Hudson Brett: Construction Contracts Amendment Bill — Third ReadingText is incorporated into the Bound VolumeHudson Brett: Construction Contracts Amendment Bill — Third Reading[Sitting date: 20 October 2015. Volume:709;Page:7351. Text is incorporated into the Bound Volume.]BRETT HUDSON (National): It is with pleasure that I rise to support the Construction Contracts Amendment Bill in its third reading. I have to say that I am not completely sure what things are like on “Planet Labour” but here in the real world we actually do expect that people who perform works are capable of doing them and doing them properly. But for any people out there watching this if they do not like the history they have been living and they would like to see it revised somewhat they could do no better than listen to a speech from the member Clayton Cosgrove who has just resumed his seat.But it is indeed a pleasure to stand in support of this bill a bill that will make some really serious and important changes to the management of our construction contracts. It will remove some of the distinctions that have been there in the past between residential and commercial builds. It will increase the scope to include some more of the professions that are involved in construction services and importantly because we acknowledge—as the members opposite have acknowledged as well—that in the past there have been situations where smaller contracting companies in particular have borne the brunt of if not some bad practices certainly some bad fortune when principal contractors for instance have found themselves in insolvency issues. Those smaller contractors have been seriously disadvantaged and have not been paid particularly some of the retention moneys that have been held on their behalf for the work they have done.Just before I cover those points it is worth reminding ourselves just how important it is to New Zealand that we address this because if we look at it the building and construction sector is going through a boom that the country has not seen for perhaps as long as 40 years. If we look at what it contributes to our economy it is about 6.6 percent of gross domestic product. The building and construction sector employs about 9 percent of our total workforce or around 213000 people. The National Construction Pipeline report is forecasting that over the next 6 years we will see a total of $200 billion worth of activity in this sector and that that will peak in about a year’s time at an all-time high of $36 billion. So the scale of this industry is so important to New Zealand that it is important and critical you could arguethat we take these measures—measures that as I have said will remove some of the distinctions that have been in place in the past that do not serve us well. So for instance most of the distinctions between the treatment of residential and commercial contracts will be removed and the parties to both kinds of those contracts will have full and equal access to the processes under the Act.Secondly the scope of the Act will be extended to apply to design engineering and quantity surveying work. So architects engineers and quantity surveyors will have access to the payment and dispute resolution processes which is good for those professions but equally consumers will benefit because that will help to hold members of those professions to account for the quality of that work.We are a sensible Government. We understand that changes like this can have significant impacts. Those professions will have until the beginning of September next year to adapt to the new regulatory environment and they will actually benefit into the future from that. But I would like to focus on the area of retentions because it is truly an extraordinarily important part of this. The key thing we are going to do is to prevent retention money from being used by the principal contractor either as working capital or to offset debts elsewhere including paying retention payments to other subcontractors. So the requirement is that the retention payments will be held in trust. There is a clarification that will ensure that the “pay when paid” provision or exclusion will also apply to retention payments. It will ensure that the retention money held in that trust is not only properly accounted for but it cannot be used for any other purpose including that it cannot be taken under a court order for a retention payment for another contractor.The member opposite had proposed that we use separate trusts for each of these subcontractors. All that would do is pile on compliance costs and complexity. We have come up with a very elegant way of dealing with this under a single trust structure but making sure that the obligations are well managed and well monitored. This will help to remove some of the poor behaviours and poor outcomes that we have seen. It will give everyone confidence in the system. I commend this bill to the House.