Tirikatene Rino: Construction Contracts Amendment Bill — In CommitteeText is incorporated into the Bound VolumeTirikatene Rino: Construction Contracts Amendment Bill — In Committee[Sitting date: 24 September 2015. Volume:709;Page:7103. Text is incorporated into the Bound Volume.]RINO TIRIKATENE (Labour—Te Tai Tonga): It is a pleasure to take a call in the Committee stage of this Construction Contracts Amendment Bill. We have been covering the issue of retention money which was inserted initially through the good work of our good colleague here on our side the Hon Clayton Cosgrove. He sounded out many in the construction community—particularly subcontractors up and down the country. It was very clear from the business community that subcontractors really needed greater protection in terms of getting paid. Ultimately you would like to think that if you were a subcontractor and put in a hard day’s work you would get a fair day’s pay. This has been a concern because we have seen many developers go out of businessup and down this country—they go broke the money disappears and unfortunately the subcontractorsdo not get paid. Usually it is the subcontractors because typically it can cascade in many many different ways to include many different business people. Ultimately that is a travesty.Mr Cosgrove was attempting—and I think he actually proposed a very good amendment in his Supplementary Order Paper—to alleviate that situation and to provide assurance and protection to subcontractors. But looking at the Supplementary Order Paper put forward by the Minister from my quick cursory read of proposed Subpart 2A on Supplementary Order Paper 106 this retention money part—we have a saying in Māoridom—has more holes in it than a hīnaki. For those of you who do not know a hīnaki is an eel net. There are a mighty lot of holes in that eel net. My whanaunga Peeni Henare will know this very well because they are great catchers of eels up in the north my whanaunga up there. This subpart dealing with retention money has more holes in it than a hīnaki because just from my quick read of this subpart it is illusory still.There is another very very well-known saying—that possession is nine-tenths of the law. What Mr Cosgrove was trying to achieve through his Supplementary Order Paper was: “Let’s put the retention money into a separate trust account that is protected so that if something were to go awry or a dispute were to arise but is ultimately sorted out that money would be paid through to the contractor.” This subpart is illusory still. When you think of developers and when you think of big major construction contractors we are not dealing with boy scouts. We are not necessarily dealing with upstanding individuals; we are dealing with hard-core commercial businessmen. This is not tiddlywinks that they are playing here; it is a very very tough game and head contractors are very sharp businessmen.Here in this subpart I do not really see any protection for subcontractors because just to take an example all retention moneys must be held in trust—must be held in trust OK—for the benefit of the other party. However that money can be cash or it could be liquid assets—liquid assets that could be convertible to cash. Again we are dealing with some sharp business people here. There are many many different ways that you could skin a cat when you are looking through these provisions and there are many ways that you could—oh and there is another requirement about “must keep accounting records”. Well there are many ways that a sharp developer could do this. You could literally drive a truck through these so-called protections and the delivery of retention money—cold hard cash payments—to subcontractors. Actually you do not have to keep cash aside; you can say “Oh OK. I’m holding these” let us say shares in whatever or some other easily liquidated asset that may not actually eventuate. That will not satisfy a subcontractor.The other aspect is that the money does not need to be kept in a separate trust account. So you can just say: “Yes we have this money. It’s in trust and it’s not in cash. It’s in liquid assets and it’s commingled with other liquid assets.” Under the provisions here you can mix it all up and slush it all around with goodness knows what other liquid assets a head developer or head contractor may have in the illusion that that will satisfy payment to this poor subcontractor.I will get back to my point: possession is nine-tenths of the law. Mr Cosgrove said: “Look to ensure payment and to ensure protection to subcontractors let’s ensure that there are these moneys actually set aside in a separate trust account so that it is actually there to be paid out.” That would give confidence to subcontractors. Yes if someone has all their capital invested in their heavy machinery which is doing a lot of work they want to make sure that they are going to get paid and likewise they have all the other subbies underneath them whom they have to pay.There are so many holes in this provision that it is actually sad for the expectant subcontractors who thought that they were going to get something from this legislation. Actually I have no trust in this part. I cannot help but think of a story that was on Campbell Live around about a year ago I think it was about a contractor in Christchurch who was in heavy digging. He was contracted to put together a Countdown carpark. There was a so-called dispute with the head developer and he was not paid. He worked on this for months and he committed a sizable amount of his capital—no doubt he was actually heavily indebted to do this big job. He was strung out and strung out and strung out—basically he was shafted by the head contractor. He was driven to the point where he was so upset that he dug up the carpark. He said: “Well look. If I’m not going to get paid for this carpark what choice do I have?”. He went out there and dug up the carpark.Under the provisions of this bill I can see that situation arising again because there is no real protection that I can see in the provisions of this so-called retention money section. Yes let us keep the trust money separate let us make sure it is there and let us make sure it is actually changeable and readily available for those subcontractors who are business people and family men and women just like everyone up and down the country. They are out there just trying to get ahead pay their way run their businesses and do good for all of our country. Kia ora tātou.The question was put that the amendments set out on Supplementary Order Paper 106 in the name of the Hon Dr Nick Smith to Part 2 be agreed to.Amendments agreed to.The question was put that the amendment set out on Supplementary Order Paper 439 in the name of the Hon Clayton Cosgrove to Part 2 be agreed to.Amendment not agreed to.The question was put that the amendments set out on Supplementary Order Paper 446 in the name of Julie Anne Genter to Part 2 be agreed to.Amendments not agreed to.Part 2 as amended agreed to.The question was put that the amendments set out on Supplementary Order Paper 106 in the name of the Hon Dr Nick Smith to Part 3 be agreed to.Amendments agreed to.Part 3 as amended agreed to.The question was put that the amendments set out on Supplementary Order Paper 106 in the name of the Hon Dr Nick Smith to the schedule be agreed to.Amendments agreed to.Schedule as amended agreed to.Clause 1 agreed to.The question was put that the amendments set out on Supplementary Order Paper 106 in the name of the Hon Dr Nick Smith to clause 2 be agreed to.Amendments agreed to.Clause 2 as amended agreed to.Clause 3 agreed to.Bill to be reported with amendment presently.House resumed.The Chairperson reported the Gambling Amendment Bill (No 3) with amendment the Construction Contracts Amendment Bill with amendment no progress on the Radio New Zealand Amendment Bill and no progress on the Weathertight Homes Resolution Services Amendment Bill.Report adopted.