Working party reports back on construction industry review

Associate Minister Laila Harré is considering a report on how the government should deal with security of payment within the building industry, including pay-when-paid provisions and adjudication processes.

The report was put together following a series of meetings between an industry working party and officials from the Ministry of Economic Development.

The group discussed different options for dealing with these issues, which have caused a number of high-profile business failures.

"Since the repeal of the Statutory Liens Act many hard working, reputable operators have gone out of business and into bankruptcy as a result of industry practice," Laila Harré said.

"Members of the working party have worked swiftly to bring together competing interests on this issue, and their conclusions mean that progress in this area can be made early.

"It has reported that it is strongly in favour of a fast-track adjudication process along the same lines as legislation adopted in New South Wales and the United Kingdom, with additions and alterations to suit New Zealand conditions."

Laila Harré said successful legislation would change the behaviour of participants within the construction industry, and allow good operators to have more certainty that they will get paid promptly.

"Prolonged legal action only succeeds in blocking cash flow, making it difficult for many small businesses to continue trading," she said.

"Members of the working party have agreed unanimously on the basic scheme for legislative reform, and will now be considering their conclusions."

Other interested groups who are not part of the working party will also be consulted.

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