Construction Contracts Amendment Bill

We are back into the Construction Contracts Amendment Bill, dealing with Part 2, and I am looking forward to some good, detailed dialogue with the Minister in the chair, the Hon Simon Bridges, on this because there are some very meaty parts in this bill, particularly around retentions, which I am looking forward to getting into. I can see that the Minister is very interested in the subject of retentions.

It is a little ironic that in a week when the National Government is proposing to bring back leaky buildings 2.0 in the form of allowing builders to self-certify their work, which is one of the more loopy recommendations from Paula Bennett’s Rules Reduction Taskforce, we are dealing with the subject of construction projects that go belly up because there is a very strong connection between the many difficulties that the construction industry has faced over the last couple of decades, of which leaky homes is probably the biggest, and the subject of construction companies that end badly. The example that comes to mind most strongly is Mainzeal Property and Construction, of course. It was the second-largest New Zealand construction company, which went belly up a couple of years ago, taking with it a lot of creditors’ money and leaving many hundreds, if not thousands, of subcontractors hanging. In fact, it was awful to see so many subcontractors who, basically, lost their tools as a number of worksites around the country were boarded up.

So this bill, I think, is overdue. It has been hanging around for quite some time now and it has been through an interesting process, which I think we will want to touch on as we get into this question of retentions in Part 2. We support this bill. We think it is overdue. We wish it had come to the House earlier, actually.

Clayton Cosgrove, the Labour spokesperson on building and construction, who could not be with us today, actually did some really good work developing policy proposals in the wake of the Mainzeal Property and Construction collapse that I want to talk about. There is a Supplementary Order Paper on the Table from Clayton Cosgrove and another one from Julie Anne Genter. What I would like to do is tease out the content of those Supplementary Order Papers because what has happened in the progress of this bill is that the Minister for Building and Housing, Nick Smith, started off saying that this bill would not be dealing with the issue of retentions and that it was unnecessary. In fact, the report from the Commerce Committee that we have got actually notes under “Retentions” that this is a matter of growing concern in the sector.

Perhaps I should perhaps explain a bit more about what retentions are. Retentions are a portion of the contract price that is withheld by a developer, or head contractor, until the work is completed. The whole idea of them is that they are there to be held on to until the work is completed and found to be free of defects, and then the payment is made to the subcontractors. As everybody knows, the way we build not only houses but industrial and commercial projects in New Zealand is that there is a principal who is responsible for the whole project, there is the head contractor, and there is a plethora of subcontractors.

So the problem that this bill is setting out to solve—and particularly this issue of retentions—is hugely important for everybody who works in the construction industry. As the select committee noted, the issue of retentions was not in the original scope of this bill, and the Minister expressed the view that the issue was not necessary, but he changed his position. He originally said there was no issue around security of payment and retentions, and then he said he was actively exploring remedies—

With the agreement of all the whips in the Committee, I seek leave for all parts of the Construction Contracts Amendment Bill to be considered in one debate with the questions to be voted upon separately.

The CHAIRPERSON (Hon Trevor Mallard): And the clauses?

And the clauses.

The CHAIRPERSON (Hon Trevor Mallard): The remaining parts and clauses—so we are not going to go back to Part 1, are we?

Yes, the remaining clauses. Thank you.

Do people understand that the debate will now go, over the rest of the Committee stage of this bill, all as one debate, but that we will have separate votes afterwards. Is there any objection to that process? There appears to be none.

Part 2 (continued), Part 3, schedule, and clauses 1 to 3