They had done a lot of work in this respect. A particular company owned the schools that were being leased by the Department which paid them back over 27 years. Among those who did not get paid were some from the Leas-Cheann Comhairle's country in east Galway. I can recall them sitting in front of me when I was a humble TD, as I am again today. I took care to listen to them. I remember that former Deputy Ulick Burke was there, as well as former Senator Pat Moylan and some other colleagues. Many of those present were owed significant sums of money even though they were guaranteed PPPs or State contracts. How could we arrive at such a situation involving ordinary people in small and medium-sized businesses? Individuals and family businesses were left bereft of any finance. In that situation, money should have been withheld and retained. In addition, there has to be a mechanism for paying subcontractors directly. We should have a system where everybody is under the framework umbrella.
There are many excellent contractors, so we should not lump them all into the same negative category. I do not like tarring everyone with the same brush because people are not all the same. Nonetheless there are one or two who did not discharge their liabilities to contractors who expended considerable sums of money to carry out necessary works. These works included building car parks, landscaping, pipe-laying, tarmacking, fencing, and the removal of asbestos from sites. Those contractors were providing vital employment at the time. Some of them are from my own area, including Mick Finn Contracting and Horan's, which is a great family business. They certainly suffered significantly.
At the mouth of Christmas in 2010 they found that they had to let off workers as they were not able to pay them and those workers then became unemployed, which added to their financial problems. A huge swell of problems came to the fore at the end of 2010 and early 2011. I remember contacting the then Minister for Education and Science in that regard. There was huge anger among the subcontractors. Deputy Stanley was correct in what he said. They protested outside the various school openings and events trying to secure the money they were owed but they did not want to go so far as to as deprive young children of their education, and rightly so. That put a strain on everything for them and they were left high and dry. That is the reason that case was important. It had a significant effect on me when I realised that only one group was being left out of the whole process - the small subcontractors who had carried out excellent quality work.
I am glad the Minister of State will enact this legislation as quickly as possible, subject to appropriate amendments. I want to compliment all involved in the preparation of this legislation, especially Senator Feargal Quinn, who pioneered, invoked and worked on it in an assiduous fashion with some help from colleagues, including Senator O'Toole and various Senators across the spectrum in the Seanad. That shows the benefit of having the forum of the Seanad to tease out the many difficult issues that were and are, even up today, integral to the successful implementation of this legislation. This Bill, when enacted, will hopefully put an end to the practice of withholding sums correctly due and owing to subcontractors mainly, without any or appropriate prior notice being given to those contractors of the intention to do so. Section 7, is an essential component of the Bill, which the Minister of State will know as he paid particular attention to it in his contribution. It is extremely important. Payments should now be made in full and, if not, the subcontractor involved will now be in a position to suspend the provision of works and/or the supply of services due under the contract until the relevant payment in made in full. It will introduce much needed clarity and, more important, transparency in regard to moneys due under construction contracts.
I recall an evening in late October 2010 attending a hotel in Tullamore and speaking to a huge number of subcontractors, those in small and medium-sized enterprises and family businesses and hearing from them that they had carried out substantial works and supplied services to well established and well known contractors who were the main contractors engaged by, for example, the Department of Education and Skills and the Department of the Environment, Community and Local Government, to which Deputy Stanley referred. Despite these being gilt-edged State-backed contracts where the main contractors were sure of getting paid once the work was carried out and conformed to the specifications and guidelines laid down - and obviously they received their payments - they failed to pass on these moneys rightfully due to those unfortunate subcontractors, all of whom were midlands-based. Many of them were left penniless with insufficient money to provide the basic provisions for their families or to meet repayments on their own loans or mortgages. We want to ensure that we never ever see a recurrence of these situations. It is estimated that more than €0.5 billion or thereabouts is owed to subcontractors who performed subcontract works in the manner to which I referred. It was the little guys who were left high and dry. We had a hierarchy of contractors. Some of them were clearly cosseted and protected, and that is what annoyed many people. They seemed to be sure of getting paid but whatever happened, the unfortunate subcontractors, who were at the very bottom of the pyramid and who do a great deal of the spade work, did not get paid.
This Bill will achieve one important breakthrough. It will break the link of dependency. There will be no more "we'll pay when we're paid". We know that almost 200,000 jobs have been lost in the construction and related sectors and we know the devastation this has brought for many families. The social welfare safety net was not available to many of those who were classified as self-employed. Provision for those is a mission I have been pursuing and that I will continue to pursue. The Minister, Deputy Burton, is acutely aware of it and she has set up a committee to deal with this. I know that the Minister of State hopefully, in conjunction with the Minister, will ensure that by providing for small subcontractors to be given the option to pay a special self -employed rate, which will be somewhat higher because they will have to pay the employer's and the employee's rate. They should be given the option and they can decide to opt in or opt out.
Prior to coming to the House I took a phone call from a man who had been self-employed for 16 years and last December was the first time he found himself out of work. He has been six months out of work now. He got word from the Department of Social Protection the other day that because his wife is working he is not entitled to a penny. He would have paid that stamp if it had been available. I told him when it comes in it will be much dearer but he said he would not care how dear it would be because it would be well worth it in the end. This must be a package of provision. These people will be protected in the future by having the safety net of social welfare system available when they find themselves out of work, impecunious for the most part, in despairing situations and in duress, which impacts negatively upon their health status. We know those people - they are plasterers, carpenters, plumbers, electricians, painters, gardeners and so on. This is the cashflow quagmire that unfortunate people found themselves in, having been forced out of business. This Bill will hopefully bring a bit of balance, fairness and respite for those people back into the system.
The thrust and objective of the Bill must be that of "pay now and argue later". In other words, we should forget about the idea of "we will pay when we get paid" or "we will argue now and we will pay later". The contractors are in the dominant position as they have the resources. The notion of "we will pay now and argue later" is the thrust of the UK Act that was introduced in 1998. Rather than having the old outdated and one-sided philosophy of "pay when paid", that is why it is important that the adjudicator's decision will be binding in all respects. That is the important aspect. It should be binding in all respects save where an appeal would lie on a point of law, which pertains in regard to the current arbitration procedure. I have sat as an arbitrator and if there was a point of law and, say, I made a mistake that is clearly evident to an eagle-eyed lawyer and it is a point of law, then the party concerned has a right to go to the Circuit Court, High Court of whatever is the appropriate forum. However, that is a different issue. That right is available. Under the Constitution, nobody can be deprived of the right to go to the courts. However, in this respect, if the adjudication decision is binding, one can go to the courts on a point of law but not otherwise. If it is not binding, a coach and four will go through it. It is important that the adjudicator's decision is binding in all respects, save where an appeal would be on a point of law, which pertains in regard to the current arbitration procedure. If it is not of a binding nature, then the party against whom the decision is made would be well able to delay the due payment by referring the dispute to arbitration, thus forcing the other, and often innocent party, into a protracted dispute, without providing a mechanism for immediate payment. This issue must be addressed before the Bill is enacted.
I see Senator Quinn in the Chamber and I know that in the voluminous and comprehensive contribution he made on the Bill in the Seanad he was concerned about this aspect of adjudication. I think he asked Senator O'Toole to address it, somebody who has some degree of expertise in this area.
The decision of the adjudicator is binding in the UK Act, which is in operation since 1998, and it is binding, notwithstanding a referral to arbitration for final determination of the dispute. Similar Acts have been enacted in Hong Kong, New Zealand, Australia and Singapore. Therefore, there is nothing new about this.
My colleague, Deputy Jack Wall, has been in constant contact and has been contacted - as have I by a number of people in my county and in the constituency of Longford-Westmeath - by a number of people who have been involved in construction for a number of years, such as Anthony O'Leary, who has taken a keen and constructive view of what is required to deal with this situation. I believe he met the Minister of State.
I wish to deal with the main items that need to be addressed by way of amendment on Committee Stage, and the Minister of State referred to some amendments he will bring forward. One is the binding nature of the adjudication for all parties in regard to public and private contracts. I know the reason for provision in regard to public contracts and I will address that later. It is in case the State would be out of money because it paid over money but that can be solved. The State is in a dominant position whereby it can have a retention clause. In other words, if the Minister of State, Deputy Hayes, was a contractor and was owed €150,000 as the main contractor and the State only paid him €120,000 and he owed me €40,000, he might say "hold on, I am only paying you €30,000 because I have to deal with matters myself". There is a mechanism to manage this, if we were to take the initiative. Otherwise, the boys are very cute; they will slip through the net again and they will drag it out interminably. They have the wherewithal. They are in the dominant position and eventually they will abuse it. That is what always happens. That is why we must have regulation. That is why we cannot have free market forces, notwithstanding that I support them in certain areas, but we cannot have them with untrammelled power. We must have regulation.
Another item is the Bill is that the threshold for adjudication, originally set out in the Bill at €200,000 and €50,000, which I know the Minister of State intends to change, were too high. He saw the light. In fairness to Senator Quinn, he just wanted to get the ball rolling and get this legislation on the Statute Book. He wanted to introduce it and pass it to us in the Lower House for us to our job, and that is what we have to do.
It would eliminate many subcontractors, and perhaps the cost of adjudication should determine the thresholds. This is just a thought and it would turn the ball the other way around.
Being able to stop work for only 14 days if not paid is short and could be easily sidestepped. As a barrister one looks at the two sides; one is given a case to advise but one always wonders what the other side will come up with. Perhaps I am a bad person to look at the Bill because I always wonder what I would do if I were on the other side. One should be able to stop working until such time as payment is made. Let it be clear that one must pay over the money and if there is a point in law one can go off and chase it.
There should be adjudication for all disputes. Should it be confined solely to disputes relating to payment? Should we have a construction judge or a specific court similar to the UK? The Commercial Court works tremendously well and many of us did not think it would. Mr. Justice Peter Kelly and all of the people working there must be complimented because it works effectively and efficiently. Cases are being dealt with and procedures are put in place. One must comply with various steps; if Mr. Justice Kelly gives one a month and one does not do what one is told, one is gone and that is proper order.
This is a golden opportunity. The Minister of State, Deputy Hayes, is very bright and I do not say this in a condescending way. He is the person to drive this and Senator Quinn would acknowledge this. We must ensure adjudication awards can be enforced quickly. At present it can take up to two years to get to court to have an adjudication award enforced. This nullifies and defeats the express purpose of the Bill. We must consider how effective and efficiently the Commercial Court has worked since it was established in the jurisdiction.
Section 1 defines construction contracts and follows an amendment in the Seanad made last March on the day before the Dáil was recalled. I was interested in the debate that day. Senator Quinn may not have known but I was watching proceedings. I did not realise where I would be the day after or where I would be on 16 November. The definition in section 1 was widened. Notwithstanding the extended definition achieved by Senator Quinn's amendment in the Seanad and the fact we are all wholeheartedly in favour of putting the Bill on the Statute Book, it is vital that any legislation so enacted covers all relevant situations. Following consultation with suppliers and subcontractors, I understand some people play both roles. People in my constituency are both suppliers and subcontractors; they supply goods and carry out the work. They do not subscribe to the view this worthwhile objective has been achieved. I do not want to be negative but Senator Quinn asked us to be positive in making suggestions to improve the Bill. The Bill remains somewhat flawed as it does not protect subcontractors who supply goods or services. It deals with the bigger and more valuable end, which is important in its own right and cannot be downplayed, but it fails to protect those at the lower end. Many thousands have fallen victim to the economic circumstances and it behoves us as legislators to ensure all sectoral interests are looked after and encompassed in as comprehensive a fashion as possible.
I read what Senator Quinn stated about materials and he has a point, but we must be able to do this. I received a letter from a supplier who employs 100 people. He came from a cottage and never forgot his roots. He looks after his workmen and everyone gets paid. Some men have worked for him for 25 or 30 years and this is a good sign. He told me one of his major concerns is that material suppliers are not covered by the Bill. Repeated efforts have been made to rectify this but to no avail. He also stated it is time some of those elected got a taste of the same, even me. He stated it is believed such suppliers are covered by the terms and conditions of sale but most of the material supplied, particularly specialist materials, are covered under the project contract and retention of title is getting more difficult to enforce because contractors are middlemen. There have been warnings that specialist materials will be omitted from the Bill. We must deal with this specific issue.