N.B. business leaders call on government to enact prompt payment legislation

·5 min read
The Caribou Mine, about 50 km west of Bathurst, suspended operations last week and was recently granted creditor protection by the British Columbia Supreme Court.  (Alexandre Silberman/CBC - image credit)
The Caribou Mine, about 50 km west of Bathurst, suspended operations last week and was recently granted creditor protection by the British Columbia Supreme Court. (Alexandre Silberman/CBC - image credit)

The owner of the Caribou Mine in northern New Brunswick owes creditors millions of dollars, including several local businesses.

Grant Erb's Bathurst-based business is one of them.

Erb said Power Precision has been doing work for the Caribou Mine since 2005, providing electrical equipment and engineering services, and has been owed money since May.

He declined to disclose the amount, but said the unpaid debt has impacted his company's operations.

"The equipment and services provided cost us money," explained Erb. "So that takes money from our company."

He said it limits the number of workers Power Precision can employ, "and the amount of work that we can do in the near future."

CBC
CBC

Erb said his company may not be in its current position if New Brunswick had prompt payment legislation.

Such rules would require invoices to be paid more quickly, "so that payments do not continue to accumulate unpaid to small businesses and these things can be resolved more promptly before they continue to escalate and increase in value."

Erb suggests a 30-day limit for payment.

"It's not uncommon to see terms on purchase orders requesting 90 days before payment, and it's quite common too for those companies to not pay even within 120 days at times."

Erb believes prompt payment will actually improve New Brunswick's economy.

"If we can ensure that money continues to flow to contractors and businesses and not be withheld, if companies get payment promptly, then they can use that money to continue on with other work and employ people," he said.

CANB says it's time for time limits

The Construction Association of New Brunswick (CANB) agrees. It's calling on the government of New Brunswick to create legislation that would ensure prompt payment for businesses.

"Prompt payment legislation is very important for the construction industry in the province," said John-Ryan Morrison, the executive director of the CANB.

He said New Brunswick is one of the last provinces in Canada to enact such legislation.

Morrison said his members are "the ones taking all the risk" and waiting so long to get paid "prevents us from growing our industry. The construction industry in the province represents about 8 to 10 per cent of our GDP, so when our construction industry is suffering, that means the whole province's economy is suffering."

Submitted by John-Ryan Morrison
Submitted by John-Ryan Morrison

He said it's not uncommon for businesses to wait 100 days or more to be paid for a job.

"That means everything further down the line is also waiting for payment … [and] it means they don't have the money to bid on new jobs because they haven't been paid for the old jobs."

Morrison said the smaller the company, the less able it is to carry such debts.

He said the construction association has been advocating for legislation for more than a decade.

New allies join call

They've recently gotten an ally — several, in fact.  Six of the province's chambers of commerce and the Atlantic Chamber of Commerce all signed a letter to government backing the construction association in its call for legislation.

"Companies need to be paid in a timely manner to ensure business continuity and to have the ability to grow and to take advantage of opportunities," said Krista Ross, the CEO of the Fredericton Chamber of Commerce.

She said such legislation would promote "the orderly, timely carrying out of construction projects. Sometimes the current system leaves general contractors, subcontractors or suppliers without payment, sometimes for months after the completion of projects, and this can cause delays in beginning new projects."

Ross said it can even lead to companies shutting down.

She said businesses have had enough to contend with for the last couple of years, so it would be helpful to remove this one "roadblock."

Submitted by Krista Ross
Submitted by Krista Ross

In a letter sent to the premier in May, the chambers said "New Brunswick will soon be the only province without this legislation. The construction industry has identified the lack of such legislation as a drag on cash flow, which is limiting capacity to produce new housing — which, as you know, is one of the key barriers holding back population growth and economic expansion in the province."

The letter goes on to say that in Ontario, the owner has "either to pay within 28 calendar days or dispute within 14 calendar days, describing the reasons for non-payment. In turn, the contractor must either pay its subcontractors within seven calendar days of receipt of payment or send notices of dispute within seven calendar days."

Ross said she's received positive feedback from government about such legislation. In fact, she said Premier Blaine Higgs, in a speech to the Fredericton Chamber of Commerce in March, said legislation would be introduced this year.

The province was asked on Wednesday to provide information on the status of any potential legislation. On Friday afternoon, Alycia Bartlett, a spokesperson for the Department of Transportation and Infrastructure, emailed a statement saying, "government recognizes that timely cash flow along the payment chain to contractors, subcontractors and suppliers is important for a healthy construction industry in New Brunswick.

"Work is underway, but as we are early in the process, we don't have anything further to add at this time."

Morrison is anxiously waiting for a progress report from the province. He said it's nearing the end of August without a draft, "so we are getting concerned."

He said the association wants to be able to provide feedback on a draft before the government moves ahead with it.

"We were promised by the premier that this would be passed in the fall legislation of this year, and it's getting pretty close to that time, and we haven't been able to even see a draft, let alone provide feedback," said Morrison.

"We just need it in place as soon as possible because every day that prompt payment legislation isn't enforced in the province, the entire provincial economy suffers — not just the construction industry."