Updated 5.07pm: The Government's planning a crackdown on developers to ensure subcontractors, like electricians, plumbers, painters, plasterers, tilers and others get paid.

Building Minister Nick Smith says it's unfair that subcontractors can miss out on being paid when contractors or developers retain the money inappropriately.

They've been retaining the payments to ensure that any faulty work is put right.

Nick Smith says in the future the money will be held in trust to ensure they get paid for the work they do.

The move follows the collapse of Mainzeal last year when around $18 million of money owed to subcontractors was lost.

Nick Smith says under his law change that won't happen again.

"I am confident that with this law change, we will prevent a repeat of that sort of tragedy for the subbie (subcontractor) industry, and we'll make sure that those funds actually have priority over secured creditors."

Dr Smith says with the biggest construction boom in 40 years there needs to be assurance for the small businesses who work on big projects.

Dr Smith hopes the new law will be in place within months.

"We're on the verge of the biggest building boom in 40 years. We've been working with the construction industry about the sort of changes that would work better for the industry, and we think subbies are too exposed."

Graham Burke of the Specialist Trade Contractors Federation says the proposed system is a good one.

"That money has to be kept traceable and separate, and it can't be used for other purposes. If it is, then the Directors of that company I believe will be facing some serious consequences."

Mr Burke says that's a better outcome than heavy regulation.

He says to say they're happy with the policy is an understatement.

Mr Burke says they favour the light-handed approach, where industry can run it themselves.