Speech on Construction Contracts Bill 2010- 10th May 2012

Construction Contracts Bill 2010- Second Stage – Deputy Joe O’Reilly- 10.5.2012

There is not a public representative in the State who could not narrate a number of horrific stories of subcontractors and the outcomes they have experienced when developers have refused to pay them, thereby placing them in a very bad position. I have dealt with a number of such individuals in my own immediate locality and have had heartrending meetings with a number of subcontractors who have been so affected. It often has involved families going without a Christmas or the removal of people’s creditworthiness. It also has affected their employees right down the line. No one can exaggerate the gravity and seriousness of this issue or its real impact on people who often are powerless and who lack the resources to go through the court process. Such people do not have the time to wait and find themselves in a very difficult position.
It is for this reason that I warmly congratulate my former colleague in the Seanad, Senator Fergal Quinn, for whom I have great personal regard. I note he is present for this debate. I warmly congratulate the Senator on initiating this legislation in the Seanad. It was far-seeing, insightful and typical of the manner in which he conducts his business. I also wish to warmly congratulate my colleague, the Minister of State, Deputy Brian Hayes, on the manner in which he took the legislation, worked with Senator Quinn and has brought this Bill before the House. The legislation is extremely well crafted and is a great synthesis of the work of the Minister of State, Deputy Brian Hayes, and Senator Quinn. I warmly congratulate both for this timely measure.
The Bill achieves a couple of highly important objectives. It establishes a new statutory right to interim, periodic or staged payments, making clear when those payments become due, the amounts thereof and a final date for payment. It is extremely important that this be put on a statutory footing.
All of us who have had jobs done privately in our homes know that interim payments are the norm, which is important in terms of cash flow to subcontractors. This is very important and I welcome that it is being provided for on a statutory footing.
The Bill also provides that a payee may suspend performance where a sum owing is not paid by the due date, which is critical. A subcontractor should no longer be bound by the terms of a contract. The arbitrary clause which permitted a developer to pay only after he or she had been paid is no longer tenable and was unfair to those concerned. As stated by Deputy Healy, people who fail as subcontractors, because of the type of abuse which this Bill seeks to address, are often, because of the nature of PRSI contributions, only entitled to jobseeker’s benefit which, too, is denied them if their spouse or partner has an income above a certain threshold. As such, these people are in a particularly vulnerable position. It is an issue to which we need to turn our attention.
The provision whereby small subcontractors are paid when the main contractor has been paid, which was arbitrarily used and abused by developers when the recession set in, leaving small subcontractors in a vulnerable position that could readily be exploited, is unsustainable. This was often matched with an abuse of company law by way of the creation of new companies with no assets and resources outside of the original company, leaving no potential comeback for the subcontractor.
The establishment of arbitration and adjudication processes outside the normal court system with all its attendant expenses is important. It is critical that these processes are efficient and secure outcomes in as relatively a short timeframe as possible. On the question of thresholds, I appeal to the Minister of State, Deputy Brian Hayes, to consider introducing an amendment on Committee Stage to lower considerably the proposed initial threshold, which does not accommodate small contractors such as plumbers, carpenters, landscapers and so on. These people are more vulnerable than any other grouping and must be protected. Their level of exposure is greater. Often the small contractors are the weakest. It is critical this issue is addressed on Committee Stage. I look forward with interest to what will emerge during that debate. Having heard the Minister of State’s Second Stage speech, I know that he is favourably disposed in this regard and that he wants to ensure the legislation works and achieves outcomes for people.
I welcome this legislation, the objectives of which are laudable. I believe, following refinement on Committee Stage, it will achieve its objectives. I acknowledge the need for protection of the taxpayer, in terms of exposure, in the area of State contracts. While there is existing legislation in place in this regard, there is a need for a good regulatory process within the public contract area. The point has been well made by previous speakers that occasionally – thankfully not often – the person proffering the lowest tender in a public contract arena does so predicated on bad practice, abuse and non-payment of subcontractors. Anything we can do to eliminate this practice is to be welcomed. It may be necessary to provide for a type of review in order to achieve that objective. The situation for subcontractors caught up in contracts such as the building of a school, hospital and so on will be particularly bleak if the mechanisms of the State cannot protect them. Every effort should be made to protect them. In regard to private contracts, the regulatory framework being put in place should impact in this area.
I welcome this legislation. I know from personal experience, from people with whom I have worked in my advice centres, that it is necessary legislation. I congratulate the Minister of State, Deputy Brian Hayes, and Senator Feargal Quinn on the great work they have done on this Bill. It would be wrong not to acknowledge that it was Mr. Seán Gallagher who initiated debate around this issue. As acknowledged by Senator Quinn in his Second Stage speech in the Seanad, Mr. Gallagher played a role in bringing this issue centre stage. This is a serious issue. I am happy we are addressing it and would welcome further improvements on Committee Stage.

Senator Joe O'Reilly representing Cavan & Monaghan 2010. | An ExSite website