A construction industry executive is giving a thumbs-up to a long-awaited report on the epidemic economic problems caused by the lack of prompt payment legislation in Ontario.
Construction associations and lobby groups, including Prompt Payment Ontario, portray delinquent payment problems in the province as “rampant and growing” with contractors having to wait months to get paid for work that’s certified as being finished.
Jeff Koller, executive director of the Electrical Contractors Association of Ontario, said the Reynolds report captures the essence of the situation, calling it a “fair, balanced review of the problem in the industry.”
The report, which was finally released by the province in September, is expected to provide fodder to craft and introduce a new Construction Lien Act next spring.
For construction and union groups, the concept of prompt payment is simple: payment for completed work within 30 days. After a few aborted attempts to bring reform to the system, the Attorney General appointed construction law experts Bruce Reynolds and Sharon Vogel to conduct a critical review of the problem in 2015.
They held extensive industry consultation meetings and sifted through 77 written submissions.
The Reynolds report, which examined similar legislation in the U.S., Europe, Australia and New Zealand, calls for a dispute resolution mechanism in Ontario.
“I think Bruce Reynolds and Sharon Vogel get it. What they’ve recommended is doing what’s right, what’s fair and what’s equitable,” said Koller.
Their report was delivered to the Attorney General on May 2.
But the lengthy delay in releasing it prompted industry and union groups to question if it was being politically doctored.
“We were concerned that the review would not be released,” said Koller, who met with senior bureaucrats petitioning for its release.
“We didn’t know what was in the report, we didn’t know if we would necessarily like it, but the right thing would be to release it.”
At the construction industry’s Queen’s Park lobby day on Sept. 27, Attorney General Yasir Naqvi announced he’s been instructed by the premier to introduce legislation to modernize the Construction Lien Act with measures to accommodate prompt payment.
Industry groups say delinquent payment drives up the cost of construction, constricts cash flow to small business, stymies job creation, affects worker payroll and reduces apprenticeships.
The government will do a round of consultation this fall in preparation to introduce legislation by next spring with a modernized act in place by the fall of 2017. “We hope that (the minister) is true to his word. Ultimately, it’s going to depend on what the legislation looks like,” said Koller.
“The legislation could either follow the review closely or look vastly different. “All we want is for our contractors to get paid for completed, certified work in a prompt and timely manner.” Koller said they were up against very entrenched opponents.
“I think there are very powerful lobbies that are opposed to prompt payment legislation or that are concerned they are going to get caught in the middle. If you think of the payment pyramid with owners and developers at the top and general contractors below them, everything flows outward and downward, and that pyramid gets clogged when payment is delayed.
“It has long been the view of the trade contractor community that trade contractors are the ones financing developers’ projects and bearing most of the financial risk in doing so when they have the least to gain.
“Trade contractors just want to get paid for the work that’s been certified as being complete.”
