Foss Craig: Construction Contracts Amendment Bill — First ReadingText is incorporated into the Bound VolumeFoss Craig: Construction Contracts Amendment Bill — First Reading[Sitting date: 11 June 2013. Volume:691;Page:11002. Text is incorporated into the Bound Volume.]Hon CRAIG FOSS (Minister of Commerce)on behalf of theMinister for Building and Construction: I moveThat the Construction Contracts Amendment Bill be now read a first time. I nominate that the Commerce Committee consider the bill. The Construction Contracts Act 2002 provides for the timely and cost-effective resolution of disputes in the construction sector. The processes in the Act are a lower-cost alternative to going to court. The building and construction sector is vital to our economy. It employs around 8 percent of our workforce and contributes around 4 percent of our gross domestic product. This House has already considered amendments to the Building Act 2004 over the past 2 years. In speeches on the Building Act amendments the Minister for Building and Construction Maurice Williamson has referred to the wider context for the proposed amendments. That context is also relevant to the Construction Contracts Amendment Bill so it is worth repeating some of that information.The National-led Government reviewed the Building Act 2004 during 2009 and 2010. The review was carried out in an environment where productivity in the construction sector was low and some of the criticisms for low productivity were being directed at legislation and associated compliance costs. The review found that current regulatory systems were not broken but they were more costly than necessary and less efficient than they could be. This was having an impact on productivity. This Government is committed to regulatory reform but not at the expense of quality. It is vitally important that we get the balance right between reducing compliance costs and providing adequate assurances that building work is up to standard. The amendments to the Building Act 2004 that have been considered by this House seek to achieve that balance.To support the amendments to the Building Act a package of other changes and initiatives is necessary to achieve the Government’s goal of a sector that has the necessary skills and capability to build it right the first time and that takes pride in its work and a sector that delivers good-quality affordable homes and buildings and contributes to a prosperous economy. The goal is a well-informed sector that shares information and quickly identifies problems where everyone involved in the building work knows what they are responsible for and what they can rely on others to do and where consumers can make informed decisions and understand the risks and consequences of their decisions. Some of these changes are non-regulatory and the Ministry of Business Innovation and Employment has a significant programme of work under way addressing matters such as consumer education and advice maintaining the skills of licensed building practitioners and making the building code more accessible.The Construction Contracts Amendment Bill is one of the regulatory changes that supports the amendments to the Building Act 2004. This bill will support the Government’s goal of achieving a more efficient and productive construction sector that stands behind the quality of its work. A detailed review of the Construction Contracts Act was carried out in 2010 and was reported to Cabinet in early 2011. Like the findings of the Building Act review the review of the Construction Contracts Act found that the system was working well but could be improved by reducing some costs and clarifying some processes.I will now outline the key changes contained in the Construction Contracts Amendment Bill. The bill will remove the distinction between how the Act applies to residential and commercial construction contracts. Currently the Act is unclear about the jurisdiction to deal with disputes under residential construction contracts. This is a barrier to parties to residential construction contracts accessing and using the processes under the Act. The bill will consolidate the processes in the Act so that one process applies regardless of the type of work the construction contract is for.One distinction will be retained in relation to residential construction contracts. Obtaining a charging order in relation to a dispute under a residential construction contract will not be possible because a charging order may create inappropriate risks for a homeowner such as possible default on mortgage obligations. The bill will also remove the distinction between the two different types of decisions that can be adjudicated under the Construction Contracts Act 2002. Current decisions on payment disputes can be more readily and easily enforced than decisions on disputes about rights and obligations. The bill will streamline the enforcement process so that it is the same regardless of the subject matter of the dispute.The scope of the Act is currently limited to contracts relating to construction work. The definition of that term in the Act is limited to ordinary building work and does not capture related services such as design and quantity surveying work. The bill will expand the scope of the Act to include construction-related services. Parties to contracts for the performance of these services will then be able to access the payment and dispute resolution processes in the Act. This amendment will be of particular benefit to consumers helping them to hold architects engineers and quantity surveyors to account for their work and will also benefit designers and quantity surveyors in enabling them to use the payment provisions under the Act to ensure that they are paid for their services in a timely manner.Resolving disputes can be a lengthy and costly process. This is particularly the case in the construction sector where issues can be technically complex and involve multiple parties. In response to the Construction Contracts Act 2002 the private adjudication market has developed the skills and experience to effectively and efficiently resolve construction contract disputes. It is working well. The Government does not need to intervene significantly in this market. What the Government needs to do is to continue to ensure that the legislation is fit for its purpose and does not create barriers or impediments for a well-functioning market. The Construction Contracts Amendment Bill will fulfil the Government’s obligations in this regard.I should also inform the House that the bill contains some other less significant amendments to the Construction Contracts Act 2002 to streamline processes and reduce costs. These include reducing some of the time periods in the adjudication and enforcement processes; clarifying some procedural steps such as how to seek an extension of time; a new power for the Chief Executive of the Ministry of Business Innovation and Employment to obtain information for research and monitoring purposes; and consequential amendments to the definition of “residential occupier”. Also there are amendments requiring a pre-adjudication conference to be held to dealwith process issues if there are any and amendments clarifying how an adjudication order can be appealed contested or reheard.This bill will speed up dispute resolution in the construction sector support the Building Act reform programme by making improvements to accountability in the construction sector and maintain efficient functioning of the private dispute resolution market. Thank you.