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Construction associations pursue prompt payment legislation

A new coalition of Ontario contractors will be pushing for a revival of prompt payment legislation when Queen’s Park reconvenes this fall.
The Council for Ontario Construction Associations is gearing up to take another run at urging Queen’s Park to draft new legislation to address a long-standing problem of late payments to subcontractors and trades by developers and prime contractors.

A new coalition of Ontario contractors will be pushing for a revival of prompt payment legislation when Queen’s Park reconvenes this fall.

Ian Cunningham, president of the Council for Ontario Construction Associations (COCA), said his group plans to keep lobbying for new legislation that would require developers and prime contractors to pay their subtrades in a timely fashion.

COCA is reloading as part of a much broader coalition which is being formed, comprised of construction associations, contractors, suppliers and trade unions to remedy an issue that has dogged the industry for decades.

“I’m sure a bill will be redrafted,” said Cunningham.

The last attempt to draft legislation, Bill 69, died on the floor of the Committee on Regulations and Private Bills last March when the Wynne government decided to launch an independent review of the Construction Lien Act.

The review, announced jointly between the Ministries of the Attorney General and Infrastructure, was also to consider some of the payment issues that had come up in the Bill 69 hearings.

Bill 69, introduced by Liberal MPP Steven Del Duca, had all-party support, but Cunningham said it didn’t appear to be a top priority issue by any one party.

“Nobody held it as an issue they were prepared to champion.”

Since the June 12 provincial election, Cunningham said he’s heard nothing on how the review will take shape.

A spokesman for the Ministry of the Attorney General repeated the government’s earlier promise to modernize the Lien Act to “reflect the reality of today’s construction industry and to address payment risk within the sector.”

But he offered no comment on when a review chair or panel will be appointed and when public hearings will take place.

For decades, industry groups like COCA has been pursuing an overhaul of the Lien Act, but would rather have a separate act to deal with the slow payers rather than those who completely default.

“Many people believe these are two different payment issues and should not be co-mingled in the same statute,” said Cunningham.

A 2013 report prepared by Prism Economics and Analysis calls the practice of late payment “widespread” in the province’s construction sector.

Cunningham said he’s heard stories from contractors who’ve gone as long as 120 days without being paid for work performed. And contractors are often reluctant to lien properties because it means cutting off any further business from a buyer.

Rick Thomas, manager of the Sault Ste. Marie Construction Association, said it’s a chronic 30-year-old industry problem where the money from the top of the project pyramid doesn’t always get properly distributed to the trades at the bottom.

And Ontario’s Lien Act is too cumbersome, difficult to understand, and expensive for his members to apply.

“In smaller towns like this, business relationships are precious. People don’t want to offend one another. Whatever the reason for someone not getting paid, the whole problem can be solved if we just pay our bills.”

Thomas estimates he spends 15 per cent of his time assisting members with payment problems of various kinds.

His standard advice is to know who you’re dealing with, find out if they have money, demand specific payment terms in a contract, and insist that they’re adhered to.

Often a businessperson is too focused on the skills, tools, and workers required to perform a job rather than on paying attention to getting paid properly, he said.
“I have a really hard time defending a member who says I haven’t been paid for 90 days, but he agreed when he signed the sub-contract not to be paid for 90 days. You can’t help someone like that. You’ve got to be aware (of what you’re signing).”

Thomas added those in the industry are still holding the Wynne government to their word to reform the Lien Act, but remain in the dark as how that process will unfold.

While Bill 69 was thought in some circles to be a cure-all to solve an age-old problem, there was a legion of opponents including the Ontario Homebuilders Association, the Fair Payment Reform Ontario coalition – comprised of some of Ontario’s largest general contractors – and the Association of Municipalities of Ontario (AMO) who called for a rethink of the bill.

Monika Turner, the AMO’s policy director, said her group supports prompt payment for contractors and subcontractors “in principle,” but had major problems with the bill’s “flawed” wording and a 30-day “must-pay” stipulation.

That short timeframe didn’t allow her 400-plus members sufficient time to conduct site inspections to review that work is completed up to specifications before public money flowed.

“I don’t think any taxpayer would disagree with that,” said Turner. “It was just payment because of the date as opposed to payment based on milestones.”

Turner said Bill 69 took a very complex issue and attempted to overwrite contracts, especially if there were disputes over performance, and further included a clause that contractors must be paid for work not yet done.

“If a contractor said we’re about to do work, pay us now, can you imagine what the headlines would be if a municipality paid a contractor for work they hadn’t done?”

Turner said AMO will be involved in any new legislation that comes forward, but prefers a well-crafted government bill that’s gone through a proper consultation process and treats all parties fairly.