Labour tries to turn back clock 26 years

Labour really are blessed with a special kind of stupid. Now they are trying to wind back the clock:

Labour is pushing for a new system to protect sub-contractors from collapses such as Mainzeal – 26 years after a Labour government axed laws that gave that very protection.

David Shearer says he wants to create a system where a trust holds payments owed to subbies, which would be ringfenced if a company shut down. At the moment big construction companies hold all money themselves and if they go belly up, the money is lost. 

The opposition leader said the system could be modelled on one being mooted in New South Wales where progress payments are made into a trust that pays out subcontractors.

Alternatively New Zealand could go back to the old system of “liens” – each person in the building chain having to hold reserve payments for the next person.

A lien system was in use here from 1939 to 1987 but was repealed by the then-Labour government.

Mainzeal was put into receivership with millions of dollars owed to subcontractors throughout the country.

“This is not the first company and probably won’t be the last, and each time it’s the subbies who are wearing the cost of these companies going belly up,” Shearer said.

So, now the facts are out, that it isn’t the government’s fault how about various Labour party spokespeople start issuing press releases holding the real culprits to account for the perceived losses of sub-contractors.


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  • johnbronkhorst

    I ALWAYS require a deposit of fixed percentage of the total contract price, parts, labour and installation costs included. I WON’T order the parts without the deposit appearing in my account. Companies never fail to sign with me and pay the deposit, because I have built up the good will and they know they will get what they ordered and more in the time stated or faster. TIP:……..ALWAYS….ALWAYS under promise and over deliver!!!!!

    • peterwn

      Do not know what business you are in, but you are very lucky to get away with this. Most ordinary subbies can only dream of this. Key thing when going into business – choose an area where decent payment terms can be demanded. Unfortunately an electrician etc chooses the business because of skills and cannot always find a decent niche. But think outside the square – an electrician fed up with not being paid went into installing burglar alarms – the advent of the transistor made a battery operated alarm viable thus slashing purchase and installation costs (they used door switches and foil strips on windows – no PIR detectors then)..

  • peterwn

    I do have sympathy for subbies. Their ‘owners’ are mostly trades people who have had the balls to get out there and make a business of it, and also their spouses who answer phones, prepare invoices, do accounts, etc – quite often they are the business people. The Construction Contracts Act has been of some help to subbies expecially outlawing the notorious ‘pay when paid’ clause Fletchers and others put in their subcontracts. The reality is subbies generally have quote on the precise terms specified by the main contractoe for their price to get a look-in (lift companies, power companies and some other specialst sub-contractors being an exception). I do wonder whether electricians, plumbers, etc through their trade associations should band together and insist on more favourable terms of trade. Trouble is some subbie will be so desperate for a job they will ‘break ranks’ and also the Commerce Commission may take a dim view of such banding together and seek crippling fines (IMO they have their heads in the cloud and have been listening too much to the Jane Kelsey economic theories).

  • Homunculus

    Apart from the fact that Shearer says it, I can’t see anything wrong with holding funds for subbies in escrow – standard procedure in the US.