Government takes action to improve protections for subcontractors

  • Hon Poto Williams

The Construction Contracts (Retention Money) Amendment Bill – which provides greater financial protection for subcontractors, has passed its first reading today.

The Bill amends the retention provisions in the Construction Contracts Act 2002 (CCA) to provide increased confidence and transparency for subcontractors that retention money they are owed is safe.

“Every worker and small businessperson deserves to be paid for work they have done,” says Minister for Building and Construction Poto Williams.

“These changes include removing the ability to co-mingle retention money with other money and assets; introducing regular reporting requirements; adding the need for contractors to confirm with the subcontractor the amount and location of the retention money being held; and harsher penalties for those who fail to comply with the retentions regime.

“Hard-working subcontractors need to feel confident that they will be paid what they are owed, so they can concentrate on building the houses, schools and hospitals across the country this Government has committed to.

“The retention provisions in the CCA were put in place to protect retention money owed to subcontractors in the event of a business failure, and to ensure retention money withheld is responsibly managed.

“While the regime is working well overall, a recent review highlighted ways it could be strengthened further.

“The proposed changes in the Bill reflect the findings of the review and will provide subcontractors with greater protection and confidence that in the event of insolvency, the money they are owed is still safe.

“The protection and transparency of retention money also helps maintain steady cash flow for construction businesses, and supports economic recovery efforts underway in the building and construction sector due to COVID-19.

“The Bill was developed following targeted consultation with the building and construction sector,” Poto Williams said.

The Transport and Infrastructure Select Committee will soon call for public submissions on the Bill.

“I encourage everyone to take part in this to process to help ensure a secure and transparent working environment for the more than 270,000 New Zealanders employed in the building and construction sector,” Poto Williams said.

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