Government moves to protect subcontractors

2:00 PM - By NICK STANLEY

The Government has announced new legislation to tackle payment problems in the construction industry.

Associate Commerce Minister Laila Harre says the legislation will address problems faced by sub-contractors, who have been exposed to a high degree of risk under current legislation.

"Hundreds of small businesses and their employees have paid a heavy price for the hands-off approach to payment problems in the construction industry," she said.

The new legislation would outlaw 'pay-when-paid' and 'pay-if-paid' clauses in construction contracts and establish an adjudication process to resolve contract disputes.

The legislation would also establish provisions for contractors and sub-contractors to receive payments for work done, including reintroducing security liens, which prevent a property being sold until the person who placed the lien has been paid.

Ms Harre says the legislation redresses the current imbalance of power between contracting parties in the construction industry.

The move comes one day after Auckland company Hartner Construction, the country's fourth-largest building firm, went into receivership.

Subcontractors angered by Hartner collapse

Links:

Report of the Working Group established to consider payment problems in the construction industry