Bill tackles construction industry payment problems

Commerce Minister Lianne Dalziel today welcomed the passage of the Construction Contracts Bill, which addresses payment problems currently endemic in the construction industry.

"The Act will encourage regular and timely payments, provide for default provisions, establish a speedy, affordable adjudication regime to resolve disputes, and provide effective remedies for recovery of payments," Lianne Dalziel said.

"It will prevent practices which are being used unfairly, such as the use of 'pay if paid' and 'pay when paid' clauses, and clauses preventing unpaid contractors and subcontractors from suspending work.

"Industry has worked closely with the government on this legislation and passage of the Bill means an education process can now begin to ensure everyone in the industry is familiar with the new regulations by the time they come into force.

"The Act will contribute to a more responsible industry and help protect those who are most vulnerable. Insolvent developers and contractors will no longer be able to continue operating, accumulating more debt, by delaying payment and shifting their risks onto the subcontractors and contractors to whom they owe money."

Lianne Dalziel said the definition of "construction work" had been amended to include some off-site prefabrication, such as wooden housing frames, because offsite prefabricators were exposed to the same unfair practices.
"The adjudication process will stop disputes being manufactured to delay payment indefinitely, and will benefit people who want quick, affordable answers to their disputes. Adjudicators will also be able to give non-monetary determinations to help resolve some disputes," Lianne Dalziel said.

"I am also delighted that the Bill has assisted the passage of legislation on establishing the Weathertight Homes Resolution Service which the government is setting up to help owners of leaky homes address their problem through a fast, effective and affordable process."

Lianne Dalziel said that, with the exception of Weathertightness legislation which was immediate, the Act's substantive provisions would come into force in April.

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