Mary Lou McDonald (Dublin Central, Sinn Fein)

This legislation is long awaited and desperately needed. I commend the Minister on the constructive engagement he has had with stakeholders and the Opposition in recent months. The Bill has the support of the entire construction sector, from house builders to general contractors, civil engineers, mechanical and electrical contractors, architects, building suppliers and the construction sector. It is now time for the Government and all of us to bring the Bill to a conclusion.

As the Minister of State, Deputy Hayes, outlined, Senator Feargal Quinn must be heartily commended on introducing this legislation in response to the desperate financial fall-out for subcontractors unable to secure payment for work completed. I do not wish to sound a dissonant note but I will do so anyway, it is to the previous Government's shame that big contractors and developers were glad-handed and small subcontractors have been failed so spectacularly during the previous Administration's time in office.

Part of the impetus around the campaigning work for the legislation is that it became apparent that big developers and contractors had more cushioning and protection at their disposal to protect themselves and their personal wealth, enabling them to continue in business or to pursue new ventures while small subcontractors were literally hung out to dry. The impact of that has proven devastating for many. Small businesses are left crippled by insurmountable debt arising is some instances solely from moneys owed to them by developers. I will follow Deputy Calleary's example and cite a real-life example of the challenges facing small subcontractors in the absence of the legislation we required to tackle non-payment.

The example to which I refer is not from my own neck of the woods. It relates to GG Roofing - a Mayo-based subcontractor - which successfully completed work for Westport Property and Construction on the Silverbridge shopping centre in Claremorris in July 2009 and invoiced the main contractor the balance of the moneys owed to the company of just over €29,000. Westport Property made a few small erratic payments from November 2009 to June 2010. After a protracted legal dispute the courts ruled in favour of GG Roofing in April 2011, yet one year later the company has still not been paid. The money owed to the subcontractor is clearly of little or no concern to Westport Property but for GG Roofing getting paid will keep the lights on - if not it could be left with no option but to shut up shop.

I wish to address some of the dilemmas and shortfalls in the Bill as currently presented. I will begin with thresholds to which the Minister of State referred. We must find a way to ensure the finished product in terms of the legislation is a robust mechanism that confronts the accepted practice of non-payment by big contractors in all its guises. The company to which I referred, GG Roofing, is the perfect example of why the minimum monetary thresholds that put private sector contracts under €200,000 and public sector contracts under €50,000 outside the scope of the legislation must be removed from the Bill. The thresholds are counter-productive and do not reflect the type of moneys involved for small subcontractors when it comes to issues of non-payment. The Royal Institute of the Architects of Ireland has warned that leaving the thresholds at such a high level would result in all kinds of anomalies. The Society of Chartered Surveyors is of the opinion that if the threshold is not removed entirely the legislation will be a complete waste of time. I am pleased the Minister identified thresholds as one of the areas for amendment.

On the issue of non-binding adjudication, it is broadly agreed that the legislation's failure to make adjudications binding in the event of arbitration is a real cause for concern. Adjudication is, as the Mechanical and Electrical Contractors Association correctly points out, a low-cost dispute resolution mechanism and is intended to deliver a result in a short timeframe. The legislation as it stands undermines that objective. Arbitration and litigation are time consuming and when it comes to the courts years can go by with little result for subcontractors. The regulatory impact analysis to which the Minister of State referred proposes a two-pillar approach to address this weakness with differing arrangements for public and private contracts. While it proposes that adjudication would be binding for both public and private contracts it suggests that such awards granted to public contracts should be covered by a bond in the event that the award is overturned at arbitration.

The Construction Industry Federation, CIF, has argued against this solution on the basis that it believes contractors will have difficulty obtaining such a bond thus leaving them unable to secure the award and, in turn, make payments to suppliers and subcontractors. Alternatively, the CIF proposes that the Bill would give the power to the courts to withhold enforcement of adjudicator's decisions where the court is satisfied that the payer presents the court with evidence that the payee is unlikely to repay the moneys in the event that the dispute is ultimately resolved in favour of the payer in litigation or arbitration proceedings. I accept there is no simple or immediate solution to the challenge. The purpose of making the adjudication binding is to provide an alternative to long, drawn-out proceedings as experienced by current arbitration and conciliation procedures which work against small subcontractors. Often, it suits large contractors with significant resources behind them to drag out challenges to non-payment through existing processes or through the courts.

Contractors are living with the reality that the value of the construction sector shrunk from €38 billion in 2006 to €9 billion in 2011. In equal measure, protective measures must be put in place. The capital expenditure budget has been cut by the Government, a decision that impacts on contractors, subcontractors and the wider economy. Small subcontractors simply want to be paid for their work.

The two pillar approach may not work. In other jurisdictions the adjudicator's decision is enforced and upheld by the courts in the interim. If we look to our nearest neighbour, in Britain only 300 out of an estimated 18,000 adjudications have been challenged in the courts.

The section in the Bill dealing with payment claim notices does not appear to include a provision dealing with an instance where a payer fails to respond to a payment claim. When this occurs, the amount to be paid should be the amount claimed. This would address the fundamental problem and also give the main contractor an incentive to respond to a payment claim.

I very much welcome the fact that the Minister of State referred to the issue of suspension limits. The regulatory impact analysis did not deal with the concerns raised about the suspension limit as set out and as such, I was pleased to hear the Minister of State articulate them. It is my party's view that the right to suspend work for non-payment cannot be time-restricted to two weeks. This will not act as a sufficient deterrent under the law. If the Government was to persist with the two week suspension limit, it would undermine the purpose of the provision. It would be unreasonable to ask subcontractors to go back to work after two weeks having still not been paid and to incur further costs. It is welcome that this is a matter on which the Minister of State will table an amendment and that we will address on Committee Stage.

On the inclusion of a trust clause, the Mechanical and Electrical Contractors Association has estimated that, in the case of the six largest construction companies which have gone out of business in the last two years, at least €500 million was left owing to subcontractors, which is astonishing. The reality for the tens of thousands of tradepersons employed by subcontractors is that €500 million worth of work went unpaid. It is on this basis that the association has proposed the inclusion of a trust clause in the legislation to ring-fence moneys paid to a main contractor to ensure payments due to subcontractors would be paid in full. The organisation argues that the moneys should be paid in trust to a main contractor for disbursement to subcontractors to safeguard payments to SME companies. There are trust provisions in some of the standard contract forms, but they are frequently struck out. On this basis, a statutory trust provision is required, as applies, for instance, under Canadian law. We must look at this issue of ring-fencing moneys paid by the payer to the payee for work completed by subcontractors.

In respect of goods and services, I support the assertion of the regulatory impact analysis that the scope of the Bill needs to be broadened to include goods and products specially manufactured for a project. The Minister of State mentioned bespoke supplies. I appreciate that there will be some work to be done to come up with a precise definition because, as has been said, the Irish Concrete Federation points out that products which are integrated into the fabric of buildings such as concrete blocks are irretrievable, a point on which we can agree. In its submission on the Bill Irish Asphalt notes that bituminous road materials are perishable which must be incorporated within hours of delivery. The suppliers of these goods and services need robust legislative protection against those who cannot or will not pay. Existing legislation does not fulfil this role.

These are my initial thoughts on the Bill. The manner in which we have gone through this process, certainly from the time I arrived in the Dáil, has been extremely productive. There is a significant degree of commonality in terms of the outstanding issues that we need to address. I look forward to seeing the Minister of State's amendments. It is welcome that he is so open to considering amendments and ideas others might bring forward.

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