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Nova Scotia construction industry calls on government to finalize prompt payment regulation

Click to play video: 'Nova Scotia construction industry calls on government to finalize prompt payment regulation' Nova Scotia construction industry calls on government to finalize prompt payment regulation
While Nova Scotia's premiership hopefuls highlight health care, education and the economy in their platforms, one industry stakeholder group is calling for a campaign commitment of its own. As Elizabeth McSheffrey reports, the Construction Association of Nova Scotia wants final regulations for prompt payment legislation by the end of the year, citing an increase in "delinquent payments.” – Jul 30, 2021

While Nova Scotia’s premiership hopefuls highlight health care, education and the economy in their platforms, one industry stakeholder group is calling for a campaign commitment of its own.

The Construction Association of Nova Scotia (CANS) wants the provincial government to enact a final regulatory and adjudication framework for prompt payment legislation by the end of the year, citing an increase in “delinquent payments” to companies in the commercial construction industry.

“We’ve got a bit of a perfect storm right now with the pandemic, material supplies in short supply and of course, costs going up,” said Duncan Williams, president and CEO of CANS.

“Throw on top of that contractors and purchasers of construction are not getting paid — that’s problematic.”

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According to survey data collected by CANS, 66 per cent of 58 Nova Scotia companies polled report not being paid on time “most of the time” or “all of the time” for work they’ve completed. That figure was 61 per cent in 2015, 70 per cent in 2016, and 77 per cent in 2018.

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CANS represents some 800 small and large companies throughout Atlantic Canada. Williams said every year, 35 to 40 construction-related companies go bankrupt, resulting in 700 to 800 jobs lost.

“If you look at the priorities that are important to our industry including diversity, hiring youth and apprenticeship … it’s very difficult to do that when you don’t get paid,” he explained.

“A lot of our members report this, they’re actually incurring interest charges and they’re not bidding certain owners, general contractors or project managers because of their past experience.”

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Sometimes, Williams said delinquent payments occur when there’s a misunderstanding of the law, including the circumstances under which a client has the right to withhold payment.

Other times, said L.E. Sheet Metal Ltd. co-owner Heather Cruickshanks, the right paperwork wasn’t completed or the paperwork was lost by the client.

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In 2000, she and her husband had to remortgage their house after a client in Sheet Harbour, N.S. failed to pay them on time.

“We just didn’t get paid. Nobody got paid. I was fortunate enough to be able to remortgage the house to keep going because the banks don’t take ‘Oh well, we didn’t get paid, so we can’t pay you,” she told Global News. “We paid (our home) off the second time.”

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Respondents to the 2021 CANS survey said 58 per cent of late payments were on private projects, 26 per cent were provincial government projects, 25 per cent were municipal projects, and 14 per cent are federal. Nearly half of respondents said “all of the above.”

In 2019, the province announced new prompt payment legislation through amendments to the existing Builders’ Lien Act. The regulation would create clear payment timelines for contractors, subcontractors and suppliers in the industry, a rate of interest for tardy payments, and an adjudication framework for when problems arise.

To date, however, no such regulations have put in place.

“When you have everybody saying we need to build our economy, well lets start with the people who actually build the economy,” said Cruickshanks, a member of CANS’ Nova Scotia Prompt Payment Coalition.

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“We do it all, yet every day we’re the ones at risk of not being paid for the services we supply.”

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Gord Gamble, president and CEO of Iron Dog Mechanical Services, estimated that 70 per cent of the time, his company isn’t paid promptly. On the construction side, he added, “you build it into your thought process” that you may have to finance a project yourself for a period of time.

Delayed payments affect every aspect of the business, he explained, including hiring, paying staff and suppliers, purchasing critical equipment, investing in training, and taking on other projects.

“As you hear the political leaders talking about the investment we’re about to take on in the hospital sector, which is critically needed in our province, well let’s make sure that the province is getting the best bang for those dollars,” said Gamble.

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“They can do that by ensuring the players that are going bid that work are not worried about paying their bills in a timely manner.”

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If elected, by email the Nova Scotia PC Party said it would “pay its bill on time once projects are complete” and commit to finalizing amendments under the Builders’ Lien Act.

The New Democrats said they’re “committed to working with the industry to ensure prompt payment of contractors. It’s very important that small and medium businesses are paid on time for their work.

The incumbent Liberals say their leader is “aware that this is an issue that is top of mind for many Nova Scotians and commits to establishing a fair process with clear expectations for all within the construction sector.”

 

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