Mainzeal owes 'millions' in retentions

MARTA STEEMAN
Last updated 17:05 21/02/2013

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A large subcontractors group estimates that retentions make up about a third of the money that is owed to subcontractors used by the collapsed Mainzeal Property and Construction.

Graham Burke of the Specialist Trade Contractors Federation was unwilling to say how much Mainzeal was estimated to owe "subbies" in total following a survey of members within the federation.

But he was prepared to say that retentions made up about a third, and the amount was "well up in the millions (of dollars)".

The federation includes organisations representing electrical contractors, the wall and ceiling industries, refrigeration industry tradesmen, plumbers, gasfitters, drainlayers, painters and plasterers, scaffolding, reinforcing and roofers.

"The value of rententions is very, very significant," he said.

Retentions are typically 10 per cent of the payment for a job up to $200,000, and 5 per cent over that.

They can easily be held by the main contractor for one to two years and act like a bond or security to hold subcontractors to account if a job has problems, is incomplete or requires maintenance.

Burke said that while subcontractors were owed for work done for Mainzeal in December and January, the retentions could be related to a couple of years of work.

The federation's members were challenging the way retentions were dealt with by main contractors.

The federation met with Building and Housing Minister Maurice Williamson yesterday for about 20 minutes on this issue.

Burke said the minister wanted more information from the federation and suggestions of alternatives or better ways to handle retentions.

The federation was questioning how retentions were being used by main contractors - as cashflow rather than as a security.

He said subcontractors had to claim their retention payments back. They were not handed back at the end of a job.

"We are not arguing about the need for retentions but we are not happy about the mechanisms and the fact they are unsecured," Burke said.

"This is an issue that is going on for some time."

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