Subcontractors owed money are to get better protection for payment for work done in changes to the Construction Contracts Act approved by Government, Building and Construction Minister Dr Nick Smith announced today.
The Government has given drafting instructions for a supplementary order paper to the Construction Contracts Amendment Bill currently before Parliament. The changes will impose a trust obligation on retention moneys, prevent the money from being used for other purposes, and impose penalties where the funds for purposes not related to the specific project.
It will also provide for a default rate of interest prescribed in regulations to be applied to late payment of retention payments and clarify that the ban on 'pay when paid' also applies to retentions. The amendments will be introduced to the existing Construction Contracts Amendment Bill currently before Parliament.
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