Prompt Payment of Accounts Bill, 1997: Committee and Remaining Stages.


Amendment No. 1 is in the name of the Minister. Amendment No. 2 is an alternative and Nos. 3 to 6, inclusive, and Nos. 12 to 18, inclusive, are related. I suggest, therefore, that we discuss Nos. 1 to 6, inclusive, and 12 to 18, inclusive, together, if that is satisfactory. If amendment No. 1 is agreed to, amendment No. 2 cannot be moved.

I move amendment No. 1:

In page 3, subsection (1), line 31, to delete "Part I of".

Deputy O'Rourke's amendment and mine seek to achieve a common purpose. They propose that Aer Lingus, Telecom Éireann and Bus Éireann should be included in Part 1 of the Schedule so that all bodies are treated in a similar fashion. On Second Stage Deputy O'Rourke expressed concern about the exclusion of those bodies from Part 1 of the Schedule and I indicated that they had agreed to comply with the timescale provided for in the Bill. I am pleased to move this amendment which will ensure the same rules apply to all suppliers dealing with public bodies as purchasers. It is not necessary to provide special treatment for the three bodies concerned.

The amendments taken with No. 1 have a similar purpose. One of them proposes to delete paragraph (b) and another proposes the deletion of references to paragraph (b) which will no longer exist. Amendments Nos. 4, 5 and 6 follow from the amendment being made to section 1. The purpose of those amendments is also to ensure that all bodies are treated in a similar fashion.

The position is as set out by the Minister. I welcome these amendments which are in accord with mine. I am pleased Part 2 of the Schedule, which gave Aer Lingus, Telecom Éireann and Bus Éireann special status in regard to times for payment, is being deleted. I opposed this on Second Stage because I fail to understand the need to give them special status, particularly in light of the profits they make. That special status will now be removed and, like all other State bodies, they will pay their bills on time. I welcome the Minister's amendment and I am pleased the matter has been resolved satisfactorily.

Amendment agreed to.
Amendment No. 2 not moved.

I move amendment No. 3:

In page 3, subsection (1), lines 32 and 33, to delete paragraph (b).

Amendment agreed to.

I move amendment No. 4:

In page 4, subsection (1), lines 1 to 4, to delete paragraph (c) and substitute the following:

"(c) a subsidiary (within the meaning of the Companies Act, 1963) of a person or body referred to in paragraph (a), where the subsidiary is not already specified in the Schedule, or".

Amendment agreed to.

I move amendment No. 5:

In page 4, subsection (1), lines 11 and 12, to delete "paragraph (a), (b) or (c)" and substitute "paragraph (a) or (b)".

Amendment agreed to.

I move amendment No. 6:

In page 4, subsection (2), lines 16 and 17, to delete "paragraph (a), (b) or (c)" and substitute "paragraph (a) or (b)".

Amendment agreed to.
Section 1, as amended, agreed to.

I move amendment No. 7:

In page 4, before section 2, to insert the following new section:

"2.—The Minister shall, by order, designate all small businesses (under 50 employees, under £3 million in turnover) as consumers to give such companies further avenues to redress difficulties.".

I spoke on this matter last autumn and again on Second Stage in the understanding that many EU countries designate such small businesses as consumers. There are various rights of redress for consumers under European law which would open up to small businesses avenues which have hitherto remained closed. Small businesses have particular difficulties and redress is often costly and very bureaucratic for them. It would be attractive to and worthwhile for them if their rights were designated as those of consumers. This Bill is for all businesses but those who will gain most from it are the small businesses which suffer enormous disadvantages when money is tied up.

I can see what the Deputy is driving at but her amendment is not an appropriate way of tackling this problem. This legislation deals with prompt payment of suppliers by purchasers who are public bodies. The designation of small businesses as consumers would not confer any benefits on small businesses because consumers are not given any entitlements under this Bill. The Deputy is going beyond the remit of the Bill to raise an issue concerning the treatment of small businesses. It would not be practical to so amend legislation of this sort in the consumer protection area as, in practice, it would stand our consumer law on its head. The definition of a consumer in existing legislation is based on a person acting outside his or her business capacity. It deals with the relationships between consumers and businesses, including small businesses. Therefore one could not redesignate small businesses as being consumers. That would create strange contradictions in our consumer law, as the consumer would no longer be protected against small businesses under, for example, the Sale of Goods and Supply of Services Act.

The Deputy may be looking for special protections to be given to small business in dealing, for example, with credit charges. The Director of Consumer Affairs now has certain powers in relation to credit charges, so that is provided for. I cannot accept the amendment because it would disrupt an existing corpus of consumer law. If we are to pursue the precedents the Deputy suggests are worthy of pursuit in EU law, those would have to be looked at afresh and suitable vehicles would have to be found to transpose into Irish law if they were found to be appropriate.

I accept in a general sense that this amendment would be beyond the remit of the Bill. Nevertheless, in credit terms and in many other ways of redress small businesses do not have an appropriate channel or appropriate appellation which would enable them to avail of various methods of redress. The amendment was worthy of being tabled, but I will not press it.

Amendment, by leave, withdrawn.
Section 2 agreed to.

I move amendment No. 8:

In page 4, before section 3, to insert the following new section:

"3.—The Minister shall, by order, extend the remit of the small claims court to allow for the registering of judgments for commercial debts up to £5,000. The order shall provide for a procedure to be established where respondents who do not dispute a claim of non-payment within 30 days of receipt of a notice from a district court registrar will be held to have admitted it. The claimant shall then be entitled to proceed to obtain a judgment against the respondent.".

The small claims court is under the remit of the Department of Justice and since its inception it has been of great benefit to consumers. It started modestly on a pilot basis and has been extended to various other centres. In 1992 I visited various registrars of the small claims court. While the work they do has been held up of late, the essence of their work is to provide people with access to a speedy redress of a claim in an non-judgmental environment. I understand there is a backlog at present and people are not being paid promptly, but that is an issue for the Department of Justice to pursue in conjunction with the consumer section.

The small claims court could be opened up to allow for the registering of judgments for commercial debts up to £5,000. That makes sense. The necessary structures are in place and would lend themselves to such further usage.

I do not envisage public bodies going to court or being required to be brought to court under this legislation in pursuit of the interest due by them on late payments. We have provided that such interest will automatically fall to be paid. There is no question of the supplier having to request payment or any such obligation on the supplier to pursue the purchaser. I envisage the position being clearcut as to when the interest falls due and the automatic payment of it by a public body.

There may be a possibility of dispute about whether the invoice was correctly issued and if changes were required to it. We have provided protections for the supplier in that there cannot be spurious arguments about invoices. However, if there are such disputes, there is a provision whereby small businesses or any business which is a supplier can go to arbitration. If the purchasing business or the public body concerned is not agreeable to that, we provide that the Law Society shall appoint an arbitrator whose recommendations shall be legally binding. I do not envisage that public bodies against whom the arbitrator rules will pursue the matter in court. I understand what the Deputy is driving at but it goes beyond the scope of the Bill, which will not result in court problems for small businesses. The Deputy is seeking a more simple way to deal with commercial claims. I sympathise with that but there are problems.

The small claims court works under court rules and not under Statute so it would be appropriate for changes to the court's rules to be made by the Minister for Justice. I will raise the question of an appropriate revision of the court rules with the Minister. There is another problem that would have to be overcome, of which I have no doubt the Deputy will be aware from her time on this side of the House. I recall Deputy Burke established the small claims court and there is a question of whether it should apply to small business. The experience in the UK and Northern Ireland was that the small claims court became so clogged up with the pursuit of business claims that it ceased to be a vehicle to provide redress to consumers. That caveat will have to be overcome. I assure the Deputy that I will take up this issue with the Minister for Justice. Under the current small claims court procedure the upper limit is £600——

It has been increased.

——so the Deputy's suggestion would considerably enhance the scope of payment being dealt with by the court and widen its remit. I will raise this issue with the Minister for Justice, but the UK and Northern Ireland experience will have to be considered before a proposal to make changes in this area can be brought forward.

The Minister has made arrangements for the arbitrator and does not envisage public bodies reneging on the requirement to pay. I do not have as much faith as the Minister in public bodies to pay their debts. They are so strapped for cash under every regime that they take it out, so to speak, on small suppliers. The spurious nature of invoice nit-picking means this legislation is necessary. Public bodies are not as white as the driven snow and will have many trepidations about this legislation. We have only to note the way Telecom Éireann, Aer Lingus and Bus Éireann were given an exemption until we tabled these amendments.

I read about the report on the operation of the small claims court in the UK inThe Sunday Times and sent for a copy of it about nine months ago. Despite the courts being clogged by small commercial bodies taking cases, the report's conclusion was positive in that ordinary people can get quick redress for small claims.

I understand the upper limit in the small claims court is £1,000.

It has not been implemented because there were industrial relations problems.

That figure needs to be updated in accordance with the consumer price index. Small businesses could be regarded as consumers and, therefore, have access to the small claims court. I have reservations about the good intentions of public bodies to pay their bills on time, but we will have to wait and see. I accept the Minister's statement that the question of a review of the small claims court's procedures will be referred to the Department of Justice. I will not press the amendment.

Amendment, by leave, withdrawn.
Section 3 agreed to.

I move amendment No. 9:

In page 5, before section 4, to insert the following new section:

"4.—This Act shall apply to and in relation to all payments made by Government departments, including the payment of grants and the handover of EU funds.".

I regard this as definitely falling within the remit of suppliers' bills. Throughout Government Departments — this does not relate to any particular regime but to all — there springs to mind the Department of Education and its very slow payment of maintenance grants. There is nit-picking of various documents that must be submitted before grants can be paid by the relevant local authority, vocational education committee or other body. There are all sorts of headage and agricultural payments in respect of which the same nit-picking takes place. This is particularly the case within the Department of Social Welfare to which elderly farmers may have applied for a pension and will have handed over their farm and relevant documentation to their son or daughter; yet months after its transference the procedure will not have been finalised.

I am concerned with the payment of grants and the handover of EU funds which often occasion huge delays. I do not know why because the funds are there. Perhaps it is a reluctance on the part of the relevant Department to open its purse strings. When it comes to the Department of Finance, whose job I recognise is always to say "no"— I often think its officers are born and die saying "no"— it is well known there are always delays in the payment of grants even to those whose need will have been identified and certified. I ask that the provision of this Bill be extended to take this into account.

I regret that that is way beyond the scope of this Bill. Essentially what Deputy O'Rourke is seeking is that all payments by Government Departments — including salaries, social welfare benefits, grants and the transfer of funds between Departments — are not amenable to late payment, including the handover of EU funds. Even from a technical point of view, most of these would not be accompanied by an invoice. The mechanisms we are establishing here to stipulate prescribed payment dates would not apply to the types of payments in respect of which the Deputy wants the provisions extended.

I see the Deputy's point, that payments should be made in time, say, to farmers seeking social welfare benefits, to students in respect of higher education grants or whatever — I can certainly see the validity of that case — but that must be done through the mechanisms being developed by respective Departments. For example, I know the Department of Agriculture, Food and Forestry has introduced a charter which enables it to identify——

It is obvious that the Minister does not represent an agricultural constituency.

——and move towards an acceptable payment period. Similarly, I know that the Minister of State at the Department of the Taoiseach, Deputy Doyle — who is responsible for the introduction of clear statements of entitlement from all Government Departments — later this year will examine statements submitted by all Government Departments of the service people can expect to obtain from them, including the turn-around of responses in relation not merely to payments but to their many varied inquiries. That is a key part of the strategic management initiative which is being pursued by Government Departments throughout the public sector. It should be dealt with in that context and to try to insert in this Bill such provisions as are in the amendment is to put a burden on it which it is not capable of carrying. It is designed for specific commercial transactions between suppliers and public bodies and is structured on the basis of invoices, payment periods relating to them, contracts, etc. That is the structure within which the Bill has been developed and the safeguards and arbitration procedures come within that. They have not been developed in the wider context envisaged by Deputy O'Rourke and I, therefore, cannot accept the amendment.

I note with wry amusement that, when the Minister was in Opposition and I was in Government, we debated a Consumer Credit Bill which significantly extended the provisions of the original legislation. I was very open to receiving representations and amendments on the matter but, when I said the matter was the remit of another Department or should be considered under different legislation, I was pursued relentlessly. However, I will not pursue my amendment as I am saving myself for the election.

The Deputy would not want to be hoarse.

Amendment, by leave, withdrawn.
Section 4 agreed to.
Sections 5 to 8, inclusive, agreed to.

Amendments Nos. 10 and 11 may be discussed together by agreement.

I move amendment No. 10:

In page 6, before section 9, to insert the following new section:

9.— Where there is a contract (`the first contract') between a purchaser and a supplier for the supply of goods or services and the supplier is also a purchaser under a contract (`the second contract') for the acquisition or supply of the goods or services to be provided under the first contract—

(a) where the first contract is in writing and provides for a date by which the payment of the agreed price for the supply of the goods or services shall be made, the period used in calculating the prescribed payment date for the second contract shall be the same number of days as the period between the supply of the goods or services and the payment for the goods or services provided for in the first contract or, if the second contract is in writing, any lesser period specified in the second contract, or

(b) where the first contract is not in writing or is in writing but does not provide for the date of payment, the prescribed payment date for the second contract shall be 45 days—

(i) after receipt by the purchaser of an invoice for the payment due, where the invoice is received after the completed delivery of the goods or services, or

(ii) after the delivery of the goods or services, where the delivery is made at the time of or after receipt by the purchaser of an invoice therefor,

or the least of such lesser number of days—

(iii) as may be specified in the second contract (if the second contract is in writing), or

(iv) as the Minister may, by order under section 10(2), prescribe.".

This amendment is a new section which, if accepted, involves the deletion of section 9. We provided in the original legislation that, where a main contractor was involved with a public body and received payment terms under this legislation, those conditions would apply to the subcontractor. However, we left open the possibility that the main contractor and the subcontractor could set that aside and agree to worse terms. On re-examination, we felt it could possibly subject the subcontractor to unfair pressure to agree to payment periods which were not in their interests resulting in an unfair relationship between them and the contractor.

We have provided instead that the period used in calculating the prescribed payment date for the second contract shall be the same number of days as the period in the first, or any lesser period if specified. This is effectively a safeguard against possible exploitation of a subcontractor. Similarly, if the contract is not in writing, or is in writing but does not provide for a payment date, the prescribed payment period for the second contract shall be 45 days. We are using the same definition as in the original section 1 for determining the payment period for the 45 day test. Alternatively, the period could be a lesser number of days. We are providing that subcontractors are not put in a position of disadvantage to the main contractor and are not put under pressure to agree to less favourable terms. The original formulation of this section left it open that they could be put under such pressure. This section is more watertight and gives greater protection to the subcontractor.

I agree with the amendment. The original section 9 was imprecise and could lead to covert intimidation of a subcontractor by a contractor, in the same way as a public body could intimidate a supplier. The original section 9 was faulty. The amendments make the section much more watertight and give more protection to subcontractors, who are often smaller than small suppliers and need all the protection they can get. I accept the amendment.

Amendment agreed to.
Section 9 deleted.

I move amendment No. 11:

In page 6, subsection (2), line 47, after "section 1(1)" to insert "or in section 9 (b)".

Amendment agreed to.
Section 10, as amended, agreed to.
Sections 11 to 16, inclusive, agreed to.

I move amendment No. 12:

In page 9, line 3, to delete "PART 1".

Amendment agreed to.

I move amendment No. 13:

In page 9, between lines 4 and 5, to insert "Aer Lingus".

Amendment agreed to.

I move amendment No. 14:

In page 9, between lines 25 and 26, to insert "Bord Telecom Éireann".

Amendment agreed to.

I move amendment No. 15:

In page 9, line 44, to delete ", excluding Bus Éireann".

Amendment agreed to.

I move amendment No. 16:

In page 10, line 27, to delete "Horseracing Authority".

Amendment agreed to.

I move amendment No. 17:

In page 10, between lines 39 and 40, to insert "Irish Horseracing Authority".

Amendment agreed to.

I move amendment No. 18:

In page 13, lines 51 to 54, to delete Part 2.

Amendment agreed to.
Schedule, as amended, agreed to.
Title agreed to.
Bill reported with amendments and received for final consideration.
Question proposed: "That the Bill do now pass."

I thank Deputies O'Rourke and O'Keeffe for their co-operation and support for the introduction of this Bill. Deputy O'Rourke has taken a keen interest in this Bill. I am pleased we have been able to develop a Bill which meets the needs and to have it on the Statute Book.

I am glad the last item of Dáil business between the Minister for Enterprise and Employment and the Opposition was on a relatively harmonious note. It has been recognised by all that the Bill I introduced last November has now seen the light of day. I enjoyed working with the Minister.

That is a most generous comment from the Deputy. I hope we will not have reason during the next three weeks to tangle with one another; even if we do it will be done in the best spirit as our tangles in the past have been.

Question put and agreed to.