Pre-Legislative Scrutiny of the Draft General Scheme of the Building Control (Construction Industry Register Ireland) Bill 2017 (Resumed)

I remind members that we will have two sessions today. The purpose of this morning's session is to resume our pre-legislative scrutiny of the draft general scheme of the building control (construction industry register Ireland) Bill 2017. On behalf of the committee, I welcome Ms Orla Hegarty and Ms Deirdre Ní Fhloinn to this meeting. I apologise for the delay in bringing them in.

I draw the attention of witnesses to the fact that by virtue of section 17(2)(l) of the Defamation Act 2009, witnesses are protected by absolute privilege in respect of their evidence to this committee. However, if they are directed by the committee to cease giving evidence on a particular matter and they continue to so do, they are entitled thereafter only to a qualified privilege in respect of their evidence. They are directed that only evidence connected with the subject matter of these proceedings is to be given. They are asked to respect the parliamentary practice to the effect that, where possible, they should not criticise or make charges against any person, persons or entity by name or in such a way as to make him, her or it identifiable. Members are reminded of the long-standing parliamentary practice to the effect that they should not comment on, criticise or make charges against a person outside the Houses or an official either by name or in such a way as to make him or her identifiable.

I ask Ms Hegarty to make her opening statement.

Ms Orla Hegarty

I thank the joint committee for the opportunity to attend this morning's meeting. I am an architect and an assistant professor at the UCD school of architecture, planning and environmental policy. My area of expertise is construction regulation, procurement and the operation of the construction industry in Ireland. I have direct involvement and experience in national and EU systems for regulating qualifications and assessing competence. The purpose of today's session is pre-legislative scrutiny. This provides us with an opportunity for public analysis and feedback on draft legislation. In preparation for this session, I have reviewed the draft construction industry register Bill and consulted widely on the technical workings and implications of this policy initiative.

In summary, a sustainable and robust construction industry needs an effective building control system, an efficient construction sector, a flexible labour market and a fighting fund for remedying defects. No single one of these parts can be looked at in isolation. The regulation of certain professions, trades, builders and developers is necessary in the interests of public safety, environmental protection and consumers. Restrictions on activities must be justifiable and proportionate. Targeted robust regulation is required in specific areas of high risk because the legacy of defective and dangerous buildings cannot be repeated.

There are shortcomings in the proposed general scheme of this Bill, which relates to the Irish construction industry register, or CIRI. There are inadequate consumer protections, particularly for home buyers. There is no mechanism for consumer redress to repair defects. There are inherent conflicts of interest. CIRI is not independent. The absence of independent regulatory oversight of CIRI is not in accordance with best practice. Restrictions on the activities of builders and trades are not in compliance with EU law. In certain respects, this legislation duplicates or is incompatible with the activities of other State agencies and organisations. There is inadequate stakeholder consultation, evaluation of alternatives and regulatory impact analysis. There is no cost-benefit analysis or evaluation of the administrative and technical capacity required to deliver CIRI. There has been no assessment of the impact on competitiveness in the construction industry, particularly with regard to restrictions on labour supply.

What is the State's role here? Why is regulation necessary? When it comes to buildings, the role of the State is primarily protection of life. It seeks to ensure buildings are safe and sustainable. This includes fire safety, ventilation, soundproofing and structural integrity, as well as protection from falls, radiation contamination, carbon monoxide and other dangers to the health of occupants. Other risks include environmental damage, energy inefficiency, sewage contamination and dangerous materials. A secondary requirement is protection of property to protect consumers who buy a product, in effect. Not all consumers need the same level of protection. Home buyers are particularly vulnerable. For the public, buildings must be safe to use and must not be damaging to their health. For the State, buildings must be energy efficient and must not cause damage to the environment. The priority for the home buyer is fixing the problem. CIRI does not provide a mechanism or a fund to repair defects.

How many builders will be affected by this? There are 100,000 construction companies, self-employed subcontractors and tradespersons in this sector. According to a survey conducted by DKM and SOLAS, approximately 70% of construction firms are self-employed with no employees and direct employment is expected to increase to approximately 213,000 by 2020. On this basis, it is possible that approximately 150,000 companies and individuals will have to be assessed for competence and will have to register in order to work. CIRI currently has approximately 800 members. The cost of putting this in place, and the delays associated with that, have not been calculated. What is needed? Registration for builders was flagged by the Department in 2012 in a document on its future focus of policy. It emphasised that registration should be in keeping with competition law, include strong quality assurance checks, provide strong consumer protection, have the cover of insurance and not add excessively to the cost of housing. These five policy objectives have not been addressed in the CIRI legislation.

I recommend there should be a future-proofed system that is aligned with other policy objectives that include construction growth and efficiency, better procurement and insurance, developments in the State building control structures, supports for training and skills and tax compliance. There should be an independent flexible and scalable registration system that is appropriate to risk and complies with EU legislation. Perhaps such a system could be similar to the CORU model for the regulation of health professionals. The system should not create barriers to trade or have an impact on construction competitiveness or SME costs. It should be possible for it to be rolled out strategically without causing delays and blockages in the construction sector. Independent regulatory oversight and enforcement of construction is essential to ensure public safety and environmental protection. There should be consumer-focused systems of protection and redress, with a single point of contact for complaints and remediation across the construction sector.

Ms Deirdre Ní Fhloinn

I thank the committee for inviting me here today to speak on the general scheme of the proposed Irish construction industry register Bill. I am a barrister in the final year of my PhD research on legal remedies and redress for defective housing. In my previous submissions to this committee, I set out my concerns regarding the construction regulation system in Ireland. I have reviewed the general scheme of this Bill. I thought it would be beneficial to the committee for me to examine how the proposed scheme fits in with the existing legal and regulatory context for construction regulation in Ireland, and specifically whether it achieves the objective of consumer protection.

I wish to highlight four particular issues in my opening statement, namely, consumer protection, the best way to regulate, public accountability and conflicts of interest, as well as effective regulation and State involvement. On the question of whether CIRI will protect consumers, I emphasise that consumer protection in construction regulation requires good-quality housing to be built, with accessible remedies for poor-quality housing. The proposed Bill provides no remedies for consumers. It may be presented as part of a package of reforms, but those reforms do not address the most significant issues facing consumers, including poor legal remedies, the lack of cost-effective access to dispute resolution procedures and the lack of mandatory defects insurance to cover the legal liability of insolvent builders, which could at least provide an after-the-event pathway to a remedy for the home owner. A private registration system might be thought satisfactory in a country with greater State involvement in the construction process generally and with better legal remedies for defects but it could have highly negative consequences in Ireland, where the regulatory system and the legal regime for remedies are both inadequate from the perspective of consumer protection.

An example would be a consumer dealing with defects in a home. A home owner dealing with defects may make a complaint to the CIRI admissions and registration board, and the complaint may result in disciplinary action or prosecution against the builder, which will not fix the defects. To obtain compensation to fix the defects, the consumer will still have to pursue a long and expensive remedy through legal proceedings. If the defect is a breach of the building regulations, that person can also complain to the local building control authority and possibly also the registration bodies of any professionals involved in the works, none of which is obliged to act or award compensation in order that another builder can do the work. Only the building control authority can order the builder to put the work right, and then only realistically during the construction stage.

How should builders be regulated? The scheme will result in a private system to regulate builders and a separate public system to regulate what they build. It is a missed opportunity to further develop the national building control management infrastructure as a central regulatory tool for regulation of both building and builders. This will result in significant information gaps, and for example, only the local building control authority will know of a registered CIRI member’s record on compliance with the building regulations. This information could be captured on the building control management system and then used by the registration and licensing system for builders if the two systems were operated under a common framework. An independent regulator with responsibility for the building control management system could use the system as a regulatory tool to monitor persons and entities involved with construction using information submitted relating to projects and any inspection and enforcement information supplied by building control authority authorised officers in respect of construction works.

An example is a hypothetical builder with a history of poor compliance with the building regulations. Information I have obtained from building control authorities indicates that formal enforcement powers are seldom used under the building control Acts. A builder with a pattern of non-compliance in construction works may have negotiated on more than one occasion to avoid formal enforcement. Under the CIRI model, a person’s registration will not be affected by these non-compliances unless that person is convicted under the Act; even then, CIRI may only discover the conviction if the member discloses it.

The proposed system will act as a gateway to being able to work for large numbers of people and would be a significant transfer of power from the State to a private entity. Independence cannot be ensured simply through the composition of the CIRI boards. The system will not be overseen by a regulator, as are the RECI and RGI systems for electricians and gas installers, respectively. These functions have been specifically delegated by the Commission for Regulation of Utilities and the commission monitors the performance of these schemes, as well as taking enforcement action where electrical or gas works are carried out illegally. A leading Irish expert on the delegation of State powers to the private sector has observed that where similar delegations have occurred in the United States, the private delegates are exempt from requirements that apply to the Government and State agencies, such as disclosure requirements, oversight structures, conflict of interest and reporting requirements and ethical obligations. There is no mention in this Bill of the Freedom of Information Act, the Ethics in Public Office Act or whether CIRI will be subject to the Ombudsman Acts. There are no requirements on any committee or board members of CIRI to disclose their own financial interests. There are a number of examples of other Irish regulatory bodies where such information is available, and for good reason; this Bill entrusts a significant amount of power to a private entity over who can work and what work they can do. These norms of regulatory governance are not reflected in the Bill.

Finally, I refer to effective regulation of construction, investment and State involvement. As part of my PhD I have researched systems of construction regulation in other countries. The consistent feature of effective and robust regimes is that they are properly resourced, independent of the regulated industry, with sufficient profile and credibility in the sector to influence compliance. My research suggests that part of the reason for the widespread defects in our housing stock is that, at least in recent years, there has not been a credible threat of enforcement of the building regulations. There are powers of enforcement in this Bill but building control authorities also have formal enforcement powers that are seldom used. The evidence of the number of defects in Irish houses and apartments points to a widespread and systematic disregard of the building regulations. Why would people comply when it is cheaper not to comply and there is little chance of being caught and little chance that one will be prosecuted or even have to pay to fix the defects if caught?

I have previously told this committee of my concern that the system of mandatory inspection and certification set up in 2014 would be seen to be doing the heavy lifting of regulation and that the public system would suffer unless it was resourced and supported. Investment in building control and in the building control management project is very small by comparison with the value of the construction sector. If regulation of builders is entrusted to the private sector, the public system will be undermined and we will miss an opportunity to develop a robust system using the building control management system as a key tool.

There are successful examples worldwide of the private actors having a role in construction regulation, and it can work well. Our context is different. We have extensive evidence of breaches of building regulations, poor legal remedies, expensive and complex procedures for dispute resolution and a lack of mandatory defects insurance. My research and analysis of the particular experience of Ireland in recent years suggests that the State should be investing in strengthening and supporting the regulatory system instead of outsourcing a key pillar of that system to a private representative body for the construction industry.

I thank the two witnesses here today and it was a good move on the part of this committee to engage in pre-legislative scrutiny. It is something we were not initially considering but after some debate it was decided it would happen at the committee. It was the right thing to do. The witnesses have raised a number of interesting and key points but we need to tease them out further. Anybody partaking in this debate, whether from the construction industry or on this committee, recognises we need a sustainable and robust construction industry that is effective in terms of building control. It should be an efficient sector that is also flexible in respect of the labour market and for the needs of this economy, particularly with respect to housing, construction, development of industry and all that goes with it. It is something we are all in favour of and it is really important. We are starting on the premise that it is what we want and need or at least it is what I believe we need.

Ms Hegarty has raised a number of matters but we need a bit more meat on them. She spoke about inadequate consumer protection, particularly for home buyers, with no mechanism for consumer redress. We need to tease that out. I am really interested in inherent conflicts of interest in CIRI. I can see how people would see that and it is important not only that it be transparent but that the public is assured on this issue. We must also note what Ms Ní Fhloinn stated, in that the building control authorities have failed for years. I know from my personal experience pursuing building control matters that nothing has happened and this is blamed on resourcing. There is something in between. Who will ultimately control this and run it efficiently and effectively, genuinely pushing to get resolutions? Ms Ní Fhloinn spoke about her own experience and research in the area and we must acknowledge that building control authorities have failed. We need to get behind the reason they failed. Is it down to resourcing or expertise? Were they really interested or driven by it? All this must be consumer-based. Will Ms Hegarty address the matter of restrictions on the activities of builders and trades not in compliance with European Union law?

It was indicated there is no mention in the Bill of Acts relating to freedom of information, ethics in public office or being subject to the Ombudsman. I do not know if those are envisaged so we need to tease that out later in this committee. Will the witnesses address those issues? I thank them again for two really interesting reports that raise many questions we did not deal with or consider in any great detail.

As Senator Boyhan had many questions, I propose we suspend the meeting now and return at 10.30 a.m. for those answers. There are other questioners as well. Is that agreed? Agreed.

Sitting suspended at 9.58 a.m. and resumed at 10.30 a.m.

Senator Boyhan had asked some questions just before we suspended the meeting, so we will go back to Ms Hegarty and Ms Ní Fhloinn for their replies to those questions.

Deputy Pat Casey took the Chair.

Ms Deirdre Ní Fhloinn

The Senator asked four questions. We will divide the answers between us. A point was made about consumer protection and redress and another was made about building control authorities and why enforcement by such authorities is perceived to have failed. Senator Boyhan raised a question about who would control the system and run it efficiently, which Ms Hegarty will deal with, and I was asked to deal with a question about freedom of information and the Ethics in Public Office Act 1995.

I am happy to deal with the first point in respect of inadequate consumer protection and redress. This is along the lines of what I addressed the committee about when I was before it in April. There are a number of significant legal hurdles for ordinary homeowners. They also affect commercial individuals, but I will particularly address the example of someone who owns his or her home and who has either bought it from new or had works carried out on it. If there are defects in that home, the remedies available to that person are very poor. They are very poor at common law under the law of contract if the person in question is not the first buyer.

When I spoke to the committee on the last occasion I also raised the fact that our systems of dispute resolution, arbitration and litigation are very lengthy, time consuming and expensive. It is very difficult for consumers to navigate. Senator Boyhan has returned. I am dealing with his first point about inadequate consumer protection and redress. I have looked at a number of cases before the Irish courts in which it has been very apparent that consumers have spent years trying to pursue remedies against multiple defendants at considerable cost to themselves. Waiting to see if they can get a remedy and for somebody to fix significant problems with their homes can cause considerable personal stress. I am not the first person to call for law reform. I mapped out the law reforms which I believe should be undertaken in the area of legal remedies in the submission which I made to the committee in April. In my view, we need to introduce primary legislation to deal with the problem of remedy in contract not being available to subsequent purchasers.

I wrote "revisit that" but I also made various points at the time about a consumer friendly system of dispute resolution.

On the point made about the freedom of information, ethics in public office and conflicts of interest, other Irish State bodies are subject to a fairly wide number of different types of regulation in terms of their behaviour, financial interest and regulation of lobbying. One can peruse the websites and annual reports of other public bodies, such as the Food Safety Authority of Ireland, and find out the financial interests of the various members of the committees and boards who are involved in those bodies. That is part of the accountability model that is used for those types of bodies that have a very important regulatory role. A body that has the power to regulate a sector and say which people can work in it and under what conditions must be subject to very rigorous standards of accountability. If there is a means to find out whether a person had a financial interest in a matter that is a very serious matter. That is why we regulate, under the Ethics in Public Office Act, for disclosures of interest that must be made by people in certain positions of employment or by certain public bodies.

The Freedom of Information Act is another example. The reason that I know that the formal enforcement powers of the Building Control Acts are very seldom used is based on the fairly scant information available on that aspect in the annual reports produced by local authorities. When I submitted freedom of information requests to local authorities that is when I made the discovery. I succeeded because I specifically said, "May I have a copy of the register for the last five years of the number of enforcement notices issued under the Building Control Acts and the number of convictions that have been secured?" This matter is of fundamental importance for this Bill because of one of the matters that an applicant must demonstrate when he or she submits an application to the CIRI board. He or she must declare that he or she has no convictions under the Building Control Acts. When one cross-refers the matter to the exercise of those powers by building control authorities we find that the formal enforcement powers are virtually never used. Out of all of the building control authorities that I spoke to or contacted I did not find a single one to confirm that there had been an any convictions under the Act in the last five years. Many of them have not issued a single enforcement notice under the Acts. Senator Boyhan was right to ask whether this aspect tells us our building control system is fit for purpose. I am not in any sense criticising building control authorities. I simply wish to make the point that this is part of the really essential context that we must consider when examining the effect of this Bill. In my view this aspect raises questions about resourcing and support for the work of building control authorities, which again is a point I made when I addressed the committee in April. I will now hand over to Ms Hegarty.

Ms Orla Hegarty

I will first deal with the question on the restrictions imposed on the activities of builders. Our system of building control works on the principle of regulating people in the expectation that the people will quality control the building rather than quality controlling the building and letting people build. When one goes down the route of regulating the building then the State could decide how to do so. It is a national matter for Ireland to decide how to regulate and inspect buildings.

When one goes down the route of regulating the people involved there is a European dimension that comes under the remit of the services directive. The services directive imposes quite strong limitations on allowing member states to restrict both the freedom of movement and the freedom of establishment. There is quite a high bar that one must reach. We have it for electricians, gas installers and crane operators due to the public safety element of their services. The State must demonstrate that it is proportionate and justifiable if it wishes to regulate, which is quite a high bar as found by the European Court of Justice, ECJ.

We already have structures to regulate some construction professionals - the non-craft through SOLAS. I have spoken to SOLAS about how the system operates and I am also familiar with how it works for the professions. If it were to operate for certain building operatives it would first need to cross the bar of demonstrating that it is necessary and there was a public interest and a public safety aspect. It would only be allowed to regulate that aspect. It would need to determine on a European basis the standard of competence to be assessed. It needs to set up structures in order to both assess people and be recognised as a clearing house for equivalence across Europe. The structures to do so are quite complex and onerous. They would need quite a lot of resourcing in order to be open, transparent and even-handed. In any system that is credible there will be certain people who will not meet the standard of competence. The system must be designed around the people who are disappointed when they make an application because they will then need a right of appeal and may go to court. Also, the system needs to be consistent over many years and ensure that everybody is handled in the same way.

Qualifications in construction are very complex. Unlike for a doctor, engineer or an architect there is no national standard agreed across Europe for those professions. It would be a case that Ireland would have to determine what that standard is, demonstrate that it is necessary for public safety reasons, establish the standard and then regulate anybody from Europe who chose to work here through assessing their prior work and qualifications to that standard.

In terms of conflicts of interest, there are inherent conflicts of interest when an organisation performs the two unaligned functions of representing builders or employers and being involved in making representations or lobbying, and also has a consumer focus. If an organisation has to carry out the two functions then at the very least one would expect to see quite a strong Chinese wall down the middle of the organisation. That is not the way that CIRI is structured. CIRI is structured to have a board with some independent members. In all of the wraparound to administer that, in terms of the public faith and the person who picks up the phone, it is the same phone number that the consumer must dial to complain about a building as a builder who seeks support from the organisation following a complaint. There no clarity about the purpose. There is plenty of potential risk in terms of how the system would operate.

I will take questions from Deputy Ó Broin and Senator Jennifer Murnane O'Connor and I will then come back to the witnesses.

Apologies for the disruption caused by the adjournment earlier.

I wish to ask a range of different questions. We have discussed with the witnesses and others before today the whole issue the of consumer protection element of building regulations and standards, and whether latent defects insurance or some other system can provide greater protection. When we put that idea to the Department at an earlier stage of pre-legislative scrutiny one of the arguments that the officials made was that there is a range of different pieces that will improve the building regulations architecture and they have to do them piece by piece. Therefore, they argued that this is one piece in a bigger picture. How will the witnesses respond to that argument? Would the witnesses prefer to see the consumer protection bit in place first? Would they prefer if the consumer protection and the industry register were located in the same place such as in the form of a building standards and consumer protection agency or some such body?

Clearly, many of us have raised this question. We will meet the CIF and others later today. I wish to forewarn them, since they are in the background listening, that we will raise the issue of independence. When we raised the issue with the Department the officials replied that this is the way this is done in other aspects of industry such as the Royal Institute of the Architects in Ireland and others and they operate a similar kind of mode. In fact, the officials in the Department went so far as saying that other countries are looking to Ireland and considering this model to see if this is the way they should go. How does the CIRI register, as constituted in the heads of a Bill, compare with the system that operates in the sphere of architecture? Are the systems comparable? I believe that there are differences between the two representative bodies in terms of who they represent and their roles and functions.

In terms of scale, there is a much smaller number of architects or consultants than workers in the construction industry. It is all very well to say that we will have a register. Given the scale, and the witnesses mentioned there could possibly be up to 250,000 on the register, how long would this process take? How big an enterprise is this when compared with some of the other registers that exist for other professions?

I keep asking people what has been learned from the voluntary register as it has existed for a period. Have the witnesses had any interaction with the process? Can they indicate whether the process has changed things? Have the witnesses sought information from the voluntary register in terms of some of the issues they have raised such as transparency and accountability?

Have they had to make freedom of information, FOI, requests for information that may have been refused? Can they give us an indication as to whether they have direct experience in this regard? Do they know others who have engaged with the voluntary register and, if so, has it made a difference?

Notwithstanding their very clear concerns about the location of the register within the Construction Industry Federation, the board membership was an issue of considerable debate previously in that the question whether or not it should have a majority of ministerial or industry appointees arose. Before we get to the Chinese walls argument, will the witnesses give us their views of the board structure and membership as currently outlined? Do they think any changes could be made to it at least to improve the legislation? Regarding the Chinese walls, is Ms Hegarty suggesting that her preferred option is that this is taken out and put in some independent body? If that is not on the table from the Government's point of view, what kinds of changes would she like to see to what is on the table at present in terms of creating greater Chinese walls so it is not just a matter of a different telephone number or a different office? What is best practice in this regard?

Do the witnesses have any information about what other jurisdictions are doing or have been doing in this area of regulation of the industry? Would they like to suggest any models of best practice? They may wish to come back to us on some of these issues in writing rather than orally. The point they made about conflicts of interest was very well made. For the sake of clarity, can they give us a number of notional examples of the conflicts of interest they would be concerned about that could arise from the Bill as it currently stands?

My last point concerns the point Ms Ní Fhloinn made about enforcement and legal action. That only refers to enforcement action and legal action taken by registered authorities within the State. What about, for example, enforcement actions, legal actions or indeed convictions taken against developers, builders or contracts or who reside outside the State and are tendering for work? We know this is becoming increasingly common in commercial and residential construction, and that is clearly a gap in the Bill. How can we try to close this gap down?

Deputy Ó Broin has made some of the points I wanted to make. The biggest issue here is that the system does not have a regulator. I am a firm believer that every public body now needs a regulator because there is so little accountability. Ms Ní Fhloinn mentioned looking to the local authorities for figures on enforcement, complaints and convictions. A builder wanting to build so many houses must, naturally enough, put a bond in place, which goes through the local authority. If, by misfortune, the housing goes into liquidation and the builder cannot afford to continue building the houses, who is accountable for the bond? At this stage 30 of 80 houses could be built and people could have bought them and be living in them. Driving into the estate, one might see unfinished lights, paths and roads. These people could have bought the houses for €400,000 each, and now they might cost €200,000. Who is accountable for that? These are people's lives we are dealing with.

We absolutely need regulation, but there is no accountability. Five years after the situation I have outlined, if one goes back to the local authority and the bond is not there, the local authority will have to see whether it can finish the footpaths, the lights and the roads because they will be unsafe. We have a duty of care to people who have bought homes in such circumstances. When they buy these homes, there should be a guarantee from a regulator that the relevant works will be done. This is a major issue. I am a firm believer in the construction industry and in ensuring local employment and so on, but one could hear that the builder has gone ten miles down the road and started another estate without finishing the first one. One is left thinking, where is the regulator, and who is implementing or allowing this? Homeowners need bonds because, for them, the guarantee of knowing they have bonds is crucial.

Overall, in the long term, we hope many more houses will be built in the next few years between local authorities and private providers, and that is great. However, we need proper regulations, everything must be sorted and everyone must be accountable in this, and this is not the case at present. I have much the same reservations the witnesses have about certain issues they have raised. They are right to highlight them, and we need answers. Bonds are definitely a massive issue in respect of which there is no accountability.

I now come back to Ms Ní Fhloinn and Ms Hegarty.

Ms Orla Hegarty

I will take one of the first questions asked about a similar model. The CIRI Bill has been drafted on the basis of the Building Control Act 2007. I do not feel this is appropriate. Professionals are there to give advice, so if they give bad advice, the purpose is to sanction them in order that they do not give bad advice in the future. Builders build a product, a building, so a complaints process that looks at their professional performance, misconduct and consumer service is not really appropriate because the complainant wants the house, the product, fixed. A more appropriate model might be what happens in the Register of Electrical Contractors of Ireland, RECI, which is how the electricians are regulated. If one makes a complaint to RECI, one receives receipt of one's complaint within a day and RECI sends an independent inspector out to look at the electrical installation within seven days. This is what homeowners want. They do not necessarily want their complaints to be put to a complaints committee for an investigation that will drag on for several months, at the end of which perhaps someone will be sanctioned. The complainant still has the problem with the building that will not be fixed. What complainants want is perhaps similar to what happens under RECI. I do not think the model for professional bodies is appropriate to use for builders.

Regarding how these bodies operate, in preparation for this meeting, I sought records from the bodies for architects, surveyors and engineers and from CIRI. Engineers Ireland does not have a statutory register and does not publish any data regarding sanction of its members, so these were not available. I got some information from the Royal Institute of the Architects of Ireland, RIAI, and the Society of Chartered Surveyors Ireland, SCSI, but it is clear that a very small number of actions get to the point of enforcement or any public sanction. It is also clear that most of the complaints are mediated within the organisation before going to the independent board for consideration, which demonstrates some conflict of interest. A very small percentage of the reports get to the independent board, and most of them are negotiated or mediated, so it is good practice to have a sliding scale as to how one deals with complaints. However, the sliding scale should be within the independent body, not within the organisation, because there are conflicts there regarding which ones are pursued and which ones are not and perhaps how people are advised at an early stage on some of that. As a model, using a professional is not the same. I sought advice from CIRI on the number of people admitted and sanctioned over the past three or four years since it was established but that has not been provided to me.

Did CIRI say why it could not give Ms Hegarty that information?

Ms Orla Hegarty


Finally, to return to Deputy Ó Broin's point about this being one piece of a bigger picture, what people expect from this and what is in the Bill are perhaps two different things. There are many different expectations. I think there are people who expect this to sort out problems with non-compliance regarding tax, people who expect it to streamline the public procurement system, people who expect it to level the playing pitch for compliant contractors, and people who expect it to be a consumer body. In various aspects of the document, one can see there is not really an alignment as to what the main focus of this should be. However, if one backtracks into the policy decisions of Government over recent years, going back quite a way into Strengthening the Building Control System, Report of the Pyrite Panel, the National Competitiveness Council reports and Construction 2020, the core element of registration of builders in all these documents is about consumer protection. The policy behind much of this was not to have another Priory Hall and more pyrite problems, but along the way it has lost that focus.

Ms Deirdre Ní Fhloinn

I thank Deputy Ó Broin for those questions. I will go through the various points he raised, and if there are ones we think need a little further reflection, we could deal with them in a separate written submission.

I will deal first with the consumer protection element of regulations and building standards that Deputy Ó Broin mentioned and whether we would prefer to see the consumer protection element dealt with first and the register dealt with separately. The Law Reform Commission examined precisely this issue in 1977 in its working paper on liability of vendors and lessors of defective premises. In that paper it deals in detail with the proposed registration system for builders, which was under discussion between the Department with responsibility for the environment at the time and the Construction Industry Federation.

The way in which the Law Reform Commission envisaged the system would work was not dissimilar to the model proposed in the Bill, except it recommended that there should be a requirement for a bond in order to deal with the widespread problem of insolvencies in the construction sector that was perceived at the time. Without dealing with the issue in great detail, the commission suggested the bond could be set at, for example, 1% of the purchase price of the house. I am not suggesting this recommendation be implemented but pointing out that when this model was considered 40 years ago it was considered fundamental that this problem be fixed in addition to fixing the legal problems I identified.

The Law Reform Commission stated it would be useless to create a new set of legal remedies without addressing the fact that the builder may not be solvent and able to meet the claims. Following publication of the Law Reform Commission's working paper, we had the introduction of HomeBond which, to this day, will not give claimants the same amount of money they could recover in an action under contract if they had access to the original contract. HomeBond is more limited and subject to significant exclusions. In each iteration of HomeBond, before it was underwritten by an insurer, it was subject to significant exclusions and limitations on what could be recovered. We have been in this position previously. The Law Reform Commission, in its working paper, stated we should not hold off on introducing these key elements of law reform until the register of builders is in place. Here we are, 40 years later, still looking at the same issue. Having said that, I believe both matters are fundamentally important and both should be progressed as a matter of political urgency.

On the point of the-----

If I may clarify the point, Ms Ní Fhloinn is arguing that these are not two separate issues and they need to be integrated in a single process as having a separate register and consumer protection function would not work properly. Is my interpretation of her argument correct?

Ms Deirdre Ní Fhloinn

As the Deputy stated, the Department expressed the view that this is part of a package and one piece of the puzzle which must be considered in context. That package does not seem to involve remedying the problems that were identified. I am not the first person to identify these problems. Having examined the issue in context, I now have the benefit of knowing what happened in the past 40 years. The Law Reform Commission predicted this would be the case and argued that both elements should be advanced. I share its concern that if law reform were enacted tomorrow morning to fix all the problems I have identified, it would not solve the problem of who will pay to fix the defects. The lens through which I examined the Bill is the perspective of the consumer. Who will pay to fix the defects? When someone makes a complaint to this body will anyone come out to look at the defects or pay to fix them?

I want to make another point about the model and also with regard to learning from history. The pyrite panel report of 2012 recommended that there should be a system in place for the registration or licensing of builders and cited the examples of the register of electrical contractors and the register of gas installers - Ms Hegarty referred to these. Both of these registration systems operate under the supervision of an independent State regulatory authority, the Commission for Regulation of Utilities. These bodies were appointed for a seven-year term in 2016 following a public procurement process. As such, there is external oversight monitoring the schemes and what they do. This is a world away from a system where one might have a registration body that is not accountable to anyone. The only real accountability in this Bill and, arguably, the Building Control Act 2007 relating to the other regulated professions, is the requirement to publish an annual report. This is another reason the Freedom of Information Act is very important. If there is no accountability and no external body asking questions, it is down to members of the public to try to work out what is happening via the Freedom of Information Act. This would suggest a real problem of accountability and governance.

The Deputy also referred to models used in other countries. On my previous appearance before the committee, I referred to the licensing model in place in Australia and I would be happy to provide further information on that. The key element of the international systems in place that are regarded as robust and effective are independence at various stages of the construction process. When the World Bank considered what should be the key factors in its guidance on building regulation reform, one of the issues it mentioned was independent verification of design, which is not a feature of our building control regulations of 2014.

There are different elements to this. What I tried to emphasise in my opening statement was that this particular model cannot be viewed in isolation. It is a model that might work differently in another country but in Ireland it is in a highly complex and prejudicial set of existing relationships.

I am conscious of time as the meeting must conclude by noon. I ask the witnesses to be brief.

Ms Orla Hegarty

I will make one comment. The issues of bonds and latent defects insurance have come up several times. They are both effectively insurance products and they will not be widely available or available at an affordable cost in the Irish market unless the insurance companies can price the risk. The lack of certainty about what risks they are pricing is a disincentive to having affordable insurance, which is the ultimate consumer protection. Having a privatised system in which the construction industry effectively polices itself, which is the system we currently have, is inherently risky and will be viewed as such. In such a system, any products that are available will be either be too expensive to be affordable for most people, be it a bond or a defects insurance policy, or they will not be widely rolled out because people will have to verify what they are insuring.

I ask the witnesses to circulate to the committee the documents to which they referred, specifically the reports from the Law Reform Commission and World Bank.

Ms Orla Hegarty

I will be pleased to do so.

On behalf of the joint committee, I thank the witnesses for their attendance and apologise for the interruption. I am sure we will engage with them again as the Bill progresses. I propose we suspend for a few moments to allow the next group of witnesses to take their seats.

Sitting suspended at 11.07 a.m. and resumed at 11.08 a.m.

I welcome from the Construction Industry Federation, Mr. Tom Parlon, Mr. Mel O'Reilly and Mr. Hubert Fitzpatrick and from the Construction Industry Register Ireland's admissions and registration board, Mr. Hank Fogarty and Mr. Liam Egan.

By virtue of section 17(2)(l) of the Defamation Act 2009, witnesses are protected by absolute privilege in respect of evidence given to the joint committee. If, however, they are directed by the committee to cease giving evidence on a particular matter and continue to do so, they are entitled thereafter only to qualified privilege in respect of their evidence. They are directed that only evidence connected with the subject matter of these proceedings is to be given and asked to respect the parliamentary practice to the effect that, where possible, they should not criticise or make charges against any person or entity by name or in such a way as to make him, her or it identifiable.

Members are reminded of the long-standing parliamentary practice to the effect that they should not comment on, criticise or make charges against a person outside the Houses or an official, either by name or in such a way as to make him or her identifiable.

I invite Mr. Tom Parlon to make his opening statement.

Mr. Tom Parlon

I thank the joint committee for the opportunity to address this meeting to discuss the general scheme of the Building Control (Construction Industry Register of Ireland) Bill 2017. I am the director general of the Construction Industry Federation.

With me are Mr. Mel O'Reilly, chairman of the CIF's building regulations committee and member of the CIRI admissions and registration board, and Mr. Hubert Fitzpatrick, director of the CIF. Our President, Mr. Dominic Doheny, is in the Public Gallery with some other colleagues.

It is important to note at the outset that the CIF is a strong advocate for a statutory register for builders. The CIF, in liaison with the Department of Housing, Planning and Local Government, established the current CIRI register on a voluntary basis with the objective that it be placed on a statutory footing at the earliest possible date. The CIF has consistently put the case to Government for the need to have such a statutory register in operation in the construction industry. Such is the importance of protecting the consumer from any underqualified, unscrupulous, or incompetent operators that the CIF fully supports the commitment of the Minister for Housing, Planning and Local Government to put this register on a statutory footing.

The entire regulatory environment surrounding building control changed significantly when SI 9 of 2014, Building Control (Amendment) Regulations 2014, came into effect. The CIF gave its full support to the introduction of the statutory instrument and considered at that time that the remaining element of compliance to be addressed required the establishment of a formal registration process for builders wherein competence could be assessed by an independent admissions and registration board. In the absence of legislation, the CIF established, in partnership with the Department of Housing, Planning and Local Government, the voluntary registration system, CIRI, while ensuring that the integrity and independence of the admissions and registration scheme was fully supported and maintained. In excess of 800 large, medium and small builders and specialist contractors from all parts of the country are now on the voluntary register and have committed to continuing professional development and training requirements. The CIF views its role as being a partner with Government in protecting the end users of buildings and ensuring and regulating compliance with building regulations and standards of conduct within the industry. In the past, the good name and reputation of many professional and fully compliant builders, contractors and specialist contractors was tarnished by the acts of others who could classify themselves as builders and contractors without any independent assessment of their knowledge and experience within the complex industry we all now work in.

The CIF has invested heavily in its IT administrative platform to support the application and administrative processes surrounding the registration scheme and the online database for CIRI registered members. Further investment is now ongoing in the establishment of an online induction programme to be undertaken by prospective members of CIRI and for monitoring by the CIRI admissions and registration board of registered members' continuing professional development obligations pertaining to CIRI membership. A dedicated continuing professional development, CPD, office has also been established to assist members in meeting training and upskilling requirements. It is the view of the CIF executive council that a fully functional registration system is a key requirement for the future reputation of our industry. The council's view is that this system, modelled on that of other professional bodies such as RIAI, Engineers Ireland and the Society of Chartered Surveyors of Ireland, is the most effective way for the consumer to identify competent builders and for authorities to identify those who should not be operating in our industry. The CIF considers this system to be one of the last pieces of the jigsaw in providing a platform for the ongoing professionalisation of the entire construction industry. Builders represent the only segment of a vast network of construction-related enterprises that are without a registration scheme to enforce standards.

The general scheme of the building control (construction industry register Ireland) Bill 2017, as published, is very much in line with the governance documents and procedures established in the current voluntary register. The Minister's role in the draft legislation relating to the statutory CIRI register is welcome. Under the proposed legislation, the Minister will prescribe regulations determining categories of registered members and classes of work; prescribe levels of previous experience or educational qualifications required for entry to the register; prepare a code of conduct specifying standards of conduct and practices to be adhered to by registrants; appoint the chairmen of the CIRI admissions and registration board, and the CIRI appeals committee; nominate five members to the CIRI admissions and registration board having consulted with the Minister for Education and Skills, the Minister for Jobs, Enterprise and Innovation, and the Minister for Public Expenditure and Reform; nominate two members to the CIRI appeals committee; consent to the making of rules for CIRI; specify offences; and consent to the scale of fees payable on registration.

The role of the CIRI admissions and registration board is clearly defined in the draft Bill. The board will decide on the eligibility of applicants for registration; make all decisions pertaining to registration of applicants; deal with all complaints concerning a registered member, pursuant to which it may cause an investigation to be carried out; appoint inspectors to carry out any investigation; publish sanctions as it sees fit; and provide policy and guidance materials as necessary to facilitate the registration process. The legislation proposes that the board shall have a quorum of six members, the majority of whom shall be members who were nominated by the Minister. The role of the CIF is clearly defined in the Bill to include preparation and publication of the CIRI annual report to include a financial statement to be certified by an auditor; and the appointment of five members of the CIRI admissions and registration board, two of whom must be registered construction professionals and non-members of CIRI.

The independence and integrity of the CIRI admissions and registration board is safeguarded under the legislation. The CIF assumes the risk and cost pertaining to operations and for any legal challenges that may arise from builders who fail in their registration applications or are removed from the register for elements of non-compliance with any registration requirements. Under the scheme of the Bill, as published, and as the current regime provides for, the CIF, while it is the registration body, has no influence whatsoever on the decision-making process of the CIRI admissions and registration board. This is fully endorsed by the CIF. In summary, the CIF fully supports the placing of CIRI on a statutory footing. This registration scheme has been a central objective for the federation in putting in place a credible system to protect consumers, occupiers, end users of buildings, and in turn the reputation of our construction industry.

Mr. Hank Fogarty

On behalf of Construction Industry Register Ireland's admissions and registration board, which I will refer to hereafter as the CIRI board, I thank the committee for the opportunity to make a presentation this morning on the general scheme of the building control (construction industry register Ireland) Bill 2017.

I am chairman of the CIRI board and with me is Mr. Liam Egan, who is also a member of the CIRI board. Mr. Egan is a former assistant principal architect with the Office of Public Works and I am a chartered engineer with over 40 years' construction experience with a civil engineering contractor. I retired in 2009. The then Minister with responsibility for the environment consented to my nomination as inaugural chairperson of the CIRI board while Mr. Egan was nominated to his position by the Minister of State at the Department of Public Expenditure and Reform with special responsibility for the OPW. Under the current voluntary CIRI scheme, the board has been in existence since March 2014. That coincided with the introduction of SI 9 of the Building Control (Amendment) Regulations 2014, or BCAR 2014 for short. Since then, my colleagues and I on the CIRI board have established operating structures and procedures which govern our obligations to develop a register for all the companies which carry out the wide range of construction activity under the BCAR regime.

A great deal of work has been done over the past three years, including analysis of the complex and diverse range of construction related activities and their categorisation into various profiles of work for CIRI registration; determination of the minimum criteria for entrance onto the register and the qualifications and experience required in order to be registered for various categories of work; development of an online registration process and its continuous review to ensure that it is not overly burdensome for applicants while at the same time providing relevant and meaningful information to the board upon which to base its decisions; the establishment of an assessment subcommittee of the board to assess each of the applications for membership of the CIRI register; and the determination of the continuing professional development requirements that should pertain for all workers of registered construction entities.

Committee members will appreciate that as the regulatory environment for construction is constantly changing, there is a requirement for ongoing CPD. That is a central and important aspect of our obligations. There is an ongoing review of the code of ethics specifying the required ethical behaviour of members of the register and there is a determination of the practical process by which the board's assessment of individual applications for registration is undertaken and the basis under which formal decision making is made by the entire board. We are also engaged in ongoing work to determine an appropriate complaints and appeals procedure.

In this regard, the Minister has recently consented to the appointment of Mr. Rory O'Donnell, who is a very well-known and respected solicitor, as independent chairman of the CIRI appeals committee.

Our entire board has been diligent and proactive in the carrying out of its functions since its establishment so that the objective of developing CIRI as a credible registration scheme would be achieved. At the same time, the board has reviewed the general scheme as published by the Government and is intent on ensuring the amendments to the current processes under the voluntary scheme can now be put in place to reflect the proposed statutory scheme that will ultimately be passed by the Houses of the Oireachtas.

I pay tribute to the CIRI board for the enthusiasm with which it has approached the development of the register and its commitment to the creation of a culture of compliance and continuing education within our industry. Knowledge, skill, competence and practical construction-related experience are the hallmarks of every successful construction company and are the foundation on which CIRI will be based.

We welcome the publication of the general scheme and look forward to the proposed legislation coming into effect.

I thank Mr. Fogarty. Before I take questions from the members, I want to make them aware we have to be out of the committee room by 12 noon. They should be as precise as possible with their questions and we will try to get the answers.

I thank the witnesses for their presentations. They were interesting and helpful. As I said from the outset, we all want a proper sustainable and robust construction industry, including mechanisms of control and ultimately redress for people who feel they were short-changed or in some way did not have a satisfactory outcome.

This morning's process was really important. I want to recount the four key messages I have taken from our deliberations today and from previous presentations we have had. They get to the kernel of the issue. I would like the witnesses to respond briefly to this. There was a suggestion that there is inadequate consumer protection, particularly for home buyers, and that there is no mechanism for consumer redress. We are told there are inherent conflicts of interest with CIRI in terms of independence. The CIF is an organisation with a track record of lobbying. My observation from reading media is that it is a particularly good lobbyist. That is its right and it would be failing its members if it did not do that. I acknowledge it is an important part of its work. It is now seeking a regulatory role in the same sector in which it is operating. Outside of here, people are saying it cannot be judge and jury in its own cause. Our job is to tease out the issues.

Another issue is the absence of independent regulatory oversight of CIRI, which is not in accordance with best practice. That is what is being suggested. The final issue is that restrictions on the activities of builders and trades people is not in compliance with EU law and specifically the service directive.

There are a number of challenges. We need answers to some of those because they are very serious. Ultimately, it is about confidence in the sector for CIRI and the consumer. Will the witnesses deal specifically with those challenges? Perhaps they will refute them but we need to hear it from them.

Mr. Tom Parlon

What we have said is it is about consumer protection. I am ten years with the CIF this week, ever since I left the esteemed House here. The Construction Industry Federation wants to support and represent a very solid, sound, reputable industry, which is the bulk of our people. That reputation was sullied by some people, often referred to as cowboys, who did not have the qualifications and so on. Reputation is a very valuable business asset for organisations, industries and individuals. This is very much about protecting our reputation against unscrupulous people. Mr. Hank Fogarty said CIRI is absolutely independent and committed to consumer protection and the culture of compliance. The new building regulations are a whole new ball game in terms of compliance and how we produce buildings. Every building has to have an assigned certifier. It has to be signed off and there has to be insurance to cover that particular signature. It is confined to chartered engineers, chartered surveyors, chartered building surveyors and architects. From the consumer protection point of view, it is the last piece of the jigsaw. When hiring people from this register, the consumer has to be assured of their professionalism, competence, trustworthiness, compliance, tax compliance, insurance compliance, health and safety compliance and that they have completed all previous projects. It ticks all the boxes. Professionals who have to sign off on somebody when they are accepting tenders will be able to check if he or she is on the register. It will save a lot of hassle and time.

With regard to the point about the lack of oversight, the Minister has major input into all the different areas. I have much confidence in the House and how it develops legislation, and particularly in this process because people from all different political persuasions come in. We had two very eminent professionals in earlier who have identified shortcomings from an academic point of view. The Bill is in the process of being put together. It will be the biggest asset to consumer confidence that we have ever seen in the construction sector.

Mr. Hank Fogarty

I will deal with the issue of conflict of interest. A comment was made about a set of prejudicial relationships. One has to understand the difference. The situation with the voluntary admissions board, that is, the CIRI board, which is in place at the moment, is that I am proposed by the CIF and my nomination is accepted by the Minister. I am not the Minister's nominee. There are five people nominated by the CIF, three members and two independent construction professionals. On the other side, there are five Government-appointed members of the board. That is the system. That seems to infer there is an "us" and a "them" but there never has been. In the three years we have been in existence, we have never once split along party lines. We have been unanimous in everything we have done. The important thing is when the scheme becomes a statutory scheme, the Minister will have control of it. I will not be reappointed. I suspect he will appoint his own person as the chairman and his five members and will have control of the board. If there is ever a conflict of interest, he will be able to deal with it very effectively. It is not true to say the CIF is policing itself. What possible interest would I have at this stage of my career in having a registered entity that is not the full shilling? Why would the CIF want that? It is damaging to the reputation of the industry and good contractors. More than 90% are good contractors. There is no interest in having that arrangement. I cannot see the conflict of interest or the prejudicial relationships. We do not police ourselves. We are a fully independent board. We have always acted like that.

As always I have more questions than the Vice Chairman would like but I will make them very brief. If the witnesses would like to give written responses rather than go through them all, I have no problem with that.

The issue from our point of view is not rogue builders; it is ensuring there is a proper regulatory framework that is good for the industry, the employees in the industry and the people who buy the product. If we get this regulatory system right, everybody will benefit from it. Unfortunately, until now the extent of defects suggests the problem is not just the odd untrained rogue builder but the absence of a proper regulatory regime. That meant that even non-rogue builders or people who in other circumstances would have been reputable did things or allowed things to be done under their watch that have left families with huge financial and emotional consequences. I want to put that in context.

I have not heard a convincing response on the issue of independence yet. If I am not wrong, CIRI will have a register with a very large number of people and companies on it. Some of those people and companies will also be members of the Construction Industry Federation on whose behalf CIRI will advocate, but others will not. If I am wrong in that, the witnesses should correct me.

Does that in itself create some kind of dynamics because on the one hand, the CIF is advocating on behalf of its members but on the other, it is playing a regulatory role for both members and employees of some of those members? I have some questions around that.

I would also like to hear the CIF's direct response to the suggestion that a better model would not be the professional association model, as is the case with architects, but the type of model that exists with electricians and gas workers both in terms of the independent inspections that follow a consumer complaint but also the independent statutory oversight of a regulator because they are two very different models. I was quite taken by the previous speaker's proposal.

The issue of conflicts of interest is not that we think anybody in the room is currently engaged in a conflict of interest. However, if we ensure that the system is designed in such a way that this is not possible, everybody is protected. To go back to the comments of Ms Hegarty and Ms Ní Fhloinn about the issue of Chinese walls, even from a public perception point of view, if I am the person making the complaint then I am making the telephone call to the same number and the same building. That does not suggest that there is an institutional separation. How do the witnesses think the Bill could be strengthened to deliver that?

I am a bit concerned about board composition because it is possible under the current heads of Bill for a majority of the board members to be industry. They do not all have to be registered but they could be within the broad construction development industry. There are five industry nominees, five Government nominees and a chair, with a list of people such as a former judge of the Circuit, High or Supreme Courts or a registered construction professional, so there could be a six or seven-person industry majority on the board. I take the point that this does not necessarily mean it is a case of "them" or "us" but it means people are bringing specific backgrounds to the board. Do the witnesses not think that for public confidence, it would be much better if there was no possibility of an industry majority and, crucially, that the chair is not from the industry to have that independent function?

I am interested in finding out what difference the witnesses think the operation of the voluntary register has made to date in practical terms. Crucially, could they share with the committee either now or as soon as they can in writing the number of consumer complaints that have been submitted to CIRI, the number of sanctions that have been issued and the number of exclusions from the register because it is quite important for us to assess whether or not the register has made any difference? The witnesses may not be able to or may not wish to answer this now but a question was asked at a previous meeting. There are people trading in the industry who were directly responsible for Priory Hall, Longboat Quay and a host of other ones. At the back of our minds is the question of whether they are on this register. Was any attempt made to ask whether some of those people should not have been allowed on to the register to give it that credibility?

Will CIRI be the competent authority in terms of EU-regulated professions for construction workers in Ireland? When construction workers from outside this jurisdiction are coming into Ireland, will CIRI be the body under EU law that is required to register those construction workers? How will it deal with the issue of whether those construction workers or employers have been non-compliant in their jurisdictions, whether they have convictions, sanctions or whatever else?

Where does the developer sit in all this because I am clear about the construction workers and the employers. If I am a developer rather than a builder, do I register? Do I have a role in this role? Is that not then a gap in terms of the regulatory function because, again, if we go back to some of the examples we have used like Longboat Quay or Priory Hall, while there was a lot of responsibility, the developer had a big responsibility?

My final question is one that Ms Ní Fhloinn made clearest. What consumers want to know is who is going to pay. When they discover life-changing defects in their property that have a huge financial cost, who will foot the bill? I put this question to the Department and I said that it is a very long and complicated legal process where someone goes around the houses regarding whether it involved the developer, builder, architect or the sub-contracted untrained guy who put in the fire stopping. The Department could not answer the question so could the witnesses explain how this will change so that we will find out who is responsible for paying if something is found to be remiss and who foots the bill if that person is no longer solvent?

Mr. Hubert Fitzpatrick

A range of issues have been raised that relate to both CIRI and the CIF. I will deal with a number of them, particularly from a CIF perspective. Regarding the protection of the consumer, which refers to one of the previous questions as well, the insurance policies available today to new home owners are very different from the insurance policies that pertained ten years ago. There are a number of operators in the market that provide what is in effect latent defects insurance. This insurance policy is first party insurance cover. The policyholder does not have to go through the builder. In addition, the policy attaches to the house. It does not attach to the builder or the first and only occupier. The policy is still in place so the home owner will go to the insurance company. This will apply in respect of defective workmanship, design and materials and will apply for a ten-year period. It offers much greater cover than applied previously. There is a policy for €200,000 for buildings and €50,000 for mechanical equipment so it is quite significant. I do no think the general public appreciates the significant difference in policy cover that pertains today compared to what pertained previously. Traditionally, the old builder warranty insurance would have been available but that had to go through the builder. This is no longer the case. We fully support-----

Does Mr. Fitzpatrick accept Ms Hegarty's point about the risk factor, namely, that if there is too much self-regulation by the industry, it pushes up the risk and premium for the premium holder?

Mr. Hubert Fitzpatrick

There are a number of players in the market. By and large, any builder who goes out to build a house to sell it on the open market will automatically get this insurance cover because a potential home buyer who goes out to secure a mortgage will only secure a mortgage on the grounds that this insurance is in place so while it is not mandatory, it is de facto a requirement for anybody who wants to build and sell a house on the open market. That is fully supported by the industry. We have no problem with that whatsoever.

In respect of poor workmanship, I believe the building control environment today is very different. The culture of compliance is totally different from what pertained prior to the passing of SI 9 of 2014. There is increased consciousness that an owner must appoint a competent builder and the builder must then appoint a competent team. We believe the CIRI registration process will certainly support that process in ensuring that only competent people are appointed for each stage of the construction process. A much more stringent level of oversight pertains to the construction of buildings. We have the assigned certifier and key inspections that are undertaken on buildings during the course of building work. We, as an industry, certainly do not want what happened in the past in terms of the experience of a number of home owners where defective workmanship was found and caused great grief to happen again. We, as an industry, want to ensure that we have a properly regulated industry where regulation is fully transparent and credible and works at the end of the day in the interests of the consumer. There are a number of issues there that would be more appropriately dealt with via the CIRI team.

Mr. Liam Egan

I will start with the issue of complaints. The record of complaints since CIRI was set up in 2014 is that there were no complaints in 2014; one in 2015 that was resolved in negotiation between CIRI, the contractor and complainant; none in 2016; and three so far this year. Two of those have been resolved and one is still under investigation.

In effect, we are discussing the regulation of the building industry today. We are discussing the building control (construction industry register Ireland) Bill 2017, which effectively proposes that the State outsource control and that the industry effectively regulates the industry. I have listened to the contribution of Mr. Parlon. I thought it was interesting that he praised the contributions of the two academics who addressed the committee a short while ago. He said that the two academics had identified important shortcomings in the Bill.

He omitted to mention that the main shortcoming that the two academics identified was the level of control that they felt this Bill gives the industry in regulating itself.

I want to address some questions, mainly on the issue of bogus self-employment and the direct relationship between bogus self-employment, which is rife in the industry, and poor quality construction and the failure to meet regulations. I believe there is a direct link between the two and that we cannot discuss one without discussing the other. I say bogus self-employment is rife within the industry, and that is not off the top of my head. The Irish Congress of Trade Unions, for example, says that 30,000 people are currently bogusly self-employed in the construction industry. The Construction Workers Alliance feels that is a conservative figure. They say there could be as many as 60,000 currently employed in the construction industry who are bogusly self-employed. That has a dual effect. It has an effect on the rights and conditions of the worker with regard to denial of sick pay, holiday pay, pensions and workers sometimes working, in effect, for less than the minimum wage. I contend that it also has a major effect on compliance and building regulations. If a contract is put out to tender and a builder applies for the job, claiming to be able to lay a certain number of blocks in a certain time with a certain number of people and if it is the cheapest tender submitted and is accepted, as such tenders often are, how can the building be delivered in a way that is not rushed?

We saw a concrete example of this recently. A raid was done on the Dolphin House flats refurbishment scheme's main contractor, Purcell Construction, in July. The raid was conducted by the Revenue Commissioners, the Department of Social Protection, people from the Department's Scope section and the Workplace Relations Commission, WRC. In some ways, it was a Mickey Mouse situation. An outcome was that the authorities were able to announce in August that all the workers were properly signed up, compliant to taxes etc. They did not say anything about the position in July, June, May or April when bogus self-employment was rife on that scheme. The chair of the housing strategic policy committee of Dublin City Council has stated publicly that he believes the electrical work on that particular project is below par and there are major questions to be asked about it, and that it is linked to the question of bogus self-employment.

It is not just a question of bogus self-employment. In the recent crane operators dispute which was so prominent at the start of summer, the crane operators alleged non-compliance by employers when it came to the issues of pay, training and safety. The best practice for training for a crane driver, as applies to not just New York or Dubai but to Dublin and Ireland too, is to have six months of training. Yet there are people being hired, given a few days of training and, at the end of the week, being put in charge of operating big cranes on big building sites in this city and in this country. How can we have proper health and safety, and applications of building regulations and standards to the highest level when that type of operation is being implemented by members of the Construction Industry Federation, CIF? It is not just one or two rogue members of the CIF, but members across the board. It is widespread in that regard.

Considering the idea that the responsibility for the regulation of the industry using these standards would be placed in the hands of industry, after all I have said, I will compliment Mr. Parlon and the five men from the CIF. They have come in here this morning with a straight face and welcomed these proposals when, back in CIF headquarters, they must be laughing to beat the band that political parties in this House in the form of the Government and the Fianna Fáil Party are prepared to support the industry effectively regulating the industry. In effect, the fox is in charge of the henhouse. Even if one was to try to put a pretty bow on this package, what one would do, at least, is say that the CIRI board must have significant representation for workers in the industry and for trade unions. We do not even have that. It is employers' legislation for employers. I am sure Mr. Parlon and the CIF representatives will deny that now and attempt to refute it but anyone looking at this in a serious fashion will see that this is the case.

Mr. Tom Parlon

I have to refute that absolutely. It is a very serious attack on the reputation of the industry. The Deputy is talking about health and safety. I do not know whether it reached his notice that this is national construction safety week and that a massive investment has been made in the industry together with workers in the safety partnership, the unions and so on to make sites safer. Big investment has been all over the media. There was a stand-down on every site at noon last Monday. Every worker in the country stood still for a moment to think about the safety implications. There was massive investment by the industry in health and safety issues. As a result, we have a very good record. We continue to have unfortunate incidents but they are very limited and are generally in small sites with small operators.

I do not know why the crane dispute that the Deputy raised comes into this but the suggestion that it has something to do with training or health and safety is wrong. As the Deputy knows, that was a result of an inter-union dispute between Unite and SIPTU. Crane drivers were used as part of that battle and the industry got tied up in it. It has now gone through proper process in the WRC and is awaiting a recommendation from the Labour Court, which is the proper channel through which it should be handled. We have extremely good relations with the unions. Unite caused an issue because it was trying to win members from other unions but, other than that, we have a very good record with labour groups.

As for the bogus self-employed, I know it was mentioned in the earlier presentation that there are over 200,000 individuals within the industry, self-employed or otherwise. The CIF does not condone bogus self-employment, nor do its members. There are many individuals and the industry has changed very substantially now in that, traditionally and originally, big companies hired all of their own tradesmen. Now they hire professional subcontractors to handle most elements. We certainly do not condone bogus self-employment. If anything, CIRI will weed that out because, as I will let CIRI's board tell, it has been quite a challenge for member firms to get registered. Before one can become a member of the CIF, one has to go through a very serious process. We do not allow in people if we have issues with their integrity or competence. I will let the board respond about the scrutiny that applies to people.

Mr. Hank Fogarty

I do not recognise the CIRI board the Deputy describes. We do not have any role in relation to bogus employment. We are, to some extent, peripheral to the question of compliance. Our role is to register builders, to encourage a culture of compliance with the ethics and to raise the standards within construction entities. That is our primary role. I do not recognise the Deputy's point regarding a lack of independence in circumstances where the Minister makes appointments, although I take his point regarding construction. I see no conflict in having a person in construction of a particular point of view being appointed by the Minister.

It was mentioned that there are 150,000 entities. There are not even 150,000 people working in the construction industry. The CSO figures are based on a particular set of criteria, which if one drills down into them indicate that the number of people working in the industry is considerably less than 150,000. We believe there will be between 3,000 and 5,000 registered entities at the end of this process, all of whom will be members. There is no conflict with European law. We have registered people from Northern Ireland but have not yet registered anybody outside of the island of Ireland. As far as I am concerned we could not possibly be in breach of EU law. We require people wishing to register to meet minimum criteria. For example, they must adhere to the rules regarding the code of ethics and the code of conduct, train their workers on an ongoing basis, provide CPD plans and advise us on how well they have done in that regard, which will be subject to audit. We are a separate entity. We are only part of the fabric. Compliance with the building regulations is guided by the Building Control (Amendment) Regulations, BCAR. Much of the history of the bad building practices occurred before they were in place. Now, somebody can be held responsible in this area. There are a number of redress options available since 2014. We are a support in that regard. Compliance with the regulations will be guided by BCAR or whatever other system the Government wants to put in place. It is our job to register builders and to ensure, in as far as possible, that we have compliant people on our register. That is our focus.

Sorry, Deputy Barry, I will allow you back in later. Senator Murnane O'Connor is next.

I thank the witnesses for being here today. Our objective is to ensure we have excellent builders and tradesmen in Ireland that we can be proud of. The problem now is the lack of builders and tradesmen and we need to work on that. I believe the ones we have are the best they can be and we need to ensure that we appreciate them.

The main issue for me is the bonds. We are all aware of unfinished housing estates and the lack of accountability in that regard which is unfair to people who have bought houses in those estates. I would welcome a response on that issue. Regulation is the key. We need regulation. In regard to the point that to be eligible to register a builder must have three years' experience, perhaps the witnesses would elaborate on that. On fees, are they payable every year or on a once-off basis? It was mentioned that building standards are excellent. We need public confidence in this regard going forward in light of the level of building that will be going on over the next few years. What is the position in relation to funding for inspections? If people are to have confidence they need to know that inspections will be carried out. From where does the funding for inspections come? Perhaps the witnesses would clarify that and also elaborate on the exemptions provided for under the Building Control Acts 1990 to 2014.

On the issue of complaints, I was surprised by the number of complaints being made in this area. Do the organisations here today work with local authorities or other agencies? I ask that question because I believe that to ensure success everybody must work together. As I said earlier, regulation is key.

I asked nine specific questions but I only got a clear answer to one of them. Would it be possible for me to email the nine questions to the witnesses and to have their responses sent back to the committee for circulation? That would be helpful.

I will not address Mr. Parlon's remarks to me about bogus self employment because I will be introducing a Bill on the issue in the House soon and I will have ample opportunity at that time to make my points.

In regard to the point relating to the crane operators dispute-----

Sorry, Deputy, it is not a matter relevant to the Bill. I ask the Deputy to stick to the subject matter of the Bill. The issue being raised by him is a separate issue for another occasion rather than today.

The issue is related to the question of health and safety and flowing from that the question of the quality of construction work. For the record, this was an inter-union dispute that the employers had nothing to do with. In reality, the dispute was between two unions, one of which was not properly monitoring pay and health and safety issues and the other of which was prepared to do that and challenge the employers on the issue. If health and safety is being taken seriously, as stated, why are the crane operators not getting the six months' training, which is best practice, and should be the case?

Would Mr. Parlon like to respond to Senator Murnane O'Connor's questions?

Mr. Tom Parlon

I will let Mr. Fitzpatrick respond to the Senator's questions.

Mr. Hubert Fitzpatrick

In regard to the bonds and unfinished housing estates, it is a condition of planning that a bond must be in place to ensure satisfactory completion of developments. There are difficulties in securing bonds because in many cases insurance companies are reluctant to enter into that market because of the nature and wording of bonds.

Is there not a need for regulation in this regard because footpaths, roads and so on form part of building contracts?

Mr. Hubert Fitzpatrick

We have had discussions with the Department of Housing, Planning and Local Government on the need to streamline bonding processes and on a standard wording of a bond that will apply countrywide. We need a bond that the insurance markets will be able to supply and following on from that a process whereby the works as they are carried out can be signed off on, certified as compliant with standards and the bond released and transferred to other developments. We are all singing from the same hymn sheet on that issue because that ultimately will protect the local authorities and the people who are buying homes in these developments. There is a body of work to be done in this regard and we are working with the Department on moving that process forward.

On fees, the annual charge for CIRI membership is €600. From a federation perspective, we see economies of scale arising such that as the register becomes statutory there will be an increased number of registrations under the scheme and thus the level of fee will reduce. However, as the Minister must consent to the level of fees payable on registration, at the end of the day it is the Minister who will have the final decision in that regard.

Will the fee be payable every two or three years or will it be a once-off payment?

Mr. Hubert Fitzpatrick

An annual feel will apply, because one must ensure compliance on an annual basis. The level of funding required will be dependent on the range of inspections, the workload of the CIRI board and so on. The fee determination will address that issue.

In regard to the Building Control Acts and the exemptions, there is provision in the Act whereby certain works can receive special exemption from the building controls and these are dealt with on a case-by-case basis with the Building Control Authority. There is scope for integration of the building control management system with the CIRI register, such that the Building Control Authority would have sight of who is on the register and, in addition, the CIRI board could have access to the track record of an individual builder countrywide with regard to compliance with the terms of building control legislation.

I acknowledge that a number of the questions raised by Deputy Ó Broin have not been answered.

We will get back to the Deputy with written responses to his queries.

Does Mr. Parlon wish to comment briefly before we finish?

Mr. Tom Parlon

I would like to offer an assurance to Deputy Barry on a point he raised. As he may be aware, a sectoral employment order for the sector was written into law in the Dáil, providing for an immediate 10% increase in construction rates. Having applied to the Labour Court for such an order, we in the industry very much welcome its enactment. I am delighted to see so many cranes about the place and the level of activity they show. The brand new tower crane installed by SOLAS at the national construction training centre in Mount Lucas is working practically around the clock to train new crane drivers. Before one gets up on a crane, one must have a ticket, as per the current regulations.

I invite Mr. Fogarty to give his concluding comments.

Mr. Hank Fogarty

In regard to renewals, it is a requirement of the system that everybody must apply for renewal every 12 months. In addition, if there are material changes to an original application, the applicant must flag those changes. We go through all of those renewal applications as well as the first-time applications.

On the requirement for three years' experience, I did not see that in the scheme and we do not have it. We do, of course, require relevant experience, encompassing skills, knowledge, competence and commitment. If we are satisfied in that regard, we register applicants in those areas where they have a proven track record. That is the regime we have in place. We currently have 1,050 registrations, but we are losing members because people see the onerous nature of what is required and are asking why they should have to comply with continuing professional development, CPD, requirements and all the other minimum requirements when their competitors do not have to do the same. I hope the Bill will provide a fillip for us and we will have no difficulty in terms of the logistics of registering members correctly.

I thank the witnesses for their engagement with the committee. I am sure they will be back with us before the Bill is passed by the Houses.

The joint committee adjourned at 12.05 p.m. until 9 a.m. on Thursday, 9 November 2017.