John Browne (Wexford, Fianna Fail)

I welcome the opportunity to speak on the Bill. It is an issue which I, like Deputy Troy, raised on many occasions with Ministers when we were in government but they were slow to recognise the need for such legislation. The Minister has moved quickly in this regard and I also compliment Senator Feargal Quinn, who pushed this legislation very strongly in the Seanad and got wide support for it among the parties. The Bill has gone through the Seanad and many amendments, changes and suggestions for change have been made. I welcome that the Minister of State, Deputy Brian Hayes, said in his opening speech that he was prepared to consider further amendments and prepared to listen to suggestions from Members on this side of the House and from the Government parties with regard to how the Bill could be improved.

All of us have evidence of how subcontractors were treated over the years by main contractors and by developers, particularly in recent years. During the building of the main county hall in my county, the main contractor gave untold hardship to subcontractors, practically on a daily basis. The main contractor might have been in financial difficulty itself but I am sure it was aware of its financial position before it ever applied for the contract on the Wexford county hall or for the contract for the new library in Wexford. Practically on a daily basis, I and other politicians had subcontractors contacting us to get us to talk to the county manager to find out why they were not being paid. The county manager and the council would tell us the main contractor was being paid on a regular basis, as per the agreed contract, but subcontractors were left high and dry.

Eventually, both the company building the county hall and the company building the new library in Wexford went into receivership or examinership and they disappeared. As a result, many subcontractors were left in a position where they were due hundreds of thousands of euro. Many had no choice but to go out of business, with a consequent loss of jobs and payments to their workers. This should not happen again. Overall, many of the country's largest developers and contractors felt the problems of the downturn in the building industry.

The purpose of the Bill is to improve payment practices within the construction industry by providing for a range of statutory rights for subcontractors, supported by the ability to refer disputes to a fast-track adjudication process. The Bill should not, however, be viewed as an alternative to undertaking appropriate due diligence of the project in which contractors are to be involved, the contract terms under which they are to perform work or provide services and the financial stability of the key players involved.

The construction industry was always characterised by a degree of informality. We had very strong, solid construction companies for many years, 99% of which would have honoured their commitments to subcontractors. Then, in the Celtic tiger or boom era, many new developers and building contractors entered the arena, many of whom had no experience in the construction industry. In my area, there were solicitors, barristers, accountants and farmers moving into the construction industry who, in my opinion, were not equipped to deal with the situation. Many of them set up shelf or shell companies, or whatever kind of company it was, and, as a result, they did not deal directly with the subcontractors and contracted out the building of the housing schemes or commercial buildings to a building contractor, who, in turn, hired in huge numbers of subcontractors.

There was also a situation where many hundreds of people were employed in the construction industry through agencies and had no contract with the developer or the person building the houses. They were dealing with an agency, they were paid a wage and, in some cases, the workers did not get paid either because of the loose arrangements that existed. Let us consider the main building contractors in Wexford in recent years. Despite the downturn in the economy and the low level of building of houses or commercial developments they are still hanging in because they have been part and parcel of the construction industry, they have a good reputation and a good name. They are able to look after subcontractors and their workers.

Unfortunately, unlike other industries when a construction company goes into liquidation there is no legal entitlement for a subcontractor to remove the goods that have been paid for. In some cases concrete blocks, plastering, plumbing, painting and the goods of electrical and kitchen contractors form part of a building and, therefore, cannot be easily removed. As a result, when a company goes into liquidation or receivership, the subcontractor has no rights whatsoever. When a developer or main contractor goes into liquidation, the liquidator effectively confiscates the subcontractor's goods and sells them off as part of a house or apartment to pay off the developer's debts, which are largely to the banks. In the majority of such cases subcontractors do not get paid. In many cases subcontractors have borrowed money from the same bank to purchase the materials supplied. They continue to owe the bank for the goods that the banks have effectively sold off because the subcontractors have already paid their staff and suppliers. As a result they are forced out of business. We have seen this take place on many occasions. Many subcontractors who have gone out of existence in my county point out that the Revenue Commissioners have the first say, the banks have a say, the examiner or the person overseeing the receivership gets paid, the legal people called in to advise get paid, but, unfortunately, they are left high and dry.

This is the reason the Bill is before the House. As I stated at the outset, the Bill should have been enacted years ago. However, unfortunately during the boom years no Minister in my Government or any previous Government saw fit to do so. For this reason I compliment the Minister of State, Deputy Brian Hayes, for taking on the Bill and moving it through the Seanad first and now through this House. I welcome the assurance of the Minister of State that he will seriously consider amendments. There are other ways and means of improving the Bill.

There are four main, interconnected proposals. They would have a fundamental effect on the impact of the legislation. These proposals were raised in the Seanad debate and as part of a consultation process. The proposals are a provision that would guarantee payment of a construction contract through the use of a financial instrument such as a bond or a designated trust account; the removal of a minimum monetary threshold for private sector contracts of less than €200,000 and public sector contracts less than €50,000 from outside the scope of legislation; to make the adjudicator's award binding on both parties, regardless of whether the dispute goes to arbitration; and to broaden the scope of the Bill to introduce goods and products, especially those manufactured for a given project, for example, concrete or some of the other products I referred to earlier.

There has been significant and justifiable criticism of the lack of accountability on the part of the regulators during the recent banking crisis. Similarly, firms specialising in liquidation and receivership are racking up hundreds of thousands of euro in professional fees per case. The poor subcontractor is left high and dry. We cannot reverse the plight of many who have suffered from the fallout of the collapse of the construction sector. This should not deter us from doing what we can to put in place appropriate legislation and enforcement procedures to ensure that such problems are prevented from recurring. The Government is certainly moving in the right direction on this issue. I am pleased that all sides of the House are supportive of the Minister of State. This legislation should be passed quickly. A strengthened and enhanced Construction Contracts Bill could have a lasting effect not only on people's lives, jobs, and businesses but on the wider economy. It will help the wider economy and help to underpin the foundations of a sustainable construction sector in the years ahead.

Unfortunately the construction industry fell out of kilter in recent years. It is important for the economy that we get back a reasonable construction industry. It is important to build houses for the people, especially those on council housing lists throughout the country. This is probably the quickest way to create jobs with a reasonable construction industry rather than the madcap building industry of the Celtic tiger era. We should get back to building a reasonable number of houses for our people. The Construction Contracts Bill will certainly enhance the construction industry in future.

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