Seán Canney (Galway East, Independent) | Oireachtas source

And no inflation. Basically, contractors were not pricing the risk. Then, however, as inflation began to take off a little, they were able to gauge and to price the risk. What has happened in the past six months, however, is such that nobody knows what will happen tomorrow, never mind next week or in 30 months' time. That is where we are. As I said earlier, the contracts were brought in at a time when the Dublin Port tunnel was being built and there were rumours that it was going over budget, it was going to collapse, water was coming into it and it would never be finished. There was a knee-jerk reaction to change the contracts. I think Mr. Sheridan said the GDLA form of contract was fine, although it needed to be tweaked a bit at that time.

Another thing that is missing from this whole process is that there is an onus on the building contractor whose balance sheet has been affected to provide a contract guarantee bond for every contract it goes onto. That is based on the strength of its balance sheet, so an insurance company will not take it on unless it does that. We are cutting ourselves off at the pass before we get there. That is a very important aspect to this as well.

When I talk about the construction industry, I am talking about the guy who is building a house or a house extension, not the big guys. I am talking about the guys who have to go home in the evening and worry whether they will have money at the end of the week to pay the wages or whether that money will pay for the bit of plant they have at the end of the month. They might have a load-all or whatever else. These guys are getting caught the same as the big guys in proportion.

I know of a guy who is building a house at the moment and who has the Polycor stone on it. It is a two-storey house. He has blockwork going from there. He is already €20,000 over budget on the project and has not got to the finishing stages of it at all yet. Because it is a private house, he will have to talk to the client and they will negotiate how they will deal with that. The private sector is functional in that there is an open book when it comes to this. The client will sit down and look at specifications, savings and whatever else to make the project work, and that will help everybody.

What is wrong here is that we have been caught out by what has happened between Covid, Ukraine and the hyperinflation we have seen. I have been talking to the Minister, Deputy Michael McGrath, about this and I know he is consulting with all the various Departments, but my biggest worry about this is that, as far as I understand, the Office of Public Works cannot now compete in respect of the tender for works. It cannot get contractors to tender for works because they will not tender in this market as they would be tendering blind. The words "reckless trading" were used, and that is exactly what this is. People will be recklessly trading if they continue the way they are.

I have a very simple solution in respect of both the existing contracts - and Mr. Sheridan can correct me if I am wrong here - and the contracts that have been tendered for but not signed. It is very simple to amend these contracts to include a clause for price variation with a mechanism within that as to how that is dealt with. It could be written out in half a day. If the price comes down, the client benefits; if the price goes up, the client will pay in proportion. That is how the NEC and FIDIC operate. That would be for the emergency situation we have now. Any clause can be inserted into a contract when there is an agreement between the contracting authority and the contractor. A clause can be put into the contract to do that. I think I am right on that. Basically, the immediate emergency and the crisis we have now can be resolved very quickly. There will be a cost to it, but what will the cost be if we do not do something about it? This is where we will find that civil engineering contractors will turn their backs on Ireland and bring their plant over to England, where they can get work and have peace of mind knowing they will get a fair deal. Right now we have stagnation because I think contractors are holding back on progressing works, even on site, because they cannot get the materials, because of the cost of it or whatever else. Looking at the presentation the CIF made, in particular on the margins at which contractors are working, they are working at very thin margins, and to achieve those margins they have to work hard. Since the public works contracts came in, I would describe them as having developed a war zone within the construction industry, where the clients' representatives are in a battle with the contractors from start to finish.

What is not known is how much money has been spent by contractors and contracting authorities on buying in expertise in arbitration, conciliation, claims and all those types of things. That has to be paid for by somebody. We have to come back from this and try to get a more collaborative approach. That is what these contracts do.

I am making a statement rather than asking questions because I have been speaking to our guests. My last point is that the small contractor building a one-off council house is as important to me as the big-----