Court Simon; Rurawhe AdrianSIMON COURT (ACT): Thank you Mr Speaker. The ACT Party is pleased to be discussing this bill although we do have a retention about how successful the intention of the bill might be because it doesn't actually go and deal with some of the issues that submitters have raised. While it's important to recognise the bill goes some way to solve a problem to protect contractors' and subcontractors' retentions there are other problems that this Government is ignoring when it has an opportunity through reform of the Construction Contracts Act to address these matters. We know that time for payment is a cash-flow issue for many contractors and subcontractors and that the biggest client in New Zealand is the Government and it is their delays in paying contractors and therefore subcontractors which are leading to a lot of unnecessary pain and suffering in the supply chain that Government and local government as well have a role in.Submitters have noted that although amendments were made in 2017 which brought the trust requirement into play it appears that very little effort was made by the previous Government which is still mostly the current Government to actually make sure that the provisions of that 2017 amendment which created the requirement for retentions to be held in trust were actually delivered on. It's no surprise because while I've just done a quick search of the organisations that do training on the Construction Contracts Act—there's the New Zealand institute of highways there's Engineering New Zealand and a number of other private training providers which deliver courses between an hour or a day or multi-day courses for practitioners and yet there is nowhere I can find on any New Zealand Government website that talks about education or training or improvements in how to get the industry to understand their obligations. So it's absolutely no surprise that now they have to come back and make a whole lot more laws that are even harsher and tougher to solve a problem that any reasonable person would've imagined was already solved.Submitters have raised particular concerns with us. There is a risk that strengthening the retention money regime might actually impact on overall cash-flow for construction companies. While there is some concern that payment of retentions money can be an issue for businesses when they have a cash-flow crunch in most cases retention money is actually a part of normal operating cash-flow for businesses. If you have a number of small subcontracts for example those contractors can often be paid out very very quickly because the risk of a defect arising later in the works period is quite low. So there is a risk that actually having to put this money aside into a trust rather than being able to use it in the day-to-day running of the business but in a protected way can cause some problems.Other submitters have been concerned that in fact there was only a limited amount of consultation with 22 invited submitters and that that did not actually invite consultation from that wider group of organisations. It was telling that the previous speaker from the Government side made the point that a law firm had been very very supportive of the concept of a very large number of trusts being set up. I would be surprised if I was offered this opportunity as an interested party that law firms wouldn't be interested in setting up trusts at a cost of tens of thousands of dollars for each business. So yeah I would assume that that particular submission was made at least with a half-smirk behind the hand but good on that member on the Government side for standing up for all of the lawyers who stand to gain from this particular requirement.But again there is a key risk here that simply passing another law and introducing penalties and fines and criminal sanctions won't actually change behaviours for the very large number of smaller contractors and subcontractors who don't actually know what their obligations are. A Government that thinks that it can change things and fix things and solve problems simply by passing laws—well that's the Government that sits opposite us now and we've seen on every single measure whether it's delivering infrastructure whether it's solving the housing crisis whether it's coming up with the money to fix the infrastructure deficit that left-leaning councils over many decades have been responsible for creating we know that they have failed on every single measure. Simply passing laws and announcing things from the podium is not the way you solve New Zealand's worst problems.However the ACT Party does intend to support this bill at first reading because despite our many reservations about whether this Government and the ministries that it controls are actually able to succeed in any of its policy measures that it puts forward we believe it's important that the wider industry has an opportunity to submit on this bill at select committee.So look for the purposes of just illustrating why we think it's important there are a number of different options that Government has for increasing the protection of retentions held by contractors and subcontractors protecting them from their client—the largest client in New Zealand right now being the New Zealand Government and local councils. They are most likely to be responsible for making it more difficult for contractors and subcontractors to recover retentions any minor defect that has to be disputed with a trustee who may themselves feel some significant responsibility not to release retentions from a trust until all of the client's obligations are met. Often clients and main contractors can be far more lenient and relaxed about releasing retentions at the end of a contract period or a defects period if they can be sure that the issue is no more than minor or that it has no impact on the design intent and the performance of the new asset.And yet what this bill proposes to introduce is a very tough regulatory and compliance enforcement and criminal regime which I propose would actually introduce a much more significant handbrake on the release of retentions by a trustee to the contractors and subcontractors than the more typical flexible approach taken by most main contractors in the delivery of their work and in the management of their contract and subcontract relationships. That's because most contractors rely on trusted subcontractors and trusted suppliers. Most contractors are not going out there to seek the cheapest price and then down the track avoid paying their subcontractors retentions money because they know that it's so hard to get good-quality contractors to deliver on time and to the quality standard. The last thing they want to be doing is holding up that payment of retentions. In fact if anything they want to get that liability off the books they want to close their project out and the best way to do that as a contract manager or a project manager is actually to close out your retentions to close out your defects to get it signed off.I would propose that actually adding in an extra requirement to have a trustee responsible for reviewing and signing those matters off introduces a layer of complexity which is more likely to hold up the release of retentions rather than make the release of retentions easier and more accessible for contractors and subcontractors.So on that note the ACT Party supports this bill to the first reading but we're retaining at least 10 percent of our support as a retention until it can be proved that the Government and its law writers can meet the quality standard ensure there are no defects and actually deliver a piece of legislation that works. Mr Speaker thank you.Terisa Ngobi: Mr Speaker.DEPUTY SPEAKER: You have to say Mr Speaker."Terisa Ngobi: I did Mr Speaker—I am saying it.DEPUTY SPEAKER: I call Terisa Ngobi and I did not hear her OK?"