Written Answers. - Mechanics' Lien Law.
Conor Lenihan
Question:
170
Mr. C. Lenihan
asked the
Tánaiste and Minister for Enterprise, Trade and Employment
if her attention has been drawn to the operation of Mechanics' Lien Law as practised in the United States; and the plans, if any, she has to introduce this type of legislation in Ireland.
[1369/98]
Conor Lenihan
Question:
171
Mr. C. Lenihan
asked the
Tánaiste and Minister for Enterprise, Trade and Employment
if her attention has been drawn to the operations of Mechanics' Lien Law in the United States of America; and whether it will be introduced in Ireland with a view to speeding up payment to small businesses.
[1370/98]
I propose to take Questions Nos. 170 and 171 together.
I have no plans to introduce legislation along the lines of the Mechanics' Lien Law which operates in the United States of America.
The question of speeding up payment to small business was considered by the Task Force on Small Business which reported in 1994. The task force recommended that legislation should be introduced to require public sector bodies to settle their accounts promptly and that the position should be reviewed three years after the introduction of legislation in the public sector to ascertain the merits of the case for the application of similar legislation to the private sector.
In line with the task force's recommendation, the Prompt Payment of Accounts Act, 1997, was enacted last year and came into force on 2 January last. The Act aims to ensure that all public bodies, and contractors on public sector contracts, pay amounts due to their suppliers promptly. An automatic entitlement to interest is provided for in respect of amounts due but not paid on time under the terms of the Act. I have, by order and following consultation with the Minister for Finance, set the rate of interest which is applicable in situations where payments are late under the terms of the Act. The rate has been set at 0.0322 per cent per day, which is equivalent to 11.75 per cent per annum. This will ensure that suppliers are compensated in the event of payments being late at a rate which is higher than the prevailing AA overdraft rates.
The Act will benefit all business including, of course, small businesses who supply goods or services to the public sector. Furthermore, private contractors on public sector contracts are obliged to comply with the payment provisions of the Act, so as to ensure that the benefits flowing to main contractors from being paid on time by public sector bodies will be passed on, in turn, to their suppliers. This provision is of significant advantage to small business.
With regard to the introduction of legislation governing payment practices in the private sector, as I have already indicated, the Task Force on Small Business recommended that the position should be reviewed three years after the introduction of such legislation in the public sector. I intend to instigate such a review not later than two years after the Act has been in operation. That review will,inter alia, consider whether the voluntary codes established in the private sector have brought about improvements in payment practices in that sector.
The Deputy will also be aware that the strategic review of the construction industry report contains recommendations aimed at assisting in the resolution of disputes involving non-payment for the supply of goods or services. On 29 October last, the Minister for the Environment and Local Government established a forum for the construction industry to oversee the detailed implementation of the 90 or so recommendations contained in the report. At its launch, he made it clear that the Government accepts the broad thrust of the report and that it will co-operate by promoting any proposals for legislation deemed necessary by the forum.
