Wages for subcontractors are to be better protected under changes to the Construction Contracts Act announced by the National Party on Tuesday.
The changes follow the collapse of the construction company Mainzeal last year which resulted in up to $90 million in claims by unsecured creditors.
Housing Minister Nick Smith. Photo: RNZ / Diego Opatowski
Subcontractors such as electricians, plumbers, painters, plasterers and tilers lost $18 million in wages, when Mainzeal went into liquidation.
A subcontractor who lost about $200,000 following the collapse of Mainzeal said a law change protecting wages was long overdue.
Seven Electrical managing director Ian Butturini said the law change would not give him back the money he lost, but at least subcontractors would be better off going forward.
Housing Minister and National's building and construction spokesperson Nick Smith said the law will be changed so that contractors or developers will be legally required to hold retention money in a trust, meaning wages will be paid.
He said it would "ensure that those funds are used responsibly and are not able to be used as either working capital or risk capital for the next project."
"That will provide increased certainty for those subbies that they will get paid for the work that is done," he said.
