Bond Ria: Construction Contracts Amendment Bill — Third ReadingText is incorporated into the Bound VolumeBond Ria: Construction Contracts Amendment Bill — Third Reading[Sitting date: 20 October 2015. Volume:709;Page:7357. Text is incorporated into the Bound Volume.]RIA BOND (NZ First): I am pleased to rise on behalf of New Zealand First and take this call on the third reading of the Construction Contracts Amendment Bill. New Zealanders cannot afford to have another Mainzeal-type collapse. The severity of such collapses of companies has shocked this nation. The biggest losers here were in fact the subbies: the plasterers the painters the bricklayers the drainlayers the plumbers and the electricians. In 2013 we saw that this actually affected over 486 workers and indeed it sent shock waves through the subbies and the industry.This bill will ensure that there is an appropriate market-driven disputes service. All parties need a clear route to an appropriate market-driven resolution process. Parties involved can be assured of a faster more efficient more effective and more cost-effective process without additional compliance costs.New Zealand First supported this bill’s referral to the select committee and its second reading. The addition of Supplementary Order Paper 106 in the name of Minister Smith amends provisions in the Construction Contracts Act 2002 the principal Act. It makes provision in the Act “for retentions (being money withheld by one party to a construction contract from money payable to another party to the contract as security for the performance of obligations under the contract) to be held on trust.”Retentions have been an issue and this was commented on by the Commerce Committee. During the second reading speech I quoted from its comments and I will do that again today: “We were concerned to hear that many head contractors may be misusing retentions as working capital delaying payment or holding retention amounts disproportionate to the contract prices. This behaviour undermines the sector’s growth and productivity. While it is outside the scope of this bill we are encouraged to hear the Ministry of Business Innovation and Employment is giving priority to addressing these issues. We urge the ministry to continue to work with industry players and look forward to policy solutions in legislation in early 2014.”I also commented on the debate pack prepared by the Parliamentary Library and specifically the legal commentary which again I will quote from: “It has been a long-established practice in New Zealand and internationally for retentions to be held under construction contracts to ensure that if there are defective works the head contractor or principal is able to recover the cost of fixing these defects. In the wake of the Mainzeal collapse subcontractors’ retentions were unsecured debts in Mainzeal’s liquidation and amendments were seen as necessary to protect payment of retentions to subcontractors and head contractors.”I will say it again: what these two commentaries told me is that the biggest losers were again the subbies—the plasterers the painters the bricklayers the drainlayers the plumbers and the electricians. Where has their protection been over the last 2 years? It is the subbies who have been shafted and left out of pocket all because developers and contractors withheld the retention money and moved it off to other projects. This placed even further risks on that money because they actually turned round and used it as working capital. As I mentioned earlier the millions of dollars lost in the collapse of Mainzeal and the subcontractors having no legal protection whatsoever—well that kind of sucked for them.We have seen with the Canterbury rebuild that homeowners have had two options available to them: one to go through the Earthquake Commission and use the Government contractors; or two to opt out do their own research and select a private contractor or company. There are however areas in this bill that still do not address some issues and I can see these will cause some problems in the future such as this bill not addressing the substandard work that has been carried out. In fact it has left some homeowners now unable to seek a remedy from the contractors or companies because they have disappeared. They are struck off the New Zealand Companies Register but then the next day like a pop-up shop they come along again as a new company with a new name and they open for business subjecting more homeowners to be left with no apparent way to take legal action because not only the contractors but also the companies have avoided responsibility.I for one will be watching for this and I hope that future amendments to the Construction Contracts Act will take place over time. I recognise it has taken over 2 years since this bill was first read in June 2013 and I know that all good things take time. New Zealand First supports this bill.