Seán Fleming (Laois-Offaly, Fianna Fail)

I welcome the opportunity, at long last, to contribute to the debate on this Bill. We are having a useful Second Stage debate in this House after the lengthy and comprehensive discussion in the Seanad. I welcome Senator Feargal Quinn to the Chamber and thank him for his initiative in bringing forward the legislation under Private Members' business. Without his work, we would not be having this discussion today. I hope we will see further examples of Private Members' Bills making it through the Houses and being signed by the President. What is most important, however, is that any legislation, once enacted, is implemented and monitored. The function of this House is to pass law and regulations; it is not our function to oversee their implementation on a daily basis. There is a major difference between passing legislation and ensuring its implementation. Failures in this regard are part of the reason we are here today discussing problems in the construction sector, where, in many cases, agreements were put in place but were simply not adhered to.

Deputy Marcella Corcoran Kennedy mentioned that the opening of two schools in Offaly was marred by protests at the failure to make payments to certain subcontractors. I suspect the same contractor was involved in two other schools in Portlaoise. What got to me about the contract was that it was a State one. It is an example of what is approved in the House and what happens on the ground. I said publicly some time ago - it was in the local newspapers - and I will say it in the House now if I have not done so before, the contractor who got that major multi-million euro schools construction project, subcontracted part of the work and the subcontractor subcontracted work to others. On several Thursday mornings, many workers came to work in their good clothes. They had a cup of tea in the canteen and then the contractor bussed them all up north to collect social welfare and bussed them back to the site in the afternoon. That was a fraud on the taxpayer. It resulted in other people not being paid for work for which they should have been paid. That may not be covered here but it should be part of this legislation. I raised the issue with the Secretary General of the Department of Education and Skills at the time and the matter was investigated.

I have other examples of that particular issue. I also have an example of where people who were covered by registered employment agreements could not get work block laying on a site even though they knew some of the people on the site were claiming social welfare. They called in the National Employment Rights Agency, the social welfare officers and the Revenue Commissioners to inspect what was happening on the site. Needless to say, the Garda were called in to deal with them because they were causing a nuisance to the contractor, but that is life. Those concerned continued to make improper payments but two years later, I understand there was a settlement between one of the subcontractors and the Department of Social Protection for having people on the site who should not have been on it.

That led on to the question I asked about who was implementing the registered employment agreement because the subcontractors to the contractor were not doing so. I was told by the Secretary General and Accounting Officer of the Department of Education and Skills that it was a matter for the architect because he or she certifies the work done. I was at the opening of an activity funded partly by the HSE and the local enterprise board last weekend. The architect complained to me that he was being asked to check payslips and pay rates and that was not his job. He openly admitted he had no knowledge or expertise in that area. Obviously, he must certify that the job is done in accordance with the registered employment agreement. He said he was not being paid to do that. That person does not have the ability to do that, so we must have a system in place in order that when the State pays the full registered employment agreement rate for a job, the people on the job get the rate. If they do not get the rate, two things happen. The person who is getting the reduced rate could be claiming social welfare as well, which is costing the taxpayer money, but more to the point, the underbidders could have a claim somewhere along the line, knowing that work was not carried out in accordance with the tendering process which specified the rate.

At 9 o'clock on the morning of the opening of a motorway financed by the Exchequer, a quarry owner arrived on site with half a dozen lorries and refused to move until he got a cheque for €2 million because he had not been paid. Further along on the same motorway, the N7 heading south, subcontractors threatened to dig up the motorway and take back some of the tar, or some of the bespoke products, because they had not been paid. They ultimately got settlements but the cheques bounced. The motorway is open but people have not been paid. The country is littered with bad examples of what happened in the past.

As somebody said, the harsh lessons are no good unless we put something in place. We have missed the boat in terms of the last construction boom but some fine day, there will be further good construction. There is still much work going on under the capital investment programme, whether in education, health, transport or other areas. There will always be new contracts, so it is important we put something in place.

It is two years since I visited the Department of Finance when the Bill was going through the Seanad but my main concerns are not all dealt with by the legislation. People at local authority level gave out contracts even though they knew when they were quizzed that they were granting contracts to contractors who had not paid local suppliers, because they knew the contractors had done this on other jobs. They said they had the bond and that the tender and every bit of paperwork was correct. They knew in their hearts there would be grief but they had no option other than to give the contract because the price was right. Some of that arose because contractors put in what I would call contract prices less than the legitimate cost of the project. I know there is scope for contracting authorities to say they do not believe a contractor's price is right but if the contractor keeps it a little under and not too far out, they may hope to get the difference back on the extras. Perhaps they do not and are looking for cashflow to keep the business in operation. As was said to me, contractors and subcontractors should provide references and the previous payment history should be taken into account.

Another mechanism is causing problems for some people. Those in the construction industry have told me that some contractors front-load. When they price a contract, there is much labour and materials involved so they front-load the labour content of the contract in the tendering process to increase the percentage of payment that will occur early in the project. They put in a large labour element into the early part, so they get a good cashflow in the beginning. I understand why people do that but it has a knock-on effect in that the person coming in at the end of the project will be squeezed because the cashflow has got tight as the majority of the cashflow came early on in the process rather than later on.

I thank the Minister of State for being involved in the regulatory impact statement. I was pleased to have been invited to his Department last summer to participate in that and to give our input along with all of those involved in the industry. The process was improved as a result of that. I understand the Minister of State is considering some amendments. The first amendment we will table, if it has not been tabled by the Minister of State, relates to the threshold. There must be some threshold but €200,000 is ten times too high. We will discuss that on Committee Stage.

The Minister of State is considering the question of adjudication and whether it will be legally binding. We need to tease out precisely how it will work on Committee Stage. The Minister of State also mentioned the two week time limit. A large contract will go on for 18 months. So what if one subcontractor pulls out for two weeks. He will have to crawl back on day 15. That is no good and that subcontractor is probably in a worse position crawling back on to the site to resume the work. That must be re-examined. Matters of a financial nature do not always need to be dealt with and completed during the course of construction. There are always issues at the end of contract to be sorted out. I would not like to see health or education contracts being brought to a halt by people coming off site. I would like to see a mechanism which would keep the project moving in the interest of the taxpayer.

I thought the word "bespoke" referred to a suit. I do not like that word. We all know of the concerns of the people involved in quarry and concrete businesses. I do not understand why they cannot be dealt with. I know there is a problem with a definition with which we will have to deal. Some of the key players have been involved with people from whom one cannot retrieve the product, so that must be dealt with.

The question of bonds arises about which I was confused. There is a performance bond for the main contractor to ensure he finishes the job. There is a payment bond, which occurs in other countries and which may possibly be introduced. The applicant who got planning for the project must lodge a bond with the local authority to ensure it is completed. Deputy Phelan referred to the unfinished estates. There are a plethora of bonds and some of them might not apply to the contractor where a public body has obtained the planning. We are talking about contracts in the private sector as well.

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