A new construction industry lobby group is building its case toward tackling the issue of prompt payment in Ontario.
With a provincial review of the Construction Lien Act underway, Prompt Payment Ontario (PPO) is compiling research to illustrate the negative impacts that late payments are having on the entire sector and the province’s economy.
The group, consisting of more than 30 construction associations, trade unions and suppliers, wants legislation to ensure that money flows down the contractor supply chain within 30 days of completed work.
Last February, Ontario’s Attorney General launched a review of the act to examine payment issues within the sector.
Bruce Reynolds, an expert in construction law is heading up the review, which is expected to be complete by December. It will involve province-wide consultation, after which a report with recommendations will be submitted to the ministry.
As a single issue organization, PPO is advocating for legislative changes that allow for interest and penalties to accumulate on payers when money is not forthcoming, and allow contractors to suspend work when payment is unreasonably late.
PPO contends late payment problems are rampant in Ontario’s construction sector with trade contractors having to wait months to get paid for work that’s been certified as being complete.
Several U.S. state governments have such legislation covering public and private sector projects as well as the U.S. federal government, the European Union, United Kingdom, Ireland, New Zealand and Australia.
Through an outreach campaign this summer, PPO has commissioned an online survey of benefit plan providers to measure the downstream damage done from delinquent payments.
Sandra Shivsky, a PPO spokeswoman, said the effect of late payment trickles down to many levels.
“What we’re looking for is the impact of delinquency on those plans.”
The survey data will be compiled into a report this fall and submitted to the provincial review.
A dispute this past spring involving subcontractors working on venues for the Pan Am Games in Hamilton has only served to highlight late payment problems, she said.
Politically, prompt payment has always had multi-party support in principle at Queen’s Park.
The Wynne government even updated its payment terms policy to ensure that payment is made within 30 calendar days on all provincial contracts.
But when it comes to enacting formal legislation that includes the private sector, the government has fallen short. Bill 69 died on the legislature floor last year when the Wynne government called an election.
“Nobody wants to say they’re against it because it’s such a fundamentally basic issue,” said Skivsky. “If you do work and your work is accepted, ergo, then you should be paid for that work.”
Some contractors wanted a stand-alone prompt payment act, but PPO believes a review of the Lien Act is a step in the right direction.
Skivsky said Reynolds has been consistent in his messaging that the whole spectrum of the payment issue – how money flows down the construction project pyramid from financiers, owners and general contractors to trades, sub-trades and suppliers at the bottom – will receive a thorough examination.
It could mean dramatic revisions to the Lien Act or its replacement with something entirely new.
How that manifests itself into law remains to be seen, she said.
The Association of Municipalities of Ontario (AMO) supports the concept of prompt payment, but had problems with Bill 69 and its 30-day must-pay stipulation. AMO argues it doesn’t provide sufficient time to conduct inspections to review work before any public money flows.
Skivsky said in small markets, it’s not easy for contractors or sub-trades to revert to legal action against delinquent payers.
Some municipalities do not to do business with companies who have imposed liens against them or taken them to court.
“You’re not dealing with peers,” she said. “They call it a construction pyramid for a reason. There are a few on top and many on the bottom.”
