O'Connor GregGREG O'CONNOR (Labour—Ōhāriu): Thank you Mr Speaker. It's interesting after the furore at the start there to find that those members opposite are actually supporting the bill as they should: the Construction Contracts (Retention Money) Amendment Bill. I will relate the experience of two very good colleagues of mine one of whom was a rather large contractor who was in recent years caught out by the collapse of one of the businesses mentioned by the Minister for Building and Construction in her introduction. Essentially his retention money was going to be the final payment that would actually allow him to get out of the contract with the business intact and of course when the company went broke he was essentially looking down the barrel of going broke himself because the chain of payments was going to be somewhat interrupted. He had thought he had the protection of the Construction Contracts Act which had been brought in in—sorry the bill that had been brought in in 2017. However it turned out that he was just another unsecured creditor in getting his retention money. Another contractor whom I'm aware of avoided ever going into business or taking a contract which required him to leave retention money in for fear of the same thing. So essentially both those businesses at either end were affected by the current situation. This bill does remedy both their situations and for both of them now it could actually almost be renamed the Sleeping More Comfortably at Night for Contractors Bill" because that was what it will actually give the owners of these companies the ability to do. One should always look at what a bill is attempting to fix. As a result of the Bennett & Ors v Ebert Construction many of the contractors who thought they did have the protection found that the wording of the Act did not deem retentions to be held on trust. Instead it required the parties to hold retentions on trust which meant that where there was a belief that they were secure in a trust they actually weren't and if a payer did not comply with the requirements to hold retentions on trust the retention money would be co-mingled with payer money or in fact—worse—had been used as capital. Of course using retention money as capital or as cash flow—even worse—meant that once again as soon as these companies do go into liquidation or collapse in any other way then it means that those companies like the ones I aforementioned are going to be the ones who are going to miss out and often that chain effect will be that they will go into liquidation and the subcontractors to them will also be left in the same place. So essentially what this bill seeks to remedy is having the money all being swept into a pool with all other cash and all other obligations leaving those who were unsecured at the bottom to essentially go the same way. Also what was quite clear was that where this was done there were insufficient penalties and offences to deter payers from not complying with the trust requirement and I'll speak shortly about those new offences which do provide something of a disincentive. So what the bill does is clarify the retentions as trust money whether or not the payer complies with the retention regime in the Act. If the payer holds retentions for more than one payee the retention money held for each of them is subject to a separate trust. So what this also means is that where you get obviously several contractors—which is common—all those contractors' money also must be separately identified for each of the payees as the Act talks about. So a payer must hold retentions in a separate bank account used solely to hold retention money and this could be retention money for more than one payee. However the bank accounts cannot be used for any other purpose. Again I go back to the real problem that this bill seeks to fix which is to ensure that that money doesn't become working capital or cash flow. The payee must in the bank account name—actually it comes down to specifics and I guess we are digging quite deep into the way these things must be operated but again like with so many things we have learnt from bitter experience. For a payer the bank account must include the words "retention money trust account" and if the account is set up to hold retentions for one payee or more construction contracts the account name must include the payee's name. So once again I'll refer to the fact that this the "Sleeping Well at Night Bill for Contractors". Knowing that that money is there under their name does give them far more security then they ever had. With two or more payees the account must identify the construction contracts or indicate that it is for all contracts under which the payee holds retention money. Also the bank must know that this is retention money. That's again an important part because there may come a time when this company or the payer does go broke or comes into financial difficulties and the first thing the bank is going to do obviously is protect its asset. This way the bank will know what is retention money and therefore that will not be part of the security because essentially it is not theirs to take in the event of the company going broke. As far as practicable in the accounts the bank is required to actually ensure that that's identified—as they are. So in the end it does dig down quite deep into the detail but obviously it needs to do so. In respect of retentions in the bank account the payer must keep separate ledger accounts for each payee and for each construction contract identifying the payee and construction contract to which the ledger relates and must show each payment into and out of the account and which payees and contract repayment it relates to. So then that's obviously digging down deeply. I think we need to step back a little and look at why all this is necessary. We are now entering into a stage where there is considerable construction activity taking place. In March 2021 alone 4128 new homes were consented and 41028 new homes have been consented for the year ending March 2021—an all-time high—so it's not as though this is an issue that's seeking to keep up. Now we've got to ensure it gets ahead of this vast amount of construction activity that's actually taking place. Also as far as individuals go ultimately we are talking about people here. Of course there's just the number of people entering into the market: 18000 more people are now in training or have been trained in the construction industry. So this is a machine that is very much building up and it's very very timely that we ensure that those who are likely to be affected do have that protection. I did mention before the offences in here to ensure that there is not the temptation to say "Wow! We'll wear this anyway. What the heck—it's a fine." The offence now is if the payee fails to hold retention on trust in a separate bank account or a complying financial instrument this offence has a maximum fine of $200000. If the payee is a body corporate each of its directors also commits an offence and will be liable to a maximum fine of $50000. So again as you will see cases that are wending their way through the courts as we speak there are those where directors themselves have been able to say "Well not us—we didn't know." I'm sure that now at the beginning of every meeting everyone who has ever sat on a board and has become aware of their liabilities will be asking the question "What are our current liabilities? Where is our retention money? Are we OK if this thing does go sour?" So once again as the chair of the Transport and Infrastructure Committee which is considering this bill I am very much looking forward to having this bill and bringing it back here before the House and to fix things that do need fixing. I commend this to the House. Thank you Mr Speaker."