Willis NicolaNICOLA WILLIS (National): I rise in support of the Construction Contracts (Retention Money) Amendment Bill. In doing so I can't help but wonder to myself about the member who just spoke Paul Eagle and commend him on his magnanimous attitude towards his colleagues across the House and conjure potentially what other roles he may play in Wellington in the future given his fondness for discussing it in his contributions in the House. Now National supports this bill. However I do want to start this contribution by noting some poor process. The first piece of poor process is that we do have here on this bill a shortened report back. What that means and the reason it matters is that there will be less time than usual for submitters from the public to give their views on this bill and how it would operate in practice. Now the usual process when someone is seeking a shorter report-back time is that the Minister outlines that at the beginning of her speech at the beginning of the introduction of the bill. The Minister didn't do that and we're yet to hear from members opposite why that was. But the second thing I do want to highlight is how slow this has been because Madam Speaker Jenny Salesa will recall that these proposals were first proposed in May last year by the then Minister the Hon Jenny Salesa. Those proposals were made. They were welcomed as I recall by the construction sector at the time a number of stakeholders were on board and one can only wonder what has gone on in the next more than a year that has held this up in a delay that to me seems unnecessary and untimely particularly given how broadly supported these changes are. It's my view that where law reform is necessary to ensure that law is operating well we should do that as quickly as possible and in this case that does not appear to have occurred. I do just want to trace back the background to this retentions regime because of course legislation to protect the rights of subcontractors in relation to retention money was first passed in 2015 and it was at that point led by the Minister for Building and Housing the Hon Dr Nick Smith. So if you'll forgive me the metaphor if the Hon Poto Williams is the renovator of this regime it is the Hon Dr Nick Smith who is its original architect who saw the need to make these protections for subcontractors. That occurred after the collapse of Mainzeal and what we saw at that time was subcontractors not being able to access the money that was retained for their later payment. So the Minister at that time saw the need to introduce a layer of protection to ensure that if companies became insolvent or went into liquidation then their subcontractors were able to be paid. Now this of course relates to a common practice in the construction industry whereby a portion of payment is withheld so that if there are problems that need to be remediated then contractors are able to use those funds. So the intention of that legislation was good. I am sure that it has offered more protection to many subcontractors and has certainly firmed up the need for contractors not to use that money wrongly. However the Ebert Construction case showed that there were some loopholes potentially in the way that was operating because some people were able to withhold retention moneys from subcontractors on the basis that they hadn't been directly deemed in trust. That has been problematic. I support changes to make sure that the law applies as it was intended.I also support moves to increase the penalties for non-compliance. And I'd like to highlight this part of the regime because the principle that is being followed here by the Minister is a simple one. It is that if we believe that compliance with the law is important in order to protect from potential victimisation to prevent people from failing to adhere to it then one way of encouraging their adherence to the law is to increase penalties. I would just invite members opposite in particular to consider why it is in this case that the Government views that an increased penalty regime may increase compliance but that that is not the approach that is applied in other areas of the law particularly when it comes to the criminal law where victimisation is more than just money; it can be lives and livelihoods. There is an interesting practice at play there. The example I would offer is with the health and safety regime where I think we have seen quite a direct correlation where increased penalties have increased directors' adherence to and the management knowledge of the law in the area and the need to apply it carefully. I do want to before I turn to a couple of the specifics of the Act just talk briefly about the context for the New Zealand construction sector because what this bill is doing is responding to one problem which is what contractors do with retentions. But actually it also in doing so highlights a larger problem which is that we continue to find that in that construction chain we are having too many construction entities fall over leading to the need for these kinds of regimes around how moneys are used and I would put to you that that challenge with subcontractors not getting paid with contractors not being able to follow through on contracts has really eroded trust in our construction sector. It's really important because a lot of what we see in the construction sector is people taking a bit of a risk choosing to put their capital their expertise their time into a project. And wherever people are taking a risk it is important that the law and policy actually supports them taking risks that we want to see taken. I would say that in New Zealand right now a risk we want to see people taking is taking the risk to go and commit to large-scale construction contracts particularly where they relate to housing. I would put to you that many of these projects have been held back by the corrosive impact that collapsing construction projects have had on people's confidence in our construction pipeline. That has eroded the desire of many to get into the construction industry to be their own subcontracting business to commit to large-scale projects. So wherever possible we need to address those issues. I do also happen to think that one of the major ways we can create more confidence and trust in the system is to give people long-term pipelines of work and the Government should not renege on its own responsibility there where as the major contractor of construction and particularly as it relates to large-scale infrastructure investment the practice of chopping and changing what is or isn't in the National Infrastructure Plan is corrosive to trust and confidence. I do want to put that on the record here because actually we all win when subcontractors have the confidence in the future pipeline. That means they invest in apprentices they invest in trainees and they feel able to commit to these projects. So just briefly before I finish this contribution on the specific provisions I do want to say that strengthening how the retention money is held to prevent it being used as working capital is sensible. It really just addresses the inevitable weaknesses of human nature which is that if this cash is able to be accessed when a firm finds itself in dire straits it may indeed access it as working capital. It makes sense to have this in separate bank accounts and not to allow it to be accessed.The bill also proposes that subcontractors not only have the right to see proof that their funds are being held properly but that actually reverses that obligation so that it is contractors themselves who are obliged to demonstrate that. I think that is realistic in that these relationships are not even relationships. The contractor is definitely the one wearing the bigger shoes and the subcontractor may be reluctant to harm that relationship by demanding more information and this gets the balance in a better place.So overall this is a good bill. I commend the Minister the Hon Jenny Salesa who seemed to do the lion's share of the work on it. I question why it's taken so long to get to this House and I commend the select committee for their work in analysing it and ensuring that submitters are heard and that the detail of it is worked through so as not to add unnecessarily to compliance costs but to achieve the good ends as discussed. Thank you.