Bayly AndrewANDREW BAYLY (National—Port Waikato): Thank you Madam Speaker and it is a pleasure to be talking on the Construction Contracts (Retention Money) Amendment Bill. I suppose the first thing I should say is that it has been too long waiting for this bill to come back into the House. This has been a very important issue and for some reason I do not understand why the Government has taken so long to introduce this bill back into the House.It is absolutely crucial. We've got an industry that is in a very difficult situation. We've seen over a hundred receiverships of building construction companies since the start of this year we've seen 200 last year and I think we need to be very careful to make sure that we—and when I say we" I think the Government has a role to play in this in terms of supporting this incredibly important industry. It employs 295000 people—295000 hard-working men and women in New Zealand. It is a kahuna of a sector in New Zealand and it is one that if we are to go into recession potentially might take us there and let's hope we do not go there because it will have such ramifications.So why the delay in introducing this piece of legislation? Of course we all understand the background of this piece of legislation and the Hon Nick Smith was concerned about retentions and the way that they're used. It's a longstanding practice. Between 2 percent and 10 percent of money that's a retainer on a contract—so if it's a large contract that can be a significant amount of money that is set aside by the head contractor against subcontractors and can be held for up to a period of 12 months or a year to remedy any potential faults that can arise. Of course what that means for the subcontractor is that that is money they do not get until that condition has been satisfied so that burns into their cash flow particularly at a time when there's a downturn in the industry. Cash is king of course but for the head contractor it has often been a way for them to fund projects if they're going wrong.There have been many examples and I note the Minister talked about the Arrow and the Stanley construction companies—both companies I knew well—but more recently the Ebert case in Wellington. The court case determined more recently that there were issues with the design and the rules around retentions so that was a timely reminder that Parliament needed to do more and this was the result of the work of the transport committee. Again I just note my amazement at the length of time that this bill has taken to come back into this House so let's hope it doesn't get delayed further and that we don't have more delay going through the committee of the whole House and through into the third reading.The bill that was introduced back in 2015 and 2017 made it a requirement on contractors to set aside the money that they hold in retention to be held in trust and of course some people did it well. In many cases it wasn't done well and when we've seen these events of receivership it's become evident that the money hasn't been put aside. The money hasn't been kept separate. Secondly it hasn't been put into a type of asset class that's not easily convertible into cash so that's what's given rise to a number of these issues. The third major issue with the retentions of course is the issue around who has jurisdiction over the money—the retentions held by the head contractor—in the event of failure.I know the honourable speaker knows this area very very well with her previous involvement and I just will acknowledge her involvement while she's in the House. But the big issue is how do you make sure that that money is available and kept separate when a default situation takes place. Of course part of this arrangement now is that there is a trustee the trustee has control of it. The trustee of the head contractor if they go into default becomes the trustee of the retention money. Their fee can be deducted from that retention money for administering that fund. But that is an important thing first of all that that is separately held and separately administered because that money is basically held on behalf of the subcontractors who've done some work in the project.The big question then becomes how that's distributed and that's a question for the liquidator or the receiver depending on the case of how that gets paid out ultimately over time. But I think the work of the committee around defining what is the retention—and I note there's four parts to that retention definition that's covered in the bill that we're going to be discussing at the committee of the whole House. Then of course I think the other thing is how that money is used by the head contractor and the bill now makes a requirement that if a subcontractor proposes to use the retention money that person or that entity must give at least 14 days' notice under section 18D of the Act to say that they are going to use it so that there's time to make sure that subcontractors can assess whether it's been used for the right purposes which again is a good thing because we want to make sure that that money is supported and secure on the behalf of the subcontractors.I would note that there are other ways of dealing with the asset class. Of course everyone assumes it's cash set aside. A contractor can also elect to take on a bill or a bond which means that they will have to put up security against a bank and a bank will issue them a bond. Particularly where we've got large building contractors who are doing multiple large jobs and they have to hold substantial sums of money one way of doing that is to actually go and get a bond from the bank but it does come at a cost. It's quite a substantial interest rate. It's like taking a loan out from the bank. So it does come at a cost but it is another way of funding entities through these construction projects.But I think these are good improvements. National will be supporting these amendments but why so long? That's just the question I keep asking: why so long when we've got a construction industry where the outlook is less than secure partly because of some of the other changes that have been brought in by the Government? The Credit Contracts and Consumer Finance Act (CCCFA) has probably had the most crippling effect on first-time buyers in New Zealand. I was with a group of banking people yesterday in Auckland who are involved in the construction sector and the impact of the CCCFA which means that many people who are building—building companies doing spec homes—now have little or less guarantee they're going to be able to sell those projects. I went to a function the night before and a large home-builder was telling me that they've had 50 contracts fall over because of the CCCFA.I'm just worried that we're going to see more building construction companies fall over partly because of the Government's making but also partly because of what's happening in the market with supply lines. It's a good thing that there's been some amendments made to the Gib arrangements but we have got an industry that needs careful management careful support by the Government and this needs to go through the House as a matter of urgency. I hope the Government picks it up and runs with it because it should have been doing it ages ago."