Labour will ensure a fair deal for subbies

Labour will ensure subcontractors are paid for the work they’ve done when construction companies collapse, says Labour Leader David Shearer.

“As we’ve seen with Mainzeal, the biggest losers in construction company failures are the subcontractors. The hundreds of subbies affected are small businesspeople but they’re last in the creditor queue and miss out on money they’re owed. That’s not fair and it could happen again.

“As usual, National has sat on the fence. The Government has no idea how to solve this problem.

“That’s not good enough. Labour will stand by the subbies and will make sure their pay is protected. We will take several models to the industry to develop a solution that offers a fair deal, without loading cost onto the sector. Our solution will apply to significant commercial construction projects.

“For example, the New South Wales Government held an inquiry into this issue that has recommended a statutory construction trust model. Property developers would make their progress payments directly to a statutory construction trust, instead of the lead contractor. This would protect payments to subcontractors from receivers with almost no additional cost to industry.

“Subbies will get what they earned. That’s fair. We will take this option to the industry.

“We will also look closely at liens and retentions, which would require a developer to hold back a percentage of payments to pay subcontractors if the lead contractor goes bankrupt.

“In days gone by many construction builders were more protected as part of a company, but now they are self-employed, their situation is far more precarious. They can at least get paid for their work.”

Clayton Cosgrove says: “Kiwis all over the country have sympathised with the subbies who have been locked out of workplaces and unable to get their tools. It’s essential that subbies can use their tools of trade. Labour will clarify and tighten the law as necessary to ensure subbies can get access to their tools as fast as possible so they can get back to work and earn a living. 

“Subcontractors do close to 80 per cent of the work on construction projects.

“When a company goes bust subbies are the biggest losers. That’s not a fair deal and all Kiwis know it. Sensible, cost-effective solutions are available to make sure subbies get what they’re owed. That’s the Labour way.

“The National way is just to sit on the construction fence,” Clayton Cosgrove said.