording in the Construction Contracts Amendment Act talks about cash and cash equivalents and what this bill does is it makes it clear that other insurance instruments and other bonds and other financial instruments can be used.To kind of understand the importance of this it is really critical I think for people to realise that the nature of the construction industry in New Zealand is this one of cascading contracting relationships and the devolution of risk down the food chain. The problem with that is that the poor subcontractor at the bottom of the chain copped far too much of the risk and certainly that was the case with the loss of retentions when a company went belly up. Clare Curran referred to the Mainzeal case but there are many in the recent history of the construction industry.Probably the largest one most recently was Stonewood Homes which left a lot of subcontractors affected. So basically what the Construction Contracts Amendment Act requires is that retention monies withheld under these contracts are to be held in trust and that that obligation applies only to contracts entered into or renewed on or after 31 March. I remember the debate we had in the House here about the Construction Contracts Amendment Bill. It is a shame that Clayton Cosgrove is not here because actually he is the member of this House who was really responsible for the retentions policy—for these provisions being inserted into the legislation after the Mainzeal crash. The other thing is that that obligation will protect the retention money for the benefit of contractors and subcontractors rather than allow it to be used as working capital.The submissions that were made to the select committee on the nature of the assets—basically the original policy intention was that liquid assets would give payers the flexibility to protect retention money in ways other than in holding cash but a conservative interpretation of the terminology meant that essentially it was cash and cash equivalents only. Quite a few different industry stakeholders came forward including contractors and subcontractors banks and accounting firms and legal firms and said that we needed a more expansive definition and that without that many of the firms would in fact have to borrow money and hold significant amounts of cash in order to meet the requirements for this and that would add cost to their businesses and generally be an impost on the efficiency of those firms. That would obviously be expensive and it would kind of add cost to construction projects and ultimately be a cost to the customer.So yes those are the main things. We support these provisions. We have been big supporters of the retentions policy and these two things will tidy up two loose ends.