10 | SUMMER 2019 ADVANTAGE STEEL PROMPT PAYMENT By Richard Woodbury Prompt Payment A STEADY CASHFLOW is the lifeblood of any successful business. Without it, even quality companies can go bankrupt and firms aren’t able to reinvest in their businesses through buying new equipment or hiring more employees. The need for prompt payment legislation is one of the biggest challenges in the construction industry, but the situation is improving. CISC has been working tirelessly to drive the move through advocation at the federal and provincial levels. Prompt payment and adjudication legislation is being developed and implemented to ensure tradespeople are paid within 30 days, which is a huge step forward from the current 90 days. Progress so far Thanks to the ongoing advocacy efforts of CISC, Ontario enacted prompt payment legislation through reforms of the existing Construction Lien Act in December 2017. Bill 142, the Construction Lien Amendment Act, established the first prompt payment regime in Canada and created a standard for other provinces to follow. A government press release at the time noted that between 2002 and 2013, the average collection period in the construction industry increased from approximately 57 to 71 days. “These changes will have a real impact on people’s lives, giving workers assurance they will be paid on time and in full, and help to ensure disputes are resolved quickly,” said Yasir Naqvi, then the province’s attorney general. That same month, Quebec passed Bill 108, which facilitates oversight of public bodies’ contracts and allows the provincial government to implement pilot projects to test different construction law reforms for public contracts and subcontracts, including prompt payment and adjudication. Last November, federal Finance Minister Bill Morneau said the federal government was committed to passing prompt payment legislation. This was an update from a January 30, 2018, announcement from Public Services and Procurement Canada in which it declared it was seeking industry input and recommendations for federal legislation. Two independent experts were retained to gather input from the construction industry. “Today, our government is taking the next step in ensuring that subcontractors who work on federal construction contracts get paid on time,” Steven MacKinnon, the parliamentary secretary to the minister of Public Services and Procurement, said at the time. “The construction sector is an important employer and economic engine in Canada. Our government is committed to ensuring that construction investments flow efficiently to all contractors involved in federal projects.” As part of the consultation process, CISC played a pivotal role, providing valuable recommendations advocating for the importance of timely payments. The two independent experts, Bruce Reynolds and Sharon Vogel, wrote a report released last summer. “We have concluded that the existing prompt payment policies and/or proposed voluntary codes are inadequate to achieve prompt payment, particularly at the trade contractor level and below, such that the implementation of prompt payment legislation at the federal level makes sense,” the authors wrote. They said there were three reasons legislation was needed: • To “assure the orderly and timely building of federal construction projects by ensuring that cash flows down the construction pyramid quickly, thereby avoiding the disruptive effects of delayed payment, and potentially non-payment.” • To reduce construction costs caused by trade contractors who add contingencies to their bid prices to account for the costs that come with slow payments. • To reduce the risk of projects being disrupted because of contractor and subcontractor insolvency. In the March 2019 federal budget announcement made by Morneau, the Government of Canada further solidified their commitment to the