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Working party to speed construction law review

Working party forms to speed construction law review

Associate Commerce Minister Laila Harré yesterday met with trade representatives to discuss security of payment in the building industry.

As a result of the meeting, an industry working party will work with the Associate Minister and Ministry of Commerce on proposals to strengthen construction industry laws.

"It's quite evident that many people in the construction industry aren't being paid on time. I believe they should be and am looking for solutions," Laila Harré says.

The working party is made up of representatives of the New Zealand Registered Master Builders Federation, The New Zealand Contractors Federation, the New Zealand Building Subcontractors Federation and unions.

"These groups represent competing interests, so for them to come together like this shows how seriously the people they represent are affected by the lack of protection afforded by New Zealand construction law."

Recent casualties include construction company Goodall ABL, which failed recently with multi-million dollar debts.

"These high-profile cases have highlighted the issues, and many small companies are also being forced into liquidation while they wait to be paid," Laila Harré says.

"The repeal of the Wages Protection and Contractors Liens Act in 1987 has left sub-contractors without any protection. Pay-when-paid or pay-if-paid clauses have become a standard feature of construction contracts."

"Because of the financing arrangement available to developers sub-contractors have carried the greatest risk for a number of years."

"The best business is done when the risks match the rewards, and at the moment they are far from evenly matched."

Laila Harré says the previous government received several reports on security of payment in the building and construction industry, but failed to act on them.

"I'm keen to resolve this issue as soon as possible, and this should be possible given the broad agreement of these different industry groups," she says.

"The working group is familiar with legislation recently passed in New South Wales which compressed the adjudication process, enabling cases to be resolved in months instead of years."


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