Tommy Broughan (Dublin North East, Independent)
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Some weeks ago I sought to raise allegations regarding social welfare and tax fraud at certain public capital programme construction sites with the Taoiseach on the Order of Business. Last week, Deputy Robert Troy raised serious concerns about alleged malpractice at the construction site at St. Patrick's College, Drumcondra, concerns which I echoed at the same Order of Business with the Minister for Education and Skills, Deputy Ruairí Quinn. Further allegations have been communicated to me to the effect that some of the companies involved in the construction of buildings funded by the State, in particular under the schools building programme, are employing individuals who are not registered for PAYE or PRSI. It is further alleged that some of these individuals may be claiming social protection benefits in Northern Ireland.

I have been informed that this matter, in particular the contract involving St. Patrick's College, has been raised with the Minister, Deputy Quinn, and his colleague, the Minister for Social Protection, Deputy Joan Burton, by the whistleblowers concerned on a number of occasions. It is additionally alleged by these whistleblowers that any contractor or subcontractor involved in these projects would have to be aware that some workers are signing on in the North while working on their sites in the Republic. The collapse of the construction industry from 2008 led to more than 150,000 construction workers losing their jobs. The very valuable public capital construction programme and the very modest revival of house-building to perhaps 10,000 units this year offered some hope at last to tens of thousands of unemployed construction workers. That is why whistleblowers in the construction industry are so profoundly alarmed by these allegations of hidden economy workers. Moreover, these practices could potentially be costing the State many millions of euro in lost tax and social insurance revenue.

As well as raising this issue directly with the Minister for Education and Skills, I have tabled parliamentary questions to the Ministers for Social Protection, Finance, and Public Expenditure and Reform to determine what actions are being taken to tackle the hidden or shadow economy in construction. The current regime of site visits, although it has uncovered some illegal practices on some sites, does not seem to represent the kind of strong invigilation needed to tackle the problems of alleged illegal behaviour associated with certain projects funded by the State. Whistleblowers have inquired as to why the Revenue Commissioners, the Department of Social Protection, the Department of Education and Skills and the Garda Bureau of Fraud Investigation have not more regularly inspected these sites. Will the Minister explain why he and the Minister for Public Expenditure and Reform did not insert a system of full-compliance pre-entry checks for contractors, subcontractors and workers involved in the public capital programme? I understand such checks are the norm in the private sector, including, for example, at the huge Intel site in County Kildare where up to 4,000 construction workers were employed at one stage. The Minister also needs to explain why officials from the trade unions BATU and SIPTU are blacklisted and banned from the public sector project sites concerned, given the important role both these unions played in ensuring tax compliance during the Celtic tiger period.

Finally, one must ask whether an element of hypocrisy is at play in the public tendering construction process. I have a copy of the post-tender clarifications for a contract between JJ Rhatigan & Company, the main contractor, and Rapid Developments of 799 Lisburn Road, Belfast, a large subcontractor, for block and brickwork at the St. Patrick's College campus development site in Drumcondra. It has been put to me by whistleblowers that the costs identified in the post-tender clarifications are examples of unsustainable costings resulting from below-cost tendering. I am informed that figures set out in the document are some 50% lower than what is considered sustainable cost and pricing. Does the Government stand over unsustainable and even below-cost tendering for the €2.1 billion schools building programme and other public infrastructure projects? Given the report and anomalies identified above, what will the Minister do to address and answer the allegations reported to me, Deputy Troy and others, which I have outlined? I am not sure of the exact status of the Minister, Deputy Quinn, at this time.

Ciarán Cannon (Galway East, Fine Gael)
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He is still the Minister for Education and Skills.

Tommy Broughan (Dublin North East, Independent)
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In that case, I am disappointed he is not the Chamber given that this issue was brought to his attention last October. It is an issue deserving of urgent attention given the importance of the schools building programme, including to construction workers.

Ciarán Cannon (Galway East, Fine Gael)
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I thank the Deputy for raising this matter as it gives me an opportunity to outline to the House the measures the Minister for Education and Skills, Deputy Ruairí Quinn, has put in place to ensure companies working on contracts awarded under the Department's schools building programme are compliant with tax and employment laws. In common with the rest of the public sector, all Department of Education and Skills capital works projects are tendered and awarded under the standard public works contracts, as required by the Department of Public Expenditure and Reform and the Government construction contracts committee, GCCC. The guidelines require a competitive process carried out in an open, objective and transparent manner to achieve best value for money in public procurement. Essential principles to be observed in conducting all procurement functions include non-discrimination, equal treatment, transparency, mutual recognition, proportionality, freedom to provide service and freedom of establishment.

Any contractor wishing to tender for any building projects funded by my Department must sign a personal situation declaration under oath confirming the company's compliance with Regulation 53 of SI 329 of 2006, which requires the contractor, among other things, to confirm that the company has not been convicted for failing to fulfil an obligation to pay a social security contribution or to pay a tax or levy as required under a law of the country or territory. Where a contractor fails to provide this declaration, it is excluded from tender competitions being run by my Department.

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Any contractor wishing to tender for any building projects funded by my Department must sign a personal situation declaration under oath confirming that they are in compliance with regulation 53 of SI 329 of 2006 which requires the contractor, among other things, to confirm that they have not been convicted for failing to fulfil an obligation to pay a social security contribution or to pay a tax or levy, as required under a law of the country or territory. Where a contractor fails to provide this declaration, they are excluded from tender competitions being run by my Department.

Contractors must also produce a tax clearance certificate or demonstrate a satisfactory level of tax compliance before they are awarded a contract. Furthermore, where my Department becomes aware of issues on building projects it funds, these issues are brought to the attention of the relevant statutory authorities. I am keen to ensure that building contractors operating legitimately are protected while those who seek to avoid their obligations under the terms of the public works contracts will be reported to the statutory agencies and penalised, where appropriate.

I am happy that the vast majority of building contractors are compliant. However, given the large sums of public money involved in the capital spend of the education sector, my Department appointed Contractors Administration Services, CAS, in April 2013 to conduct random audits on school building projects in order to verify compliance with the relevant pay and conditions clauses in the public works contracts. In tandem with the appointment of CAS, my Department also provided an online complaint system on its website to enable individuals bring to the Department's attention cases where they are of the opinion that issues of non-compliance are taking place.

Contractors Administration Services are continuing to conduct audits on school and college building projects and any issues of non-compliance brought to the attention of my Department will be audited by CAS and should irregularities be uncovered in terms of non-compliance with employment law, enforcement and prosecution falls under the remit of NERA. My Department will liaise with NERA on the progress of the random audits by CAS and will report any discrepancies found to it. If an audit uncovers any other matters of concern in regard to tax compliance or social welfare fraud, such matters will be referred to either the Revenue Commissioners and-or the Department of Social Protection, as appropriate.

Tommy Broughan (Dublin North East, Independent)
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The Minister of State outlined a process for public tendering. Are the main contractors not responsible for all subcontractors and the workers of all subcontractors on a site? What can the Government do if it finds non-compliance? Can a contract be terminated? Could it apply to re-tender it? What kind of sanctions are in place for a main contractor who does not seem to be observing the rules the Minister of State outlined?

The Minister of State mentioned Contractors Administration Services but whistleblowers have asked me if CAS has the kind of expertise required. It seems to be mainly a private forensic accounting and auditing company. Why are the State agencies not ensuring the laws are being upheld? The Minister of State did not respond to my question on pre-entry checks on all workers and all personnel going onto sites. I referred to sites of companies such as Intel. When it was building all its fabs, there was very strict invigilation as to who entered the site.

Is there a race to the bottom in terms of the contracts themselves, one of which I have in my possession, and where the pricing system does not seem to allow for any kind of adequate wages or returns for the workers? Have the Minister of State's Department, other Departments and public tendering officials the expertise to invigilate cost structures? Why are trade union officials blacklisted from sites such as those in Drumcondra and Lucan? There are serious allegations that workers are being denied pay and pension rights on those sites.

Will the Government put the hidden economy monitoring group, which I understand involves a number of Departments and agencies, on a statutory footing and introduce a Bill to ensure there is no more of this chicanery and alleged serious criminality in the hidden economy, or the black economy, which is supposed to cost our country billions of euro in GDP each year?

Ciarán Cannon (Galway East, Fine Gael)
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The reason CAS was chosen as the body to carry out these random audits is that it has the expertise, including significant forensic accounting expertise, to determine whether labour law is being complied with on these various sites. So far, CAS has completed 16 random audits on school and college construction sites, with one audit ongoing. As a result of those audits, information in regard to five projects have been referred to the Revenue Commissioners, one to the Department of social protection and one to NERA. Again, these are the entities with the legislative backing and the expertise to take any action required in terms of punishment or sanction for the contractors concerned.

The Deputy will appreciate that while I am happy that the vast majority of building contractors are compliant with their obligations under the public works contract, the Department is also keen to ensure building contractors operating legitimately are protected while those who seek to avoid their obligations under the terms of the public works contracts will be reported to the statutory agencies and penalised, where appropriate. We have within the machinery of the State significant expertise and significant sanctions to be able to take action in instances where such transgressions take place. We are proactively addressing the issues raised by whistleblowers through CAS architecture.