Seán Kyne (Galway West, Fine Gael)

I am delighted to have the opportunity to say a few words on the Bill. One of the most startling aspects of the economic crisis is the way some large construction or property development companies conducted their business. Emboldened by irresponsible members of the banking sector, some property developers did not repay substantial loans but merely rolled them over into new loans. There was, effectively, a house of cards which needed only one non-payment to cause the system to collapse, with serious negative consequences for the parties involved. Unfortunately, these included small community-sized contractors and subcontractors.

Because of the financial pressures and not forgetting the gambling nature of some developers, payments for services provided by subcontractors are being withheld or delayed. Such a practice is abhorrent and shows a lack of regard and respect for other businesses and the people behind them. It is impossible to plan properly or meet one's own payment requirements if there is uncertainty over the delivery of payments owed to one's own company. In the light of these difficulties, Senator Feargal Quinn introduced the Construction Contracts Bill 2011 during the dying days of the last Seanad. The Bill, unfortunately, remained static because of the political climate until its swift reintroduction following the general election. It aims to ensure prompt cash flow, thereby protecting jobs and facilitating the swift resolution of problems and issues in a non-judicial setting. It has many positive features and will, in so far as is possible, be cost neutral to the State, which is important at this time. Lack of resources does not mean positive constructive legislation cannot be enacted.

The Bill will inject a sense of fairness into a sector that has received considerable criticism and bad press. It will set out proper and clear payment procedures which, in all truth, should feature in every industry and business transaction.

Another positive aspect is the embracing of an alternative dispute resolution mechanism. The courts system is expensive for businesses and individuals, for reasons that are part of another debate. Companies under financial pressure can ill-afford the risk, at times, of entering the courts. Furthermore, the judicial process can heighten tensions and deepen problems, as opposed to mediation and non-judicial resolution mechanisms which can be calmer, less divisive and more constructive.

The Government demonstrated support for the positive aspects of the Bill and broadly tackling and reforming problematic areas by commissioning a detailed regulatory impact analysis of the Bill. The analysis outlines three possible courses of action, the first of which is to do nothing. That would place no extra financial burden on the State, but it is not an option. The market, as the analysis notes, is not working. This is leading to delays and disputes and is an inefficient use of our scarce resources. We all know the trouble doing nothing about regulation and oversight can cause.

The second course of action is to introduce the Bill, as it stands. I have outlined its very positive elements which will benefit all involved in the industry by safeguarding and formalising payments.

The third option is to introduce the Bill but with certain amendments. One amendment is necessary to strengthen the spirit of the Bill. As it stands, it will not apply to a contracts in respect of an individual dwelling which is appropriate, given that its thrust is to assist subcontractors and small contractors. However, as others have stated, the stipulation that it will not apply to contracts worth less than €200,000 poses a problem. It effectively excludes significant swathes of contracts that, correctly, would be viewed as the bread and butter contracts for most companies in the construction industry. The Bill is also out of step with the experience of the industry in the United Kingdom which places a high value on the setting of a lower threshold. It would be shameful, therefore, to allow the Bill to pass without amending the threshold level and extending its applicability. It would go against the stated objectives which are to help small and medium-sized business and contractors in the industry. I would also like to see a measure, as the regulatory impact analysis highlights, to protect the suppliers of goods and materials, particularly of supplies tailored for individual construction contracts.

One likes to believe fairness and fair play underpin business transactions and in the majority of cases they do. However, we have a duty, as legislators, to step in and provide support to uphold these principles when they are endangered. The Construction Contracts Bill 2012, subject to a number of amendments, particularly the lowering of the threshold figures, will achieve this objective.

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