Friday, 17 October 2014
Social Clauses in Public Procurement Bill 2013: Second Stage [Private Members]
Before I make my contribution on the Social Clauses in Public Procurement Bill 2013, I wish to make a point about Friday sittings. It is regrettable that there is no second Bill for debate today, given that Deputies submit legislation for selection by lottery. I understand the Deputy concerned has withdrawn the second Bill, which is fair enough. Clearly, something arose for that Deputy, but it reduces the chances of other Deputies of being selected in the lottery. If Deputies have Bills in the lottery, they should make themselves available to bring them before the Dáil. We are aware of when the sitting will take place when a Bill is submitted for the lottery.
Fianna Fáil will be supporting this legislation which will go some way towards enhancing procurement procedures in Ireland and ensuring opportunities arising from local projects lead to local employment. The public procurement market in the European Union is estimated to be worth around one sixth of total GDP. This is a huge market, one from which Europe's SMEs and local companies ought to be deriving a significant share, considering their overall contribution to the economy. Despite this, many local firms or small and medium-sized enterprises are locked out of the market owing to restrictions they find impossible to overcome. As a result, public procurement is often seen as squeezing out the little guy and undermining the possible benefits of public procurement in the area in which it is to be carried out. This results in a huge drag on the European economy, given that 98% of all businesses in the Union employ fewer than 250 employees. Some 85% of net new jobs in the Union have been created by SMEs. In Ireland, 67% of all new jobs created in businesses in the first five years of their existence. SMEs make up over 99% of businesses in the enterprise economy in Ireland and account for almost 70% of those employed. That public procurement tenders which, in essence, are State contracts undermine the flourishing of this sector of the economy is shameful and must be addressed.
I acknowledge that attempts have been made in the past to address this problem. The 2004 EU directives reforming the public procurement rules provide a new basis to create a level playing field for SMEs bidding for public contracts. However, despite assertions that the European Commission encouraged member states to share their good practices in facilitating SME access to public procurement and stimulating the innovation and growth potential of SMEs, most people who work in the sector and try and engage from a local or smaller business continue to feel shut out. The reason for this is that many barriers remain to discourage SMEs from responding to requests for tenders or even lead them to avoid such opportunities altogether. They include difficulties in obtaining information; lack of knowledge of tender procedures; the large size of contracts; the fact that time spans that are too short to prepare proposals; the cost of preparing proposals - since many costs are fixed, SMEs face disproportionately high costs in comparison with larger enterprises; overly high administrative burdens; unclear jargon; high qualification levels and required certification; requirements for financial guarantees; discrimination against foreign tenderers and preference for local and national enterprises; and finding collaboration partners abroad.
While the difficulties SMEs face are widely understood, significant efforts are still required to change public procurement practice across the European Union. After all, those responsible for awarding contracts on behalf of governments and public authorities are required to safeguard public funds and many need to be convinced that reforming their procedures will not jeopardise this. The current legislative directives on public procurement are supposedly designed to reduce the administrative burden and costs related to tendering, make procurement systems more transparent and easier for SMEs to access and to encourage the use of information technology systems to simplify the process. However, those who have engaged in the public procedure process still find the system extremely bureaucratic and not in any way user friendly. It is welcome that European Union rules on tendering and public procurement permit the use of clauses that promote social considerations and it is understandable they must satisfy certain requirements such as objectivity, being made publically available and striking a balance between competitive tendering and social considerations. Furthermore, they must not be discriminatory. Several EU member states already make use of socially responsible clauses in their tendering processes. Scotland and the United Kingdom in general have passed legislation which has given local firms an advantage where they can show that their tenders would offer significant community benefits in their areas. We have yet to introduce such legislation here and, as such, the legislation before us is most welcome. Every day that we as a Parliament fail to introduce social clauses to our public procurement process, we are allowing the opportunity to create local jobs creating significant local benefits to slip through our hands.
I understand there is a trade-off in using socially responsible clauses and that the prohibition on discriminatory clauses facilitates Irish enterprises tendering for contracts in other EU member states. However, we are losing out as a country because of our failure to recognise that some tender submissions offer far more than economic development or service delivery. They can also offer a renewed more prosperous community. Research has shown that many other European countries use these clauses. Italian clauses favour bidders from less developed regions of the country. Dutch and Danish local government laws provide for requirements to create jobs for the long-term unemployed. German rules allowed favourable terms for bidders with a background in the former German lands in Poland, the Soviet Union and Czechoslovakia. Most member states also favour workshops for the disabled, workshops in prisons and procurement opportunities for small and medium-sized enterprises. Irish public opinion is strongly behind this proposal. A total of 82% of Irish people surveyed agreed that it was acceptable to choose a more expensive offer for a public contract when local people were employed by the winning company. The EU average was 85%. It is time for our legislators to start acting on this public support by delivering local jobs through local contracts.
Ireland should pass this legislation as Europe 2020, the European Union's growth strategy for the coming decade, begins to pick up pace. In a changing world we must drive forward the country to become a smart, sustainable and inclusive economy. These three mutually reinforcing priorities should help Ireland and the European Union to deliver high levels of employment, productivity and social cohesion. Under Europe 2020, the Union has set five ambitious objectives - employment innovation, education, social inclusion and climate and energy - which are to be reached by 2020. Each member state has adopted its own national targets in these areas. Concrete actions at EU and national level underpin the strategy. As we emerge from the economic crisis which has caused pain and hardship, we must take steps to guarantee the future prosperity of the country. Passing the legislation before us would be one step forward in securing that prosperity. It would also chime well with each of the five objectives as outlined in the Europe 2020 strategy.
I would like to conclude my contribution by looking at the overall situation in Europe with regard to the idea of a social contract, which is central to the idea of including social clauses in the public procurement process. One of the central aims of the European Union was to build an equal society across Europe and ensure opportunities for all citizens to reach their full potential, regardless of their economic circumstances. Policies pursued at a European level in the past five years have dramatically reduced social inclusion and resulted in growing inequality in many member states. Young people and the elderly have been particularly hard hit with the onset of the financial crisis. We must seek to ensure EU economic policy enhances social inclusion and reduces poverty. As a small nation which has benefited greatly from EU membership and has a proud record of contributing to the building of the Union, we must strive to ensure its basic values are protected and promoted.
In an ever-increasing Union we need to find new ways to accommodate all voices, not just those with the largest populations or biggest GDP. The European Union needs to listen to its citizens more and work to enhance their livelihoods.
The scourge of high unemployment has returned to many member states of the European Union. EUROSTAT estimates that 24.85 million men and women in the EU 28, of whom 18.4 million were in the euro area, were unemployed in July 2014. That is 26.5 million men and women whom the Union has failed dreadfully. The experimental policies of the past five years emanating from Frankfurt and Brussels have, in many instances, made the crisis deeper and more prolonged.
Increasingly, people who have lost all hope in moderate politics turn to the extremes to give them answers that moderate politics supposedly cannot. This can and must be challenged by democrats among Europeans left, right and centre. We must provide the answers. The European Union must provide the answer for its citizens who are crying out for work. In order to consolidate peace in Europe and act as a guardian of the peace in the world, we must guarantee the well being of all citizens within the Union.
I welcome and support the Bill which could go some way towards helping the emerging recovery in the country and broaden it and ensuring community benefits and social inclusion were central to any public procurement policy.