Speech at 3rd Reading of Bill S-224 (Canada Prompt Payment Act)
Hon. Donald Neil Plett moved third reading of Bill S-224, An Act respecting payments made under construction contracts, as amended.
He said: Honourable senators, I will be brief. It is late. We all want to go home. I need to build a shed at home, something that I had to pay for when I bought it. They didn't give me any credit.
Bill S-224, the Canada Prompt Payment Act, was first tabled in this place on April 13, 2016, over one year ago. Sadly, in that time, trade contractors across the country have continued to go out of business. Colleagues, this is too long for an issue as important and straightforward as workers getting paid for work they have completed.
This legislation had an extensive and unorthodox journey through the committee. But witnesses were overwhelmingly supportive, and truly that is an understatement. As Senator Tannas reminded us at clause-by-clause consideration, we had men in tears here. We know there is a big problem.
The problem, colleagues, is that it has become an accepted and tolerated practice in the construction industry that unpredictable delays in payment down the contractual chain are just part of the normal course of doing business. The average duration for a trade contractor to receive payment for certified work that is not in dispute is over 70 days, 10 weeks.
I have mentioned before in this chamber that this puts trade contractors in a liquidity vice. The trade contractors' revenues are subject to unpredictable delays without any flexibility on their payables. Weekly wages, payments to the CRA and payment for materials must be made within 15 days, and the list goes on.
Most trade contractors are small employers. The majority of trade contractors employ fewer than 20 employees. Trade contractors often commit all of their resources to one single project. In these circumstances, there are serious consequences when there is an increase in cash flow risk. A three- or four-month delay in making a payment when a project is absorbing all or virtually all of a trade contractor's business resources puts the survival of the business at grave risk.
I'll remind colleagues that Canada is the outlier. Nearly all jurisdictions in the Western world have prompt payment legislation, including virtually all of the U.S. states and the federal government.
The Canadian provinces are also moving quickly on this file. In fact, Ontario's legislation is slated to be tabled this spring.
Colleagues, we had 20 witnesses at committee. Eighteen were not only supportive but were pleading with the committee to pass this legislation quickly and to finally give them an enforceable solution to this problem. Only two of those 20 witnesses raised any concerns. Which two would those be; those that are not paying their bills on time.
Steven Mackinnon, Parliamentary Secretary to the Minister of Public Services and Procurement, while not stating he was opposed to the legislation, stated that he was told there may be some jurisdictional issues. They were told this by lawyers from Justice Canada.
As the chair knows, we pleaded with Justice Canada to send over some lawyers to testify so that we could ask them about this. Eventually, they reluctantly sent over two. Both said they could not say for certain whether the bill was unconstitutional, but there may be some concerns.
We then invited a renowned constitutional expert to testify about whether this legislation was within federal jurisdiction, and he was absolutely emphatic that this was within the federal Parliament's right to legislate. The committee accepted his opinion.
The only other witness to raise concerns was a general contractor, who of course is the party responsible for paying its bills and who is often the culprit in terms of the delays in payment and the disastrous consequences that have resulted in the construction industry.
We heard stories from trade contractors at committee who had waited 180 days, 220 days, four years, and even up to seven years to receive any payment for completed and certified work. One said that he has gotten to the point where he just won't work with general contractors anymore. Dan Lancia, an electrical contractor, told the committee:
It's a systemic problem in our industry. I don't do any government work. I do private sector work. It's systemic in [the] private sector. When dealing with general contractors, they hold on to your money.
From what I understand now, they've actually hired money managers to manage my money and not give it to me. That's becoming so much of a problem I have actually decided I don't like working for general contractors anymore. For that reason we may be slowing our business down a bit by not taking on so many projects and not hiring as many people as we usually do.
I am tired of a being a bank. I am tired of having the bank call me. I am tired of having suppliers call me. I am just tired. I have been in business for 28 years. It has been a great business.
. . . The business changed 15 years ago and it's just getting worse trying to get paid.
Colleagues, what we did is work with the general contractor, the lawyer representing the national trade contractors, and the Senate law clerk's office and came up with a series of amendments to satisfy the vast majority of not only the general contractors' concerns but other concerns. Of course the committee was not able to satisfy all of the requests, but we made a compromise.
All of the amendments that I proposed at committee were accepted unanimously. As Senator Tkachuk did a great job explaining each amendment when he tabled our committee's report, I will not repeat all the details. I will, however, highlight one amendment that was recommended by Senator Ringuette, which spoke to a swift and efficient adjudication process. This was one of the most significant improvements to the legislation, and I thank her sincerely for her work on this file.
Honourable colleagues, as most of you did not have the opportunity to listen to the stories of the contractors who came before us, I will leave you with just one story, a quote from Ed Whalen who testified representing Canada's steelworkers. I asked him what he thought about the parliamentary secretary's suggestion that we simply strike up another working group or perhaps try to come up with yet another solution, and whether that would satisfy their concerns. This is what he stated, with tears in his eyes:
The ultimate problem is that we're not getting paid in time. If some process takes 120 days or longer then it's not the solution. We have expectations from our suppliers that they want to be paid in 30 days. We're running up our lines of credit. The banks are on our backs. They're ready to pull the pin.
You wouldn't get this many trade contractors in front of this Senate committee unless this was very serious. Hundreds of thousands of Canadians are at risk. Thousands of companies are at risk through no fault of their own.
We need a solution so that our guys can minimize the risk in one draw. Then they can make a business decision. At the moment it's one draw, two draws, three draws, four draws, and then unbeknownst to them the bank is on their back. They can't collect but everybody is looking for money.
This isn't a joke. We need immediate solutions. Is there some other possible way to solve this problem? The rest of the world said no. They all came down to the same common denominator, and that was legislation.
Why are we trying to reinvent the wheel? We have something sitting right in front of us. We can work on additional solutions later. Do you want these companies going down through no fault of their own?
Mr. Whalen concluded with this:
We're trying to make a living, to keep the economy going and to employ people. We're trying to build things, not feed the lawyers lots of money. All those legal fees and expenses come out of our bottom line. Right now our bottom line is nothing. Anything which delays payment and takes away from our ability to survive is money gone. We need a bit of profit in order to survive, and you're not giving it to us.
Colleagues, it is time we give the contractors what they need to survive. All they want is to be paid for work that they have completed. They have waited long enough.
Earlier this week, we passed Bill S-229, Senator Mitchell's call-before-you-dig bill. It too had been in this chamber far too long. It is a completely non-partisan issue, and it too needs to pass the other place. We owe it to Canadians.
Let's move this along to the other place so it has a chance of passing in this session. Our trade contractors across the country, their livelihoods and their families are depending on it.
For this reason, colleagues, I humbly ask, if you would like to speak to this legislation, to do so today on behalf of the trade contractors across the country, so that we can vote on this bill today and pass it over to the other place.