Charlie McConalogue (Donegal North East, Fianna Fail)

I welcome and endorse this important Bill and I commend the work and effort of the draftspersons and those who took it through the Seanad. It was introduced by an independent Senator, Senator Feargal Quinn, which is an unusual occurrence in the Houses of the Oireachtas. I also commend the work of Seán Gallagher, who has been a driving force behind the concept and necessity for this Bill and who linked with many people in the Oireachtas to ensure it would get on the political agenda and reach this stage.

Unfortunately, the Bill is too late in many ways. Although it is timely, it is untimely in the sense that it is something we needed a number of years ago. Throughout the country subcontractors are suffering the consequences of not having the protection the Bill endeavours to give them in terms of ensuring safeguards exist that will allow them to be paid in circumstances where the main contractors refuse to pay or go out of business and leave their subcontractors high and dry. Unfortunately, some 57% of job losses in our economy emanate from the construction industry. Many of these losses comprise self-employed tradesmen and contractors who provided services within the construction industry. There are very few people in that category who were not burned and left with outstanding debts because they were not paid for work they carried out. For the vast majority, that amounts to a number of unpaid sums they have little to no hope of receiving, which leaves them in a most unfortunate situation. I have no doubt that other Deputies have seen a similar scenario. In my experience, in the constituency I represent, the situation is more acute because of the predominance of the construction trade in providing employment, particularly to men. The area I come from has one of the highest proportions of people who were involved in the construction industry and subcontractors working in the same area. From cases I have come across, I know there is nobody who worked in this sector who has not suffered consequences because this type of legislation was not in place to offer them protection.

A situation prevailed in this country in recent years whereby there were protections in place for the large contractors. They enter into negotiations, either with a private entity contractor or, in many cases, with the State. Part of the contract negotiations normally involves a payment schedule, a clearly laid-down agreement of when payments will be made and what needs to be achieved in order for these to be handed over. In many instances that contract offers clear protections for the senior or main contractors. However, when one goes down to the next level, where senior contractors employ subcontractors to carry out work, one finds there is not the same level of regulation. The processes are much more informal and there is much more unregulated competition because different people compete for the work. Those subcontractors who are most flexible in terms of giving the senior contractor the option of delayed payment are those who may have the better chance of getting the job, and because there are not such strongly formed contracts, as is the case with the main contractors and their employers, the subcontractors are much more vulnerable to being left high and dry. Unfortunately, this is what we have seen. The subcontractors are those who, in many ways, are least equipped to be able to take this. The majority are relatively small, perhaps one man with a few workmen, and it is a challenge for them to keep going, pay out wages every week to their own employees and carry the cost pending the potential payment. When that does not come the consequences can be devastating.

I offer one example that arose in the building of a new accident and emergency medical assessment unit in Letterkenny General Hospital. It is a very fine project that awaits final completion. The contract was awarded to the McNamara group before, unfortunately, it went into receivership. As a result, the project has not been finished, leaving an array of subcontractors who had carried out their work. After the receivers came in these were left with nowhere to go in order to get full payment. Many are likely to get very little. This was in spite of the fact that the State would have paid staged payments to the senior contractors, McNamara, for the work that was carried out. There was no drop-down of parallel contracts, however, between the senior contractor, McNamara, and its subcontractors and this meant the latter group took the hit, leaving many of them in a position where their business was threatened. Indeed, some went out of business. In addition, this created real problems for the State because, naturally, those subcontractors who were left high and dry, who had sunk much of their money into the work, were either reluctant or unwilling to go back and complete the work under a new contract, either because they were not being paid or did not see any chance of being paid for their previous work. They refused to take up that mantle until such time as there would be payment, which led to a very long delay in this instance. Subsequently, a new contractor was employed and the work is now being completed. However, it is an example of the type of situation we have experienced, particularly in recent years. This Bill is designed to guard against this in the future.

The real irony is that because so many people in the sub-contracting sector have been burned there will be much more caution. At present, there is a great deal of caution among those who work in the construction industry, in terms of the jobs they take on and their attempts to ensure they will be paid. Although the Bill will be very welcome in terms of offering these people protection, subcontractors will be very cautious about the types of agreements into which they enter in the coming period.

There are some aspects of the Bill that could be improved or that need to be strengthened. One such is that mini-contracts with a value of not more than €200,000 would not have the protections afforded by the Bill. That is a very high threshold, one that would exclude many contracts the average subcontractor would take on. This needs to be looked at again by the State when this Bill goes on to Committee Stage. I wonder about the merit of bringing in a Bill which will not afford protections to the majority of contracts that, in many cases, are those subcontractors would actually take on. I do not believe that situation is fair. We need to get to a place where, when a contractor engages a subcontractor, the standard and expected procedure is to have a payment schedule over the time of the agreed contract. If the State engages a contractor in a significant job, as part of our awarding and monitoring of that contract we should expect that contractor to show a certain procedure for engaging its subcontractors. We must ensure there are no scenarios such as those we have seen played out in far too many cases in the recent past.

I commend the Bill but I seek to have its weaknesses dealt with and strengthened in the course of its journey through the Houses of the Oireachtas. I again commend Senator Quinn and Seán Gallagher, and those who work with them, for their trojan work in producing the Bill.

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