Pádraic McCormack (Galway West, Fine Gael)

I thank the Ceann Comhairle for allowing me to raise this matter. I seek clarification where a main contractor carrying out State work on a school or for a local authority and contracts part of the ground work to a subcontractor. In the event of the main contractor going into examinership, receivership or liquidation, what protection is provided to the subcontractor who has carried out the work on the site? For example, a main contractor may have worked on the school building and the subcontractor may do the ground work. When the main contractor goes into administration, receivership or liquidation, someone is to be paid for doing the work. Either the main contractor, the school authorities or the school trustees are paid but the subcontractors who have carried out the work cannot get paid. A small landscaper doing work on the landscaping of the school site takes on the job believing it to be a blue-chip job because the Department of the Education and Skills is involved. He thinks there will be no difficulty getting paid for his work.

However, when the main contractor goes out of business, apparently the subcontractor is not paid. This can cause great hardship down the line for small subcontractors. They may employ people to do the ground work on these sites and the subcontractors may employ up to 60 people but if they do not receive money for a €200,000 job, they will go out of business and all of the staff must be laid off. The same applies to a landscaper or a painter, perhaps employing ten people. If he cannot receive €10,000 or €20,000 for his legitimate work, he will go out of business with 12 people on the dole.

As happened in County Galway, local authorities give contracts to develop pitches or playgrounds. In that case the main contractor went into receivership, administration or liquidation. The subcontractor in such cases is not paid for his work yet the local authority pays the main contractor for the work. What provision can be made so that it can be determined that everything is in order before money is paid to the main contractor? The people who did the work on the project should get paid rather than the main contractor, who may have done very little work on the site. What provision exists in law? What investigation take place to ensure the main contractor has not salted away his money or reinvested it? Subcontractors can be owed sums of money by main contractors, the Department of Education and Skills in the case of the school or the local authority in the case of work on pitches or playgrounds. It is hard for them, while awaiting payment, to see main contractors in big houses and travelling by helicopter or 4 x 4 vehicles passing their house every day.

A typical example of this occurred in the Taoiseach's constituency. The contract for two schools was awarded under public private partnership. It was part funded by the Department of Education and Skills. When Pierse Contracting went into receivership, liquidation or administration, despite the fact that it was found to be viable by a leading accountancy firm, the subcontractors who carried out the work on those schools will not be paid. I could give the Minister of State many examples of this happening in my constituency. The examples I have given are hard cases. The knock-on effect is that the subcontractor goes out of business if he is not paid. For large or small subcontractors, who may be exposed to several hundred thousands of euro, they may have to close their businesses. Two years ago a subcontractor had 100 people employed and he now has 40 people employed. He will go out of business. The same is true of the small landscaper who had ten or 15 people employed. He is now down to himself and his wife, trying to keep ahead but still he has not been paid his money.

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