Parliament

Gordon Campbell | Parliament TV | Parliament Today | Video | Questions Of the Day | Search

 

Subbies to get better protection for payment

Subbies to get better protection for payment


Subcontractors owed money are to get better protection for payment for work done in changes to the Construction Contracts Act approved by Government, Building and Construction Minister Dr Nick Smith announced today.

"It is unfair that electricians, plumbers, painters, plasterers, tilers and other subcontractors can miss out on being paid when contractors or developers use retentions money inappropriately. We are going to change the law and require retentions to be held in trust to help ensure contractors and their subcontractors get paid for the work they do," Dr Smith says.

Retentions are payments withheld by the developer and main contractor from subcontractors so as to ensure any faults or repairs to work done can subsequently be put right. An issue arises when the developer or main contractor puts this money at risk by using it as working capital or for another project which then fails, leaving the subcontractor unpaid.

The law change will mean the developer or main contractor has a fiduciary duty to the subcontractors to hold the money in trust. The issue was highlighted with the collapse of Mainzeal where about $18 million of subcontractors' retention money was lost for many small subcontracting businesses.

The Government has given drafting instructions for a supplementary order paper to the Construction Contracts Amendment Bill currently before Parliament. The changes will impose a trust obligation on retention moneys, prevent the money from being used for other purposes, and impose penalties where the funds for purposes not related to the specific project.

It will also provide for a default rate of interest prescribed in regulations to be applied to late payment of retention payments and clarify that the ban on 'pay when paid' also applies to retentions. The amendments will be introduced to the existing Construction Contracts Amendment Bill currently before Parliament.

"We have not opted for a model of requiring retention funds to be put into a separate bank account or lawyer's trust fund as some have advocated because the compliance cost is too high. Putting a trust obligation into the law makes plain these moneys are not to be used inappropriately and should take priority over other creditors in the event of liquidation,” Dr Smith says.

“The proposals have been developed in consultation with the construction sector including subcontractors, who wish to have a flexible approach to compliance that would work across the sector.

"These changes will provide improved certainty and stability in the construction sector without excessive compliance costs. It ensures that in building contracts, the risks are carried by the developer and the principal contractor rather than by subcontractors who are less well-informed of the viability of a particular development.

“New Zealand is on the brink of the largest construction boom in 40 years according to the latest National Construction Pipeline Report, with construction activity set to grow to $32 billion per annum. This law change is about ensuring the billions held in retentions is responsibly managed.

"The changes will be welcomed by thousands of mum and dad subbie businesses and their employees across New Zealand, as it gives them greater security that they will get paid for the work they do," Dr Smith concluded.


ends

© Scoop Media

 
 
 
Parliament Headlines | Politics Headlines | Regional Headlines

Gordon Campbell: On Why New Zealand Needs To Change Its Defence Habits


In a flashback to the military displays of days gone by, one of our frigates recently joined a Carrier Strike show of force in the South China Sea, en route to a joint military exercise in Singapore with our traditional allies, called BersamaGold21. Reportedly, Anna Powles, from the Centre of Defence and Security Studies at Massey University felt this to be a case of us doing our bit to uphold international law, and the right of free transit through the region in question... More>>

Government: New COVID-19 Protection Framework Delivers Greater Freedoms For Vaccinated New Zealanders


Vaccinated New Zealanders will regain everyday freedoms when the country moves to a new simplified COVID-19 Protection Framework that doesn’t rely on nationwide lockdowns as the main measure to stop the virus spreading. In a suite of announcements that establish a pathway out of restrictions the Government is also providing up to $940 million per fortnight to support businesses through the challenging period... More>>

ALSO:





 
 


Government: Responds To Independent Review Into WorkSafe

The Government has clear expectations that WorkSafe must action the recommendations of the independent review into the regulator to improve its management of adventure activities following the tragedy at Whakaari White Island, Workplace Relations and Safety Minister Michael Wood says... More>>

Government: New Zealand Secures Historic Free Trade Deal With The United Kingdom
New Zealand and the United Kingdom have agreed in principle the details of a historic Free Trade Agreement (FTA), which will further accelerate our COVID-19 economic recovery say Prime Minister Jacinda Ardern and Minister for Trade and Export Growth Damien O’Connor... More>>

ALSO:

Ombudsman: Launches Investigation Into MIQ Booking System
The Chief Ombudsman Peter Boshier is launching a broad investigation into the Managed Isolation and Quarantine (MIQ) booking system after receiving hundreds of complaints... More>>

ALSO:


Pay Cheque To Pay Cheque: Half A Million New Zealanders Have No Savings
New findings from the Consumer NZ sentiment tracker found that 15% of New Zealanders had no savings, and a further 27% were anxious about their level of savings and would like to have more tucked away... More>>


Government: Mandatory Vaccination For Two Workforces

Large parts of two workforces critical to preventing the spread of COVID-19 will be required to be vaccinated, COVID-19 Response Minister Chris Hipkins said today. “Our education and health and disability workforces have done an incredible job throughout this pandemic to keep themselves and people safe,” Chris Hipkins said.... More>>


Green Party: Deeply Concerned Space Launches May Be Breaching Nuclear-free Laws

The Green Party is deeply concerned that space launches by Rocket Lab may be breaching nuclear-free laws, given our long-standing position as a signatory of the Nuclear Non-Proliferation Treaty... More>>


 
 
 
 
 
 

LATEST HEADLINES

  • PARLIAMENT
  • POLITICS
  • REGIONAL
 
 

InfoPages News Channels