'Prompt Payment' Bill Proposed To Ensure Federal Funds Go 'Down The Food Chain'

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DON PLETT
Conservative Sen. Don Plett arrives at the Senate on Parliament Hill in Ottawa on Oct. 28, 2013. (Photo: Sean Kilpatrick/The Canadian Press) | CP
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OTTAWA — A Conservative senator is looking for the Liberal government to enact "prompt payment" legislation on federal projects, making sure cash paid to large construction firms flows without delay to the trade contractors doing the work.

The idea contained in Sen. Don Plett's private bill in the Senate would allow trade contractors who don't get paid right away to walk off the job without fear that someone else will come in and finish the work.

The bill would also require the government to promptly pay the large firms overseeing work on federal projects or on Crown land once they submit receipts for work, or set strict payment deadlines if none are spelled out in a project agreement.

justin trudeau
Prime Minister Justin Trudeau's Liberal government has promised to spend $3.4 billion over the next five years on federally-owned parks, harbours, laboratories, museums, and buildings. (Photo: Chris Wattie/Reuters)

Plett's decision to move now on the proposal, one he has been looking at for years, coincides with the Liberal government's moving ahead with $3.4 billion over the next five years for work on federally-owned parks, harbours, laboratories, museums, and buildings.

Plett said the bill, if passed, would make sure that money flows quickly to the smaller companies and trades people doing the work.

"General contractors are using trade contractors money to subsidize their work. It's the most prevalent with the real large contractors we have in Canada," said Plett, a former plumber.

"All this bill does is it forces contractors to pay the money they have received — nothing else, just the money they have received — down the food chain."

For trade contractors who have been lobbying on Parliament Hill for support in the Senate and in the House of Commons, the bill would level the playing field between large contractors and trades companies that sometimes feel they have no recourse if they're not paid on time.

“This very unbalanced system has become a norm.”

For now, large companies could withhold pay for any number of reasons, including if they need the money to finance another project or development, said John Blair, executive director the Canada Masonry Centre. He said that leaves trades business owners unable to invest to grow their business, and could penalize employees with delays in pension contributions, for example.

"This very unbalanced system has become a norm," Blair said.

"It's not. At some point, and I think we're there, the issue becomes so (crucial), it becomes so difficult, good companies for all of the wrong reasons can no longer stay in business and that's a really sad commentary."

Cost reduction for federal treasury

Those delays, trades contractors argue, also add costs to contracts because contingencies or hold-backs of five per cent or more have to be added to tender prices.

Plett said the bill, if passed, would eliminate the need for the contingencies, usually set aside in case payments are not made on time, and reduce costs to the federal treasury.

Similar legislation exists in other countries like the United States, Ireland, and the United Kingdom.

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