Ms Deirdre Ní Fhloinn:

I thank the committee for inviting me here today to speak on the general scheme of the proposed Irish construction industry register Bill. I am a barrister in the final year of my PhD research on legal remedies and redress for defective housing. In my previous submissions to this committee, I set out my concerns regarding the construction regulation system in Ireland. I have reviewed the general scheme of this Bill. I thought it would be beneficial to the committee for me to examine how the proposed scheme fits in with the existing legal and regulatory context for construction regulation in Ireland, and specifically whether it achieves the objective of consumer protection.

I wish to highlight four particular issues in my opening statement, namely, consumer protection, the best way to regulate, public accountability and conflicts of interest, as well as effective regulation and State involvement. On the question of whether CIRI will protect consumers, I emphasise that consumer protection in construction regulation requires good-quality housing to be built, with accessible remedies for poor-quality housing. The proposed Bill provides no remedies for consumers. It may be presented as part of a package of reforms, but those reforms do not address the most significant issues facing consumers, including poor legal remedies, the lack of cost-effective access to dispute resolution procedures and the lack of mandatory defects insurance to cover the legal liability of insolvent builders, which could at least provide an after-the-event pathway to a remedy for the home owner. A private registration system might be thought satisfactory in a country with greater State involvement in the construction process generally and with better legal remedies for defects but it could have highly negative consequences in Ireland, where the regulatory system and the legal regime for remedies are both inadequate from the perspective of consumer protection.

An example would be a consumer dealing with defects in a home. A home owner dealing with defects may make a complaint to the CIRI admissions and registration board, and the complaint may result in disciplinary action or prosecution against the builder, which will not fix the defects. To obtain compensation to fix the defects, the consumer will still have to pursue a long and expensive remedy through legal proceedings. If the defect is a breach of the building regulations, that person can also complain to the local building control authority and possibly also the registration bodies of any professionals involved in the works, none of which is obliged to act or award compensation in order that another builder can do the work. Only the building control authority can order the builder to put the work right, and then only realistically during the construction stage.

How should builders be regulated? The scheme will result in a private system to regulate builders and a separate public system to regulate what they build. It is a missed opportunity to further develop the national building control management infrastructure as a central regulatory tool for regulation of both building and builders. This will result in significant information gaps, and for example, only the local building control authority will know of a registered CIRI member’s record on compliance with the building regulations. This information could be captured on the building control management system and then used by the registration and licensing system for builders if the two systems were operated under a common framework. An independent regulator with responsibility for the building control management system could use the system as a regulatory tool to monitor persons and entities involved with construction using information submitted relating to projects and any inspection and enforcement information supplied by building control authority authorised officers in respect of construction works.

An example is a hypothetical builder with a history of poor compliance with the building regulations. Information I have obtained from building control authorities indicates that formal enforcement powers are seldom used under the building control Acts. A builder with a pattern of non-compliance in construction works may have negotiated on more than one occasion to avoid formal enforcement. Under the CIRI model, a person’s registration will not be affected by these non-compliances unless that person is convicted under the Act; even then, CIRI may only discover the conviction if the member discloses it.

The proposed system will act as a gateway to being able to work for large numbers of people and would be a significant transfer of power from the State to a private entity. Independence cannot be ensured simply through the composition of the CIRI boards. The system will not be overseen by a regulator, as are the RECI and RGI systems for electricians and gas installers, respectively. These functions have been specifically delegated by the Commission for Regulation of Utilities and the commission monitors the performance of these schemes, as well as taking enforcement action where electrical or gas works are carried out illegally. A leading Irish expert on the delegation of State powers to the private sector has observed that where similar delegations have occurred in the United States, the private delegates are exempt from requirements that apply to the Government and State agencies, such as disclosure requirements, oversight structures, conflict of interest and reporting requirements and ethical obligations. There is no mention in this Bill of the Freedom of Information Act, the Ethics in Public Office Act or whether CIRI will be subject to the Ombudsman Acts. There are no requirements on any committee or board members of CIRI to disclose their own financial interests. There are a number of examples of other Irish regulatory bodies where such information is available, and for good reason; this Bill entrusts a significant amount of power to a private entity over who can work and what work they can do. These norms of regulatory governance are not reflected in the Bill.

Finally, I refer to effective regulation of construction, investment and State involvement.As part of my PhD I have researched systems of construction regulation in other countries. The consistent feature of effective and robust regimes is that they are properly resourced, independent of the regulated industry, with sufficient profile and credibility in the sector to influence compliance. My research suggests that part of the reason for the widespread defects in our housing stock is that, at least in recent years, there has not been a credible threat of enforcement of the building regulations. There are powers of enforcement in this Bill but building control authorities also have formal enforcement powers that are seldom used. The evidence of the number of defects in Irish houses and apartments points to a widespread and systematic disregard of the building regulations. Why would people comply when it is cheaper not to comply and there is little chance of being caught and little chance that one will be prosecuted or even have to pay to fix the defects if caught?

I have previously told this committee of my concern that the system of mandatory inspection and certification set up in 2014 would be seen to be doing the heavy lifting of regulation and that the public system would suffer unless it was resourced and supported. Investment in building control and in the building control management project is very small by comparison with the value of the construction sector. If regulation of builders is entrusted to the private sector, the public system will be undermined and we will miss an opportunity to develop a robust system using the building control management system as a key tool.

There are successful examples worldwide of the private actors having a role in construction regulation, and it can work well. Our context is different. We have extensive evidence of breaches of building regulations, poor legal remedies, expensive and complex procedures for dispute resolution and a lack of mandatory defects insurance. My research and analysis of the particular experience of Ireland in recent years suggests that the State should be investing in strengthening and supporting the regulatory system instead of outsourcing a key pillar of that system to a private representative body for the construction industry.