Construction Contracts Amendment Bill

I firstly want to acknowledge the work of the Commerce Committee on this Construction Contracts Amendment Bill. It makes a number of changes to improve the dispute resolution process that was put in place in 2002. The first of those changes is to expand the dispute resolution process to include residential contracts. When we did a review of the Building Act, that identified the fact that there were many residential building disputes that would be more easily resolved by the specific processes set out in the Construction Contracts Act. The second change it makes is that it includes professional design and quantity surveying, and disputes in that respect that previously were not covered by the law. There are also some technical amendments that improve the way in which the dispute resolution system, which, overall, has been good law, works.

The reason I have chosen to take a call early in the Committee stage is that members will be aware of a pretty significant debate that has gone on in the construction sector about the issue of retentions. Yesterday I tabled in Parliament Supplementary Order Paper 52, which makes substantive changes in respect of retentions and how they operate under law. This was an issue the select committee raised during submissions. Given the fact that, actually, the Supplementary Order Paper changes are in some respects more significant than the original bill, I think it is worth just taking a moment before Parliament to note those significant changes around retentions, what they mean, and why the Government thinks we should progress with these changes.

In the construction industry it is long-established practice not just in New Zealand but internationally for retentions to be held after construction work is completed to ensure that if there are any defects or difficulties with the work, either the main contractor or the principal is able to ensure that those defects are fixed. Sometimes those retentions are 5 percent; I have seen contracts that have them as high as 10 percent. When you are talking about a construction industry that is currently riding an all-time boom—about $15 billion a year—the amount of moneys involved in these retentions come to many hundreds of millions of dollars. One of the concerns the Government has, particularly for the subcontractors, is that these retention moneys can be misused by main contractors who are effectively using them as working capital for the next project. The part that does not serve the public interest around that is that if another project gets into financial difficulty and the main contractor ends up in liquidation, then you can have hundreds of subcontracting businesses that end up as unsecured creditors and are subsequently not paid. So the Government has given consideration over recent months to whether we could have better law in this regard.

It is interesting to look at international practice. The Parliament of New South Wales has recently passed law in this respect and has introduced quite a strict structure where retentions would have to be held in separate trust funds, separated from the main contractor and the subbie, and would then be released when the work was found to be without defect or the like. In other jurisdictions you could set up a system. For instance, I am responsible for running the tenancy bond system. What we do there is that when a bond is required in a residential tenancy, that money is actually paid off to a Government fund. The Government manages that fund. In the event that there is a dispute or when the tenancy comes to an end, the Government then refunds that bond.

We have put in a lot of work, and there has been a lot of consultation and discussion with industry, with subcontractors, and with the banking sector about what would be the right response for New Zealand. Our view is that law reform in this area is required, and we are trying to find a balance between what would provide the right incentives for the management of risk within the construction industry and at the same time trying to minimise compliance costs. If you impose excessive compliance costs, that is simply going to add to the cost of business, to the cost of building houses commercially, and to the cost of infrastructure across New Zealand. What the Supplementary Order Paper provides is what I would describe as a deemed trust model. It is not that the main contractor who is holding retentions is going to have to set up a separate bank account. It is not going to have to set up a lawyer’s trust account, but it is going to have to treat retention moneys as deemed trust funds. That means that the main contractor will have to be far more transparent in the way in which they report those funds that are held in retentions. It also means that in the event of a liquidation, as occurred very publicly and controversially around the Mainzeal Property and Construction collapse, the deemed trust funds would have a higher security in a liquidation than other funds—i.e., those subcontractors would be above the unsecured creditors and would receive funding and payment for work that they actually did, providing it was up to standard and met the normal tests. That would be a huge relief to people who are caught up in liquidations of those sorts.

I commend the Supplementary Order Paper to the House. I think it makes a much-needed improvement to where the risks should sit within the building and construction industry. The Government has chosen an implementation date of 1 April 2016. We think that is a reasonable period of notice to be able to allow the construction industry to take on board this new legal framework for the way in which retentions are managed. Overall, what the Government believes is that this change in the law around retentions will see the risk around collapse in the construction industry fit more appropriately with the parties, end up with a more disciplined industry, and require a more efficient albeit cautious response to commercial contracts. Of course, an ambition of these changes is that fewer people in the building and construction industry end up doing work and not being paid for it. I commend the original bill but also the Supplementary Order Paper to the House.

Firstly, I want to say that the Labour Party will support the Construction Contracts Amendment Bill. We have our own Supplementary Order Paper 439, in my name, which is an alternative measure to deal with many of the issues that the Minister for Building and Housing has raised. But I want, firstly, before I get down to the grit, to express some goodwill and some bipartisan support. We support these measures. We note the collapse of Mainzeal Property and Construction, and many others, and this issue has been around for a long time. It is a difficult issue, the retention issue. It places certain burdens and certain responsibilities, some of which are hard to deal with, so I do commend the Minister for coming to the party—late, but coming to the party anyway.

I note the Minister’s comments about having concern for subcontractors. The history of this is that when the previous Minister was in the chair, just after the time of the collapse of Mainzeal Property and Construction and the controversy, it was Maurice Williamson, the then Minister for Building and Construction, who wiped his hands of the whole thing. In fact, he told this Parliament, under questioning from this side, that there was no issue—that he had consulted the industry, there was no issue, and everybody was happy with the status quo. There was no need to make any changes—that was communicated through the select committee process—because the industry was happy. This is even though a company collapsed under the stewardship, in part, of one former Prime Minister Jenny Shipley, who—when coming before a number of select committees, I say as an aside—was loath to make any explanation or take any accountability for the fact that a massive construction company collapsed, with millions and millions of dollars lost, and subcontractors were hung out to dry. I have to say to the Minister in the chair, the Hon Nick Smith, that, to be fair to him, he was not the Minister. I think he may have been sacked from Cabinet at that point. He was not the Minister at the time. It was Maurice Williamson. But the Government collectively wiped its hands of the whole issue. We were told in the Commerce Committee, and it was only very, very late in the piece when officials came to us and said: “Oh, there’s been a bit of a rethink.” The jitters around the industry were that the Government was coming up to an election and the industry thought the Government might want to do something. That coincided with David Shearer and the Labour Party announcing that we would consult the industry and we came up with the proposition that we have today.

Supplementary Order Paper 52 has been dropped on us in 24 hours. I look forward, in goodwill, to going through the detail in good faith and having a look at it. But I do say to the Minister that it is good. He is world-renowned for road to Damascus experiences. He has come to the battle almost when the war is won—late to the battlefield. It would be good for him to express a little bit of humility. If he could just have a look at the dates on the relevant Supplementary Order Papers. One is dated 1 year ago, even though it was argued that this bill was out of scope, to deal with retentions. Now it is back in scope. Oh, what a surprise.

This Supplementary Order Paper appears almost a year after the Labour Party proposed—and the Minister is right—a similar model to the New South Wales model, and given that the Minister has outlined his, I will outline mine. That proposal—and one of the deficiencies I think in the Minister’s model, but I will be grateful if he will allay my fears—is that to have moneys deemed trust moneys is all very well, but if you have crooks in a company who spend the money, however it is deemed, and it is gone, even though it is higher in the hierarchy and in insolvency, you cannot get blood out of a stone, Minister, I say through you, Mr Chair. If it is gone, it is gone, and that is the thing that worries members on this side of the Chamber.

We proposed a simple model—and we costed it out with the industry; a few hundred bucks, basically, effectively—a similar model to the New South Wales model, which was to have, if you like, a contract trust, a construction trust, that would not interfere. It would be like a drop-box. It would not interfere. It would sit between the developer and the lead contractor and the subbies. It would not interfere with timing. It would not engage in dispute resolution. That is up to the contractual arrangements between the parties. It would not be onerous and it would not require multiple trusts and all this sort of thing; you could default to the Public Trust if you wanted to. But what would happen is that instead of the moneys flowing directly from developer to lead contractor and then to the subbies, and if the lead contractor, the Mainzeal Property and Construction, goes boom, it is all over and there is nothing there, those moneys would flow in whatever contractual time frame was deemed by the parties, not the trust—and that may vary from project to project—through from developer to trust, and then is paid out as per the contract to subbies first, then the lead.

The difference in our proposal—unless I am to be corrected, and I will wait to see—is that if you had a Mainzeal Property and Construction collapse, if you had crooks in a company, then that company then collapses and the money is frozen—[Bell rung] Mr Chair—

The CHAIRPERSON (Hon Trevor Mallard): The Hon Clayton Cosgrove, on Part 1.

Thank you. I am just following the Minister’s lead. You did not pull him up when he explained his Supplementary Order Paper, with respect. I think it is very helpful—

The CHAIRPERSON (Hon Trevor Mallard): Order! Mr Cosgrove, the Minister’s Supplementary Order Paper is to Part 1 of the bill as well as to Part 2. Your Supplementary Order Paper is to Part 2 of the bill, and I am sure you will want to talk to it then.

Thank you, but I think, as I say, referring to being helpful, that the Minister’s explanation deserves some sort of counterpunch in respect of Part 1. I think, in fairness, the concern we have with the Minister’s proposal and where we differ is that once those moneys are gone, they are gone. They flow through a trust. If Mainzeal Property and Construction goes bang, at least the moneys are quarantined within a construction trust and can be paid out. One of the benefits of that I think—and perhaps the Minister’s Supplementary Order Paper may deal with that as well—is it actually provides for those people who are supplying subcontractors, for instance, more confidence to extend credit and other facilities right through the supply chain. We will look forward to a number of explanations because these are quite technical amendments, but we support the adjudication provisions and the notion of trying to straighten out these particular problems within the industry, because, at the end of the day, subcontractors lose, and when they lose, they lose big time. Larger organisations have the ability to manage their financial affairs in a way that the one-person subcontractor brickie, scaffolding person, or whoever does not, and they are vulnerable. They are extremely vulnerable.

I am pleased that the Minister—but I would like an explanation as to why it took him a couple of years to change his mind—has come to propose some solutions in terms of the retention issue. The original proposition was that there was no problem, according to his predecessor, Maurice Williamson; that nothing was required to be done, according to the reports that officials were getting and passing on to the select committee; and that the Government did not need to do a thing.

And I just say I would be interested in the Minister’s comments and his analysis of the Mainzeal Property and Construction collapse, because in this Parliament we have heard nothing. In fact, I think Mrs Shipley is still the chair of a major power State-owned enterprise. I believe she was director or deputy chair, but she was definitely on the board, yet the murk that surrounded that collapse and the commercial and social carnage that occurred as a direct result of it, through hundreds of subcontractors losing millions of dollars, with many going out of business, no one has provided an answer for. In fact, it was well reported in the media that the Prime Minister stood shoulder to shoulder with Mrs Shipley, and we have never had an explanation either from the Prime Minister in respect of that statement or from Mrs Shipley, who now heads up and has been appointed—in fact, I think she is on the flag committee. Is she or not? No? I am not sure, but she has been appointed to many a Government entity and no one has provided an explanation as to whether she is fit and proper to be on those entities, given the Mainzeal Property and Construction collapse.

So I welcome the legislation. We will have questions—detailed questions—for the Minister, but our main concern, and why we did put up an alternative proposal over a year ago, was that nothing was proposed by the Government. I would like an explanation to tell us whether, if moneys are deemed to be in trust but thieves and vagabonds and rogues exist within the company and that money goes, and is spent or misappropriated and is lost, it will matter at any point whether it is higher on the hierarchy when the receiver comes over the fence to try to save it, because there may well be nothing there. That is, I think, in goodwill, where our proposals differ. The Labour Party remains open-minded and will listen to the explanations of the Minister, and we remain open-minded as to whether we will accept and support those particular proposals or support our own.

I think, at least, on both sides of the House we want to deal with this issue. We want to ensure that small businesses are protected. They do live up to their responsibilities and they do their work. All they ask is that they are paid for that work, and all their suppliers ask is that they are paid for that work. But you have a Mainzeal Property and Construction collapse and everybody in the commercial chain, like a set of dominoes, falls over, from retailers right through. So we all want to see that actually resolved. What we on this side of the Chamber seek is reassurance that this is the best possible option. It is very easy to say that the setting up of a construction trust is going to cost a whole lot of money. Well, the information we had is that that would be very minimal. We too were mindful that we did not want to simply impose compliance cost on the industry. I look forward to the Minister’s reply.

Before I call Brett Hudson, I am going to indicate to the member that I did reflect on his comments and he is accurate. I was too loose on the Minister. He had a very broad call. But I think it has happened now on both sides and we will speak to Part 1 of the bill, which is very narrow and goes down just to clause 8.

I will retain my comments on retention payments to Part 2, as you request, Mr Chair. I will just draw attention, of course, to why we are here to debate this bill.

The amendments we are making are, in fact, all about providing a productive, efficient, and accountable construction sector. But, as the Minister has said, I think that one of the key changes we are making in Part 1, in fact, is ensuring that residential construction activities and projects will receive full and equal access to the processes under the Act. So, in fact, we are just making an amendment to have a definition of construction activities, and not a separation or distinction between what might be commercial and what might be residential.

In fact, I think we can take it as read that by making them the same, they do get full and equal treatment, but I would be happy to have the Minister—if he feels it might be appropriate—perhaps just give us some illustration as to the risks that might exist today under the existing provisions where the treatments are different for different forms of construction. That elucidation might help give members across the Chamber some greater confidence as to what this specific provision change will achieve in reality for people who are undertaking work.

It also, of course, does widen the scope to include those activities and services in construction that are provided by architects, by engineers, and also by quantity surveyors. So it makes sure that those rather important design and construction activities are also caught within the scope of the provisions of the bill.

But the part that I would like to talk about and focus on in Part 1, as it is obviously very key, is the amendment to section 9 of the Act, in clause 7, which is, in fact, when these provisions will take effect. Supplementary Order Paper 52, which the Minister has put forward, sets a commencement date, or, if you will, a time of validity, of 31 March 2016. That will give the industry a full year to adjust to all of the changes that this bill will introduce, including the ones that we are not going to talk about right now that will, in fact, require change within the industry—they are around retentions, but we will not cover the retentions themselves. But the start date is very relevant for that because it makes sure that those parties have sufficient time to prepare themselves, their systems, and their processes to be able to conduct business in accordance with the new provisions.

I would note that the Supplementary Order Paper is changing the start date by over 6 months, in effect. I think that is taking on board feedback from the industry and others that were we to rush into this too quickly, then we would have a whole suite of obligations, but really just not give the people who are obliged to comply with them sufficient time to get everything they might need in place to ensure that the consumers, or the purchasers—the ones whom we are really looking to provide protection to—could have sufficient confidence that the new provisions were in place and were being administered fully. So it is good to see that we have extended it out a bit, as I have said, to ensure that the industry has sufficient time to get all of its processes in place.

I do look forward to the next part of this bill, when we will get into some meat of both the Supplementary Order Papers and a discussion—which I think we are all looking forward to—on retention payments, but that is not to diminish the importance of Part 1, particularly, as I have said, the start date for when the provisions of the amendment will come into force. Thank you.

Labour will support the measures in this bill, largely as a result of the road to Damascus experience that my colleague Clayton Cosgrove referred to earlier, and what a very interesting and useful metaphor that is. I want to refer members—and I have some questions for the Minister—to section 6, in clause 6, where the meaning of “construction work” has been amended. It has been broadened, and we see in subsection (1A)(b) that “quantity surveying work carried out in New Zealand” is captured within the amended definition. There is some debate about what that might mean and exactly how that might be applied. Design and engineering work carried out in New Zealand will be included, as I understand it, and I am just wondering whether this will really make a difference to the speeding up of the resolution of disputes and how that will flow down to subcontractors eventually.

I want to mention a case that might be illuminating and give a concrete example of how this might be applied. So let us imagine a Government wanting to build a convention centre in a large city in New Zealand as an example of a process where we might want speedy construction and any disputes, if there was a failure on behalf of the Government, to be resolved speedily—brought to a head and resolved. In this hypothetical case that I am bringing to the discussion, we know that Television New Zealand, a local operator that is a neighbour of the site where a convention centre would be constructed, had given over, for the purposes of construction, some land that carried a value to a deal that was done, and we are told that the value of items brought to the party in this wider construction deal actually affect the final outcome and the solvency and the ability to deliver on the construction contract, which is the fundamental case we have here.

So we have got a dispute that is, actually, dare I say, a very real dispute. It is not just hypothetical. It is playing out in New Zealand, with a dispute over funding for the Auckland convention centre, where the Government has said that there will be a cap of $402 million and concessions going to Skycity, but Skycity is saying—

The CHAIRPERSON (Hon Trevor Mallard): I am now going to ask the member to come to Part 1.

I will come back certainly to Part 1, because what I want to ask is how it is determined in this example if Skycity said: “We can no longer build this convention centre for the money; we are going to have to fold. It is actually going to take our company under. We can build only a pup tent, but we have got on to this, and we are going to build it, but we cannot actually finish the building.” If there was a dispute about this, how much would go back to the value of the inputs—you know, the work of the various quantity surveyors who worked out what that Television New Zealand land would be worth with different construction designs on it in the end picture, and how much the deal was actually about the right amount of money if there was a legal dispute? How would those kinds of legal issues play out as they were resolved in working out whether the deal was properly funded in the first place and, therefore, what the implications for subcontractors would be?

So I will be very interested if the Minister has a view. I know that there are a number of officials here ready to advise him, but we are talking about a broader definition here and the legal implications of advice supplied along the way, if I understand it correctly, as well as the work committed by the subcontractors. Who is due what and where does the liability lie? That is the basic question I am asking, and I think it is a fair question because what this bill is doing, and what we actually support, is, hopefully, leading to a speedier resolution process, particularly where complex legal issues are applied.

In this case we on this side of the Chamber have a particular view about that deal. We do not think it has been a good deal for the taxpayer. We think the Government has done a poor job, and we think there could be implications further down the line for the taxpayer if the Government has not done its job right.

I would be delighted to answer the questions that have been raised by a number of members and I want to begin by saying how much I enjoy debating with members of the Labour Opposition and the way in which they want to continuously rewrite history. The first thing I would like to do is talk about the horror that was expressed by the last member, Dr David Clark, over the Skycity convention centre. The problem for the member is that I was sitting on his side of the Chamber when the Helen Clark Government brought a bill before the House—

The CHAIRPERSON (Hon Trevor Mallard): Order! I am going to ask the member to resume his seat. I am going to ask him, as I did the previous member, to relate his comments to the bill.

Well, the bill is about construction disputes and the question that I have got from the member is whether the sorts of disputes that there have been about the construction of the convention centre apply to the great, new international convention centre that John Key and Steven Joyce have very successfully been able to negotiate for the Government. The answer is, with this bill, that, yes, we are going to extend the dispute resolution process to include the design, the engineering work, and the quantity surveying, which would not occur without this bill and the changes in Part 1. But I also want to assure the member of this: the design, the engineering, and the quantity surveying on the smaller convention centre, which was negotiated as a trade-off for casino concessions by Helen Clark—exactly the same deal—would also apply to Part 1 provisions of the Construction Contracts Amendment Bill.

The CHAIRPERSON (Hon Trevor Mallard): I think the member has now had two warnings. If he would like to continue to speak to Part 1, I suggest that he does and not relitigate ancient history, which, I think it is fair to say, is not affected whatsoever by the bill.

I think it is worthwhile, as we debate the changes in Part 1 about the performance of the construction industry—and, most important, I think is consistency of a political party’s position on issues such as construction contracts. I saw the same sort of duplicity when I heard the comments from Mr Clayton Cosgrove, because Mr Clayton Cosgrove—

The CHAIRPERSON (Hon Trevor Mallard): Order! The member will withdraw the term and apologise.

Can you clarify what particular term—

The CHAIRPERSON (Hon Trevor Mallard): No, I will not. The member knows absolutely which term. He is an experienced member.

I am happy to apologise to take into account the concerns of the Chair.

The CHAIRPERSON (Hon Trevor Mallard): The member will immediately withdraw and apologise unconditionally.

I unconditionally withdraw and apologise. A point was made by Mr Clayton Cosgrove, over the issues in Part 1 of this bill, that my predecessor, Maurice Williamson, had ruled out any changes. That is grossly incorrect. When issues arose around the construction contracts dispute, my predecessor Maurice Williamson made absolutely plain that there was a significant issue for us to work through in respect of construction contracts. In fact, if you look at the paper trail, it very clearly shows that the very issues that are covered in my Supplementary Order Paper were triggered as a consequence of the work that Maurice Williamson asked officials to do with the industry. The difference is this: the changes that National is proposing in its Supplementary Order Paper are changes that have been very carefully thought through, are workable, and will reduce compliance costs. Yet the Supplementary Order Paper that has been tabled by the Labour Opposition is not workable, and if you look at the website—and the website for the Ministry of Business, Innovation and Employment has a comprehensive—

The CHAIRPERSON (Hon Trevor Mallard): The member will resume his seat. If I have to warn the member once more to stay on Part 1 of the bill, I will terminate his speech. As has been pointed out to Mr Cosgrove, his amendment does not relate to this part of the bill.

💬 Tim Macindoe: I raise a point of order, Mr Chairperson. I am not questioning your ruling, but I am genuinely confused and seek your elucidation. As I understand it, the Minister is currently attempting to respond to questions that were put to him by Opposition speakers in their contributions on Part 1 of the bill. I am not sure how it is that the Minister has therefore transgressed when he is attempting to answer the questions.

The CHAIRPERSON (Hon Trevor Mallard): I am happy to explain it to the member. It is that I did make clear after Mr Cosgrove’s speech that the matters that he was dealing with that related to his Supplementary Order Paper related to Part 2 of the bill and that I would not countenance further discussion on those items as part of the Part 1 debate.

I do note that Supplementary Order Paper 52 that I have tabled on the bill does make changes to Part 1—

The CHAIRPERSON (Hon Trevor Mallard): Yours does and Mr Cosgrove’s does not.

I am pointing out to the Committee that in respect of my Supplementary Order Paper, which makes changes to Part 1 of this bill, there is a regulatory impact statement on the Ministry of Business, Innovation and Employment’s website. In that regulatory impact statement there is a thorough analysis of the options that could be used in this bill to address the concerns around construction contracts. If members of the Committee look at that regulatory impact statement they will see that in the cost-benefit tests the options that the Government has in its Supplementary Order Paper are a more efficient way of dealing with those concerns. I would say to members of the Committee that the changes that we are proposing in this bill are sensible, they are changes that will result in a more efficient construction industry, and they are changes that will enable disputes in the construction industry to be able to be resolved more quickly. I think the changes in this part that extend the provision of the construction contracts dispute resolution process to residential contracts, quantity surveying work, and engineering work and those other provisions are sensible changes that the Committee should support.

💬 Dr David Clark: The regulatory impact statement is dodgy.

Sorry?

💬 Dr David Clark: The officials say in the regulatory impact statement that the availability and robustness of data and the methodology used for it by the estimates is unsuitable—

Well, the member should take a call. I do not want to offend the Chair. I suspect that part of the regulatory impact statement is the Part 2 debate. I look forward to having a healthy debate on those issues and on why the Government’s Supplementary Order Paper is a far better option than the pretty messy Supplementary Order Paper that has been tabled by the Opposition, which would not work.

Well, I will do my best to be more obedient than Nick Smith, the speaker before me, in addressing my comments to Part 1 of this bill. There are several parts to this bill, and, clearly, the changes being made to Part 2 have the most significance, but Part 1 is important. I would also, with your lenience, Mr Chair, like to go back a little bit in time in the history of this bill because it is of deep importance to the Committee, given the extensive nature of Supplementary Order Paper 52, which was introduced 24 hours ago or less, after, as I understand it, first going through Cabinet in August last year. This is something that I would like the Minister for Building and Housing, when he again gets to his feet, as I am sure he will during the process of this discussion, to give us a little bit of information about—exactly what the consultation has involved with the industry around the impact of all of the measures contained in the Supplementary Order Paper, including the measures that relate to Part 1, but, in particular, the measures that relate to retentions.

With your lenience, Mr Chair, I will refer to my colleague Clayton Cosgrove’s Supplementary Order Paper 439. I will not talk about the substance of it because I know that we will certainly be having a wider discussion about that later on. The thing, though, is that this bill went through an extensive select committee process back in 2013, I think. There were 31 written submissions and we heard 22 submissions at that time. Almost without fail, every submitter that came through the Commerce Committee raised the issue of retentions and the issue of the collapses that were happening in the construction industry, and the impact that that was having on the construction industry. They spoke very lucidly about all of the other measures that were being proposed in the bill—the measures that are contained in Part 1 around the definition of “construction work”, the process of complaints, the definition of “construction site”, and the operations that are critical to the completion of, or preparatory to, the scope of design, engineering, and quantity surveying work. That is one of the amendments in Part 1. Mr Chair, I am just making sure that you know that I am addressing my comments to the part.

These things were addressed, but, without fail, for almost every one of them the real substance of their submissions to us was around what was a glaring gap in the bill. Just to back up my colleague Clayton Cosgrove, despite being told that he is rewriting history, this issue was ignored—it was ignored. It was ignored by members opposite right up until the very last minute, when we were told, oh no, there could not be an inclusion in this bill of remedies for the retentions and the moneys that were being lost by subcontractors when there was a collapse—we could not include that information, and that would have to be a separate item. As a result, this bill has now sat and languished while another process was happening behind the scenes.

As I have discovered, there was, as I understand it—and I would like the Minister to give us some clarification around this—a paper put to Cabinet in August by the Minister in the chair today, Dr Nick Smith, clarifying a set of proposals around this. My concern with any legislation that comes through this House when there is a substantial last-minute change that has not gone through the benefit of a select committee process and where there has not been any public consultation is that it is going to be bad law. We know that there have been other Supplementary Order Papers put forward during the course of this bill. We will be debating them in Part 2. But what has the process been for consultation?

I think there have been some really good contributions so far on Part 1, or, rather, those parts that are referring to Part 1. I have got a few questions of my own for the Minister, partly as someone who is relatively new to the Commerce Committee, and I am trying to get my head around some of the context.

The first part really is around the whole issue of date changes. So Part 1, particularly through Supplementary Order Paper 52—I had better be clear, actually, to the Committee that while the Supplementary Order Paper recently tabled from the Minister deals across Parts 1, 2, and beyond, the main area, being retentions, is in Part 2. So for me at the moment—this is in Part 1 around the date, obviously—this is just to signal to the Minister where the thinking is going. The other is around the choices of definition, of what has been included in contracts. The third area that I am interested in is around services and why certain ones are being excluded.

If I might start, though, with the date, I see we have a dual split developing here in the Supplementary Order Paper. Obviously, initially this bill was meant to be passed by November last year, but I think, as a number of people have indicated, there have been some delays as we were making proper consideration of this. I think particularly if we reflect on the arguments in the Statutes Amendment Bill (No 4) yesterday, parties in this House want us to take the appropriate time to get things correct. So I am interested to ask the Minister why do we have a split coming through here in Part 1? We have a commencement date for clause 8BC that is meant to be on 31 March 2016. So obviously that is very particular. Although the Minister is seeking that length of time for that clause, he is equally happy for the other parts to come into force in July this year. I suspect—through you, Mr Chair, to the Minister—that the nature of that particular clause probably needs greater consideration, particularly with the industry, in order to deal with it.

The next part, really, because I am sure we will end up in the title and the commencement debate later, is around the whole definition of what is construction. I note in the Supplementary Order Paper, in what is clause 6, that it seeks to amend section 6 so that construction work should be defined as “design or engineering work carried out in New Zealand in respect of work of the kind referred to” in various sections. I would be interested to know what particular elements of design—I assume we are talking architectural, but does that stretch out as well to draftspeople and so forth? What level of design is required then?

And then engineering—it probably sounds simple, but is that for all people who use that title “engineer”, or are we dealing with those who are particularly chartered to a recognised engineering profession? I think simply of friends of mine who are qualified engineers working in the various fields, be it building, construction, mechanical, and so forth. But, equally, I think of those whom I have met—

The CHAIRPERSON (Hon Trevor Mallard): The time has come for me to report progress, and I will report progress on the bill.

Progress reported.

Report adopted.

The House adjourned at 5.56 p.m.