Genter Julie Anne: Construction Contracts Amendment Bill — Third ReadingText is incorporated into the Bound VolumeGenter Julie Anne: Construction Contracts Amendment Bill — Third Reading[Sitting date: 20 October 2015. Volume:709;Page:7354. Text is incorporated into the Bound Volume.]JULIE ANNE GENTER (Green): I rise to speak on the third reading of the Construction Contracts Amendment Bill. I am very pleased to say that this is one example during my time here in this Parliament where I have seen submissions to the select committee; persistence on the part of the affected people who were showing up and submitting and calling for change because there was a problem that needed to be dealt with; the role of Opposition parties as wellof course championing the issue; and a number of other circumstances and all of those factors have actually contributed to an improvement to the law. It is going to make a real difference in the lives of many independent business owners who work as subbies out there working on the ground helping construct our buildings whether they be residential commercial or industrial.I just want to go through the history of this bill because we have heard different sides of it from different people in this House. In 2009 the Government undertook a review of the Building Act and in 2010 that led to a review of the Construction Contracts Act itself. There were five areas that were identified as needing change but only three of them actually came forward in the initial bill that was put to the House. So there were two areas identified during the review that were not dealt with in the legislation when it came to the House in its first reading and they were the areas of security of payment and retentions. We all knew this was a significant issue—certainly people in the industry knew it was a significant issue—and yet the Government was choosing not to deal with it when it went to amend the Construction Contracts Act probably putting it in the too-hard basket or potentially because Government members have some constituents or big donors who are principal contractors who would not like the law to be changed to actually level the playing field for subcontractors.Finally the Government introduced a bill in 2013—so that is 2½ years ago. It did not deal with the issue of retentions or security of payment but then in February 2013 we had the Mainzeal collapse which many people have referred to today and of course it eventuated that when Mainzeal went into receivership it owed over $18 million to subcontractors for work that had been undertaken and it was never going to be able to pay. That money was completely unsecured so we had guys out there who were doing their best who were not even able to access their tools on the day. The tools sometimes got locked on to sites because the receivers were locking the subcontractors out. They lost $18 million collectively and that money was not secured at all. That was twice the amount that Mainzeal owed to the Bank of New Zealand. It owed $9.3 million and of course that money was secured.So the Mainzeal collapse demonstrated just how much the law was failing the subbies. It was allowing principal contractors to use money that technically did not belong to them as cash flow for other projects rather than going to the bank and that was irresponsible and really immoral.The problem with Mainzeal was so huge that it was impossible for the Government to completely ignore it and when the bill came to the Commerce Committee in July 2013 which was more than 2 years ago although we had politicians saying they were very sympathetic to the subcontractor situation and they wanted to do something about it ultimately it was out of the scope of the bill which was actually going to amend the Construction Contracts Act. But during the submissions process we heard from a huge number of submitters and more than a dozen of them were specifically focused on this problem of retentions and the lack of security of payment. We heard from the Building Disputes Tribunal the Building Industry Federation the Construction Strategy Group the New Zealand Contractors Federation the Law Society the Specialist Trade Contractors Federation Steel Construction New Zealand Master Plumbers Gasfitters and Drainlayers the Electrical Contractors Association and on and on and on. We heard over and over again that this was a major problem that was costing potentially tens of millions of dollars to subcontractors—money that legally should have been theirs but was being spent by principals and was not able to be recovered. It was completely unsecured and not protected by the law.So they were saying “We have this huge problem.” and they were begging us to solve it. Unfortunately—or fortunately as the case may be—the Minister at the time Maurice Williamson was not interested in dealing with this problem in this legislation. So the bill came back to the House with Supplementary Order Papers from the Government in March 2014—that is over 18 months ago now—there was no indication that the issue of retentions or security of payment was going to be dealt with.There was an issue of BuildLaw put out by the Building Disputes Tribunal that noted that this major problem was not being dealt with in the legislation. It noted that the Labour Party MP Clayton Cosgrove had put forward Supplementary Order Paper 439 modelled on some legislation in New South Wales I believe which deemed that for the purposes of commercial and industrial buildings at least the retentions should be held in trust. But the Government criticised Clayton Cosgrove’s Supplementary Order Paper and the BuildLaw issue. There were a couple of problems with the Supplementary Order Paper. First it was requiring that a separate trust account be set up which the industry thought was going to create a lot of compliance costs; and secondly and probably more problematically it applied only to commercial and industrial projects not to residential. We saw the research from the Building Research Association of New Zealand during the select committee submissions and it demonstrated that a majority of the payments that were being withheld—payments that subcontractors were not able to access—were actually on residential projects.I spoke in depth with the New Zealand Contractors Federation and it really needs to be congratulated on all the work it did on it. We worked together and proposed a Supplementary Order Paper. It was very very simple—it worked with the existing language in the existing bill and it deemed that retentions must be held in trust. It did not require that a particular trust account be set up but it did allow for the protection of that money through the legislation and it would have applied to all contracts whether they be commercial industrial or residential. BuildLaw and the Building Disputes Tribunal applauded me for that Supplementary Order Paper 446 although I could not have done it without listening to the expertise of the guys who really knew what was going on on the ground. They were the ones who really worked to propose that elegant solution which finally is going to be included in the legislation that is going to be passed today.The Green Party is very happy to see that this problem is finally going to be dealt with. But it took a lot. It took members of the industry coming to the select committee. It took Mainzeal collapsing and leaving debts of $18 million to subcontractors. It took a lot of persistence on the part of the affected people. It took Opposition parties effectively coming up with alternative solutions and putting pressure on the Government in the House.I tabled my Supplementary Order Paper 446 in May of 2014. We questioned the Minister in May of 2014 and finally—because the previous Minister Maurice Williamson ended up resigning in May 2014 and we got a new Minister for Building and Housing Nick Smith—Nick Smith actually listened to the affected people in the industry in a way it seems that Maurice Williamson was unwilling to do. So I think we do have to thank circumstances—that the Government’s Supplementary Order Papers that were introduced in March 2014 were withdrawn and do not exist in legislation today. Instead we have Government Supplementary Order Papers that are very closely related to the one I tabled in May 2014 finally being introduced 18 months after the bill was supposed to go through the Committee of the whole House in a whole other Parliament. The Government tabled its Supplementary Order Paper 106 in September of this year. It deems that the retentions should be held in trust. There is a lot more detail in it because the officials have worked it out.So finally we are going to see an improved bill. Let us see: if this started in 2009 we are looking at a 7-year process to see what is right and moral which is protection for subcontractors’ money that belongs to them and should not be spent by principals as cash flow in other projects. They are finally going to get protection in the law today. I am very proud as an Opposition member to see this bill pass. When you are in Opposition it is very hard to see what good you are doing but I do feel that this is one of the biggest wins that I have had since I have been in Parliament. So thank you. The Green Party will be supporting this bill.