I move:
That Seanad Éireann takes note of Report No. 7 of the Fifth Joint Committee on the Secondary Legislation of the European Communities: Public Works and Public Supply Contracts.
Report No. 7 of Joint Committee on the Secondary Legislation of the EC — Public Works and Public Supply Contracts: Motion.
Is aoibhinn liom bheith ar ais anseo arís chun an tuarascáil seo a chur faoi bhráid an tSeanaid.
Report No. 7, dated 21 September 1988, of the Joint Committee on the Secondary Legislation of the European Communities deals with public works and public supply contracts. The report, after setting out the background to the liberalisation of public contracts in the European Community, goes on to describe the main features of the existing and proposed EC legislative measures in the public works field; the recently adopted directive in the supply contracts field and a proposed compliance directive aimed at the more effective enforcement of Community legislation in the public procurement field and the provision of an improved means of redress for aggrieved firms. The report concludes in section E, to which I shall return later, by giving the views of the Joint Committee on a number of matters.
First, I should like to dwell briefly on the broader background to the liberalisation proposals. As recognised in the report, the opening up of public procurement to genuine Community wide-competition is a key component in the achievement of a single European market by 1992. The new regime proposed will increasingly have an impact on the operations of Government Departments including the Office of Public Works, for which I have responsibility, as well as on the operations of regional and local authorities and the public sector generally. It is designed, of course, to help to underpin the economic and monetary strategies aimed at making the single market work for the benefit of all the citizens of the European Communities. The new regime should, together with other measures being taken to open the markets of member states, have a fundamental effect on the structure of the European economy.
The challenge of 1992, which grows all the more real as time passes, has its roots in the Customs Union between the Community member states which is embodied in the European Treaties. The Customs Union forms the starting point for the whole range of policies which seek to establish a common market. As you know, the Customs Union was completed between 1958 and 1968 for the six founding members.
The free movement of people, goods, services and capital is the other requirement for the completion of the internal market. Since 1969 the Community has made strenuous efforts to tackle technical barriers to trade. The achievement of a single market was seen as being in the interests of manufacturing industry and of the consumer. Industry benefits from a larger market which will allow for economies of scale and make European undertakings more competitive in relation to external competitors. Consumers benefit from a greater choice of goods at more favourable prices. Efforts to liberalise Community trade have, however, always come up against problems.
The Fifth Economic Policy Programme 1981 — 1985 prepared by the Medium-Term Economic Policy Committee gave some impetus to liberalisation when it included, as part of the planned Community dimension fo the programme, the achievement of the single market. The aims in this regard included the removal of protectionist "buy national" policies which were being applied in certain member states. In this context the opening up of public purchasing became a major instrument in the campaign for the completion of the internal market.
In 1984, as a consequence of pressure from the Heads of State and Government and the European Parliament over a number of years to speed up the creation of a European internal market, the Commission in its communication "Consolidating the Internal Market" pushed for action over a wide field where progress was seen as necessary in order to make the best use of the opportunities provided by a European market then of more than 270 million consumers. Again, one of the important areas was seen to be the opening up of public procurement and the introduction of transparency in the award of contracts. It was recognisd that to this end improvements were needed in the existing directives in the public procurement area. I note in passing that the Joint Committee underlined this need in the report. In addition, in relation to certain sectors accounting for much public expenditure i.e. the water, energy, transport and the telecommunication sectors, which were generally excluded from the existing directives, the Commission pointed out that Community industry could not retain or restore its competitiveness in these vitally important sectors unless it could build on a continental-scale market. It was a vital need, therefore, that these sectors should gradually be opened up to competition and common technical standards in the award of contracts introduced.
The Joint Committee referred in its report to the proposals being prepared by the Commission's services in relation to the excluded sectors. These have now been finalised and were sent by the Commission to the Council of the European Communities on 11 October 1988.
The European Commission White Paper in 1985 set out the timetable for all the measures, including those on public procurement, needed to ensure by 1992 the completely free circulation of people, goods, services and capital among the 12 member states in accordance with the Community treaties. The failure up to now to complete the European Community has been a costly one. All the barriers that prevent the formation of a grand European area without internal frontiers are estimated to cost the citizens of the Community tens of billions of pounds every year. In a report prepared for the Commission, discriminatory purchasing practices by national public authorities are alone estimated to cost the European taxpayer about 40,000 million ECU per year. This figure has to be seen in the light of the size of the public procurement market in the Community which was estimated to amount to 530 million ECU in 1986, that is, about 15 per cent of the Community's gross domestic product.
The Community directives already adopted were intended to eliminate some of the discriminatory practices and ensure that tendering procedures are transparent but, as I have said, they were not regarded as sufficient. Legal measures needed to be substantially improved and better surveillance was necessary to ensure that they were enforced. In backing up the European Commission's emphasis on the opening up of public procurement, the European Council at its meeting in the Hague in June 1986, as is noted by the report of the Joint Committee in its introduction, indicated that it "considered that public contracts are an essential feature of the internal market and their liberalisation is, therefore, a precondition for the completion of that market".
I should now like to apprise the House of important developments since the report was published in September while mentioning a number of the more relevant salient features of the report from the Joint Committee.
The report first refers to the 1971 works directive and in paragraph 7 to the proposals for amendment. For the record, I note in passing that the Joint Committee has expressed itself as being fully satisfied that the case for strengthening the public works directive is unanswerable. I should inform the House that the Council of Ministers formally agreed a Common Position on these proposals on 4 November 1988. The main amendments agreed in the Common Position are essentially those referred to in paragraph 7 of the report.
The effect of the amendments is that the present directive is to be substantially strengthened. The scope of the directive will be broadened to include more concessionary contracts. The definition of bodies governed by public law, the contracts of which will be subject to the directive, is to be extended. In addition, a contribution of more than 50 per cent of the cost of a project from any such bodies will bring the projects within the directive planned. The open and restricted tendering procedures are being continued with a view to ensuring genuine competition for the award of a contract. Even under the new negotiated procedure, a minimum of three candidates have to be approached.
Overall, the operation and procedures involved in competitive tendering will be made more transparent. Indeed, perhaps one of the most significant changes to be made in the Common Position, under a new Article 5 (a), is the introduction of a right for contractors, whose applications or tenders are rejected, to learn the reasons for their rejection and to obtain the name of the successful tenderer. Public authorities will be required to compile a report on each contract awarded and to make it available to the Commission on request. Parliament's Second Reading is expected to take place shortly and the draft directive is likely to be adopted by Council within a period of some months. An effective date of operation for the directive of late 1990 appears probable on present information.
I might point out that the higher threshold of 5 million ECU or about £3.8 million Irish pounds will have the effect of reducing the number — about 25 in 1987 — of works contracts advertised in the official journal by Irish authorities.
The Joint Committee next referred to the new directive on public supply contracts which came into effect on 1 January 1989, the main features of which are summarised in the report. I should inform the House that the necessary implementing instructions were issued by the Department of Finance on 23 December last. The threshold at or over which supply contracts must be advertised is at present about £155,000 for regional, local and other authorities and about £101,000 for Government Departments. These limits are quite low and should lead to increasing numbers of contracts being advertised for which Irish suppliers can compete. With regard to tendering procedures, the open procedure whereby all interested suppliers may tender will be the norm. Restricted and negotiated procedures can only be used in certain circumstances and a written report must be prepared by the contracting authority on each case, to be made available to the Commission on request.
I might refer to one significant new requirement which was mentioned in the report of the Joint Committee, namely, that requiring contracting authorities to make known by a notice in the official journal the procurement requirements in advance each year when the expected value of these equals or exceeds 750,000 ECU, that is about IR£580,000. I draw attention principally to this new development since the new advance notices required should greatly assist suppliers in their forward planning and will, I hope, be carefully monitored and followed up by them.
The next area in which there has been progress since the Joint Committee reported relates to the draft Compliance Directive, the main features of which are described at paragraphs 12 and 13 of the report. The "works" and "supplies" directives were intended to harmonise national procedures for public procurement. The European Commission, however, is unhappy with the level of compliance with these directives. It has become clear after several years experience that both national and Community monitoring arrangements were unable to ensure strict compliance with Community directives on public "works" and public "supplies". These directives do not provide for the monitoring of their application.
I note that the Joint Committee agrees that, in the light of past experience, the Commission is fully justified in proposing such a compliance directive. Under it, member states would have to adopt effective administrative and/or judicial remedies for setting aside decisions of contracting authorities which breach Community law and for awarding damages to an injured contractor. Member states will, in addition to their new responsibilities, be obliged to allow the Commission itself to intervene in whatever national administrative procedure is adopted.
The House will recall that this draft directive was sent by Council to the European Parliament which gave its opinion on it in May 1988. The Commission has recently indicated that it accepts many of the amendments suggested by the Parliament which, it is felt, both improve and clarify the proposal.
The main effects of Parliament's amendments to the proposed directive will be the inclusion of provisions: to guarantee an interested party a prompt hearing through the system of redress to be used; to recognise the rule that the Commission cannot use its power of suspending the award of a contract where it has already definitely been concluded; to allow any person to institute proceedings before the Court of Justice against a suspension decision by the Commission.
In adopting a measure which will tend to take from the need for litigation under a compliance directive, the Commission at its meeting on 1 May 1988 decided on a system for monitoring compliance with public procurement rules in the case of projects and programmes financed from Community sources. The monitoring system to enter into force on 28 March 1989 will comprise measures such as awareness campaigns to explain the relevant obligations under Community law and measures for monitoring and, indeed, enforcing compliance with public procurement rules. Under the latter measures both a special questionnaire and modified payment request from will be examined by the Commission, following verification of these documents by national authorities. In cases in which questions are not satisfactorily answered the Commission will suspend or even seek to recover its payment.
The directives examined by the Joint Committee and others now being proposed have taken on an increased significance now that a determined bid is being made to achieve, within a set space of time, the aims of the original Common Market. The structure of the European economy which will emerge should secure the future position and importance of Europe. As the world economies evolve towards a number of mega, competing economic blocs, it is essential that Europe should not be left out of the process. Our main concern is, of course, that Ireland should play its full role within the EC. Our builders and manufacturers in particular should start to explore the European market more actively for the growing opportunities there — including those in the public procurement area. The time to act is not 1992 but now.
Lastly, I might mention for the information of the House that a draft Directive in the field of Services is in course of preparation in the Commission and is under active discussion with the member states. A formal proposal for the Commission is expected by mid-year.
I should now like to address some matters to which the Joint Committee referred in part E of its report. The first relates to implementation of Community legislation and will be found in paragraph 14.
The Joint Committee has questioned the correctness of the practice followed up to now in our case of implementing public purchasing directives by administrative action. They are of the view that the rules should be set out in regulations under the European Communities Act, 1970, and in particular that the proposed compliance directive if adopted will require the enactment of legislation.
I am informed by the Department of Finance that this country is not alone among the Member States of the Community in implementing the public procurement regulations by administrative as distinct from legislative means. The directives themselves allow for the possibility of implementation by this means. It recognised, however, that issues of quite a different nature arise in the case of the draft Compliance Directive, which must be regarded as exceptional. The Department of Finance has, I am told, sought the Attorney General's advice in relation to both the general issue of implementation by administrative means and the specific questions arising from the proposals in the draft compliance measure.
The Committee has also raised at paragraph 18 a matter relating to a performance bond which was regarded by a member of the CIF wishing to tender for a contract in Belgium as excessively onerous and out of line with normal requirements. From inquiries made by the Department of Finance it appears that while the performance bond demanded in that case appears unusually high, a condition in the contract tendered for — one of the contracts for the construction of the new building for the European Council — required such a bond. The requirement was approved by the Council itself. Since all tenderers equally, irrespective of nationality, would have had to be able to provide the necessary bond if awarded the contract, the question of discrimination did not arise.
I hope that what I have outlined will be of interest and information to the House. I look forward to the contribution of the Members during the course of this important debate, particularly in our preparation for the single market in 1992.
I should like at the outset to express the Joint Committee's appreciation of the work undertaken by our sub-committee under the chairmanship of Senator Mary Robinson. The very detailed and technical nature of these directives placed quite a considerable burden on the committee. They have come up with a very clear assessment of what is involved. The Joint Committee would wish me to acknowledge the contribution made by Mr. Hennessy of the CIF, Mr. Frank O'Donoghue and Mr. Tom Costello of the Department of Finance, and Mr. Jim Branigan of the Office of Public Works. These people have assisted the committee very fully in the important work of examining these directives which may make a significant impact on the execution of public works here. Apart from quite a small number of well-established and very professional public works' contractors, who tendered mainly for and worked for local authorities in the provision of water and sewerage schemes, it is only in the last two or three years that public works contractors have taken on the building of new roads, motorways or bypasses. They have clearly shown that they have been able to execute works which over the past 50 or 60 years were designed and executed solely by the direct labour force of the local authorities throughout this country. We have only to look at the latest road development works. We see the motorway on the road to the west where the works were carried out by Killeen's from Portlaoise. The greater part of the work on the Nass motorway was carried out by Murphy Construction. There are very few people in this kind of activity. After 1992 we can expect competition from much longer established contractors from either the UK or the Continent. One sees Italian civil engineering contractors working not just in Europe but in Africa and many other countries across the world. There is a market here. I would hope that Irish industry — the people who have proven to themselves and to the local authorities that they have the business acumen, the professional expertise and an excellent workforce — will be able to compete and to survive and, indeed, hopefully to tender for works outside of the Republic of Ireland in the years ahead.
We have been taking a lot of these directives for granted. The report by the Joint Committee of the Houses of the Oireachtas — Report No. 7 — deals with public works and public supply contracts. The regulations themselves relate in the main only to contracts of a certain size, contracts which cost more than a million units of account, which is about £750,000 to £1,000,000 roughly. Nevertheless, they have a very significant effect and I hope we will be able to look forward to a positive approach.
The background to this directive — and indeed we have about 300 directives to get through the Oireachtas in the next 2½ or 2¾ years; at the rate we are going there will be quite a glut of work towards the end of that period — comes from the European Council meeting in The Hague in June 1986 when it considered that public contracts are an essential feature of the internal market and their liberalisation is, therefore, a precondition for the completion of that market. Public authorities in awarding contracts for the execution of works and the supply of goods are, of course, bound by the relevant provisions of the Treaty of Rome; and certain barriers to Community-wide competition for such contracts may amount to infringements of the Treaty provisions relating to discrimination on the grounds of nationality under Article 7. Free movement of goods comes under Article 30, freedom of establishment under Article 52 and freedom to provide services comes under Articles 59 and 60.
The obligations arising directly from the Treaty are perhaps negative in character. They were supplemented by the Council Directive No. 305 in 1971 which was amended in 1978 by Directive No. 669. Council Directive No. 62 of 1977 was amended by Council Directive No. 767 in 1980 to meet the GATT commitments of the previous GATT session, these directives impose positive obligations on member states relating to public works and public supply contracts respectively. These directives were intended to harmonise national procedures for public procurement but they have not been successful in their objective of opening public procurement to Community-wide competition to any marked degree. In this report our committee analysed the measures already taken by the Council and other measures proposed by the Commission to open up public procurement to inter-Community competition as part of the completion of the internal market by the end of 1992.
In March of last year the Council, acting on a Commission proposal, adopted Council Directive No. 295 of 1988 amending Directive No. 62, which was enacted in 1977, and amending certain provisions of the earlier Council Directive No. 767 of 1980 relating to supply contracts. Two other Commission proposals are awaiting decision by the Council. So, for the ordinary contractor to know exactly where he stands there is a lot of history and research to be undertaken if he is to be able to follow the trends, the changes, the improvements that the European Communities are trying to focus and implement in this entire area. One of the purposes of amending the Council Directive No. 305 of 1971 as amended, regarding the award of public contracts, was that the latest version of this proposal would incorporate amendments to reflect the opinion given by the European Parliament in May 1988 and submitted to the Council in July last year. The other proposals relate to the adoption of a new compliance directive and would apply to the award of both public works and public supply contracts. The Joint Committee has completed its consideration of these proposals and the Council Directive No. 295 of 1988. In this report the Joint Committee submits its observations to the Houses of the Oireachtas.
These reports present very difficult and dull reading. They are in the nature of much of the European Community legislation. But it would be a tremendous mistake if Members of the Houses of the Oireachtas did not acquaint themselves with what is contained in all of these directives because unless we are acutely aware of them and of the potential good contained in them, I am afraid we shall miss the opportunities that will present themselves on the completion of the market on 1 January 1993.
The 1971 Directive, as amended, applies to public, regional and local authorities, as far as our country is concerned, by virtue of our Act of Accession. As with other public authorities, these public works contracts are controlled by the State in respect of written contracts for carrying out works of construction, of building, installation and civil engineering as well as other works, even down to decoration and finishing and fittings. This again is something we must be aware of. If we take any local authority housing scheme, it is quite an insignificant and small development that would not cost less than £1 million. That means, certainly for the larger local authority projects that the contracts for fitting out, for furnishings or even for decoration must be made open. I would hope that, while competition is very welcome and very important and may perhaps represent better value for the taxpayer in this country, the provisions of the directive before the House could mean that we could have contractors coming in from any part of Europe to engage in works here once they cost in excess of something around £780,000. The directive does not apply to public bodies administering transport services or contracts relating to the production, distribution of transmission or transportation services for water and energy, mainly because they are of an ongoing nature and it would only be very few of the larger undertakings that would be involved from that point of view.
I would like to deal briefly with Council Directive No. 295 of 1988. Under the new definition adopted by this directive public supply contracts are written contracts concluded for money consideration for the purchase, lease, rental or hire-purchase, with or without the option to buy, of products between a supplier and State, regional or local authority, and in the case of our country, other public authorities whose contracts are subject to State control. Unless I am greatly mistaken that covers almost every bit of public activity in this State because the Department of Finance have a finger in every conceivable pie nowadays, whether it is large or small.
The threshold for this kind of work is as low as £108,000 in the case of contracts within Directive No. 767 of 1980. Contracts are to be awarded applying (a) open procedures whereby all interested suppliers may tender (b) restricted procedures whereby invited suppliers only tender and (c) negotiated procedures whereby terms are negotiated with chosen suppliers. The open procedure is to be the norm and the restricted procedures may only be used where there is a need to maintain a balance between the contract value and procedural cost or if the specific nature of the product so warrants. The negotiated procedure may be used in the case of irregular or unacceptable tenders, though unless certain conditions are satisfied a tender notice will be required. That procedure may be used without prior publication of a tender notice in the absence of tenders in cases of extreme urgency, in the case of products manufactured for research and development, for additional deliveries and where technical or artistic considerations apply or it is necessary to protect exclusive rights of the supplier.
Where either a restricted or a negotiated procedure is used a written report must be drawn up by the contracting authority which must be made available to the Commission on request. After the beginning of each fiscal year contracting authorities will have to make known by notice their procurement requirements for the year by product-area where the value equals or exceeds 750,000 European units of account and also give notice of the procedures to be adopted and the contracts awarded. These notices must be published in the Official Journal. The amending directive also contains provisions relating to technical specifications, time lines and criteria for selection. The directive also goes on to underline the co-ordination of national measures on procedures. It is indeed highly desirable that every one of our local authorities should acquaint themselves with these directives. For example, they set out the circumstances in which contract award procedures could be suspended. This is very important. They can be suspended for failure to publish in the Official Journal. They can be suspended for the adoption of an exceptional award procedure without justification or incompatability with the Community law of tender notice or other documents and exclusion of a contractor in a breach of Community rules.
We have an entirely new situation arising. Up to now, since 1924, the only regulations on local authorities from the point of view of tenders were imposed by the local government auditor, who invariably carried out his audit two or three years in arrears. In the main, he discovered perhaps what would be described as irregularities in his report to the council months later: he would point them out and very rarely one would find perhaps a county manager or a county engineer or indeed on very rare occasions a council itself surcharged a few thousand pounds. In this new environment in which we will find ourselves in two-and-a-half year's time this situation changes completely. It is certainly of the greatest importance that at least our officials and the people with responsibility for advertising for contracts should themselves be aware of what is involved and the new constraints placed upon us coinciding with the completion of the internal market.
The free movement of goods and freedom to provide services are two of the four basic freedoms of the EC Treaty which it purported to establish. The stated objective of completing the internal market by the end of 1992, which has been endorsed by the enactment of the Single European Act, necessarily involves the elimination of any remaining restrictions on the basic freedoms. All the evidence available points to the failure of earlier measures to open public procurement to Community-wide competition to any marked degree. The Department of Finance informed our Joint Committee that the earlier measures have many loopholes and some member states have managed to discriminate against foreign tenders without overtly flouting the directive. This contention is amply supported by the conclusions of the Commission and as a result earlier measures failed to secure the same penetration as was envisaged.
I think we would be very foolish if we thought that we could introduce new Irish solutions to this new environmental problem in which we find themselves. I believe we must equip ourselves to know exactly what is involved. It is quite true, even with the GATT negotiations, that some countries like Japan, for instance, make it very difficult for European and indeed Irish exporters by having requirements laid down for commodities or produce to be sold in different ways, meeting standards that are not common in our country. That is, possibly, an inhibition. I do not think we would be entering the spirit of the completed market if we were to think in a negative way. If we provide a good service, if we are prepared to go in and compete at the very top of the profession, with a high standard, good workmanship and finish, then I think there is no reason why we should not be able to compete not just at home but right across the Community if some of our entrepreneurs feel that they want to move into that extended market.
In conclusion, I would like to refer to the very comprehensive and detailed examination of this whole area in the Joint Committee's report. The report covers some 17 or 18 pages and, while some of it would appear to be quite technical, I feel it would be worthwhile for the local authorities, and indeed all of the public services engaged in development work, to acquaint themselves with this report as an introduction to the kind of competition and kind of regulations that they will be encountering in two or three years' time.
Our Joint Committee has been informed by the Department of Finance that proposals are being prepared by the Commission relating to public procurement in energy, water, transport and the telecommunications sector. Liberalisation in those areas will have considerable economic impact having regard to the large scale of public purchasing involved. Our Joint Committee proposes to reserve comment on this particular aspect until the Commission's proposals have been published.
If we look at our Government's capital budget, unless they start building schools or hospitals or local authority houses literally one room at a time, which would certainly not be economical, the vast percentage of expenditure under the Government's capital programme all across this country comes right under these new directives. Similarly, all the capital expenditure on the local authorities and on the regional health boards will be subject to this, which means that it is technically possible for foreign firms to do all the capital improvement in this country. If you take with that the free movement of workers, there is no reason why we cannot have contracts being awarded to, for instance, an Italian company or an English company and that those companies would bring in their own workers. We see here how very many of our building contractors, if they get a contract in a neighbouring county tend to bring in their own workers with whom they are used to working and who know the standards that they work to. That is going to raise some hackles and eyebrows in this country.
So, from that point of view our people who are engaged — I think effectively and efficiently — in public contract fields should be acutely aware of what they are facing after 1993. I would hope they would not look on the future negatively but that they would take a positive approach, that they would hope not just to compete with anyone who may offer on the home market but that those who are sufficiently large and who have the internal design teams and organisation should be encouraged to tender for work, perhaps during the slack periods or perhaps during the winter periods, so that they can ensure that their Irish workforce will be engaged 12 months of the year.
I am sorry to suspend the proceedings but I understand a technical problem has arisen with the sound system. It is proposed that the sitting be suspended for 20 minutes to allow the matter to be rectified. I apologise to Senator Lanigan who is waiting and the Minister. Is that agreed? Agreed.
Sitting suspended at 11.20 a.m. and resumed at 11.40 a.m.
It is an opportune time to have a debate on the report of the Joint Committee dealing with public works and public supply contracts. There has been a lot of talk over the past number of months about progress towards real European unity at the end of 1992. To many people 1992 might seem far away, but it is a bit like advertising so many shopping days left for Christmas — there are not that many shopping days left before the end of 1992. There are only 322 shopping days left which does not give a lot of time to firms or individuals who want to benefit from the directives which it will be necessary to conclude by the end of 1992. There is not a sense of urgency yet in Irish industry, given the time in which we have to get everything in place so that we will be ready.
There is a gradual but accelerating harmonisation of the entire market currently taking place and this harmonisation will impact on every facet of Irish life, both on industrialists and workers. It is therefore necessary that we are all aware of any proposals that come from the EC and that we debate their implications for business in advance of the legislation being enacted.
There have been legislative changes in the areas of air transport, banking and telecommunications. Future legislative changes will be made in such diverse areas as insurance, transportation and energy standards and particularly harmonisation — which will have an impact here in the harmonisation of VAT rates — company trade marks, company laws, patent laws and working conditions. Indeed, we have before us another area of vital importance to the Irish economy in terms of what Irish industry could gain from the directives being discussed here this morning that is, the amount of money that is being lost, as the Minister said this morning, to European taxpayers as a result of restrictions and because there is not an opening up of tendering facilities. The loss to European taxpayers is in the region of £40,000 million per annum and that is a huge figure. The report states that a sum of 400,000 million ECU is available annually in the opening of public procurement which would be in the region of £312,000 million but within the past 12 months that figure has increased to £400,000 million.
There is a vast sum of money being spent on public works and public procurement throughout the Community and it is essential that Irish firms contract for these enormous sums that are available. They will have to be helped in terms of advertising the contracts that are available. In the report it is stated that at the beginning of each year public bodies will have to announce their programme of works for the comming year in a broad sense and this would give firms who might wish to compete for public contracts a broad base on which to work. In order to identify areas of proposed EC legislative change which will affect our business there must be regular reporting. I am glad to see that certain firms in the financial accounting world have set up information data bases which will be available for the use of business. Firms who wish to tender for contracts which are available throughout Europe can get information on them and will be alerted as to what contracts are available or will be coming up. It is essential that this information be made available.
Publication in official documents is not always the best way of getting messages across. There will have to be a concerted media effort to ensure that Irish industry is made well aware of what is available throughout the Community. We lost a number of contracts throughout the years because of lack of knowledge.
Irish industry in the areas we are talking about need not fear open competition with firms throughout Europe. We have the greatest of expertise in the building industry. As a result of restrictions on building in Ireland over the past number of years, quite a number of these firms have had to tender abroad for work and they have been extremely successful. I do not think the opening up of the market will affect in a negative way what will be available to the construction industry in terms of the works directives. I have seen many Irish companies take on competition throughout Europe in public works and they have been highly successful. In Kilkenny a local firm, Mahon and McPhilips, took on some of the major water treatment and water supply contracts in Great Britain, on the continent and further afield and they are not the only ones. There is an expertise in this area which will stand up to the competition that the completion of the internal market will bring about. I am glad that the Construction Industry Federation played a major part with the joint committee in going through these directives and coming up with proposals which were of value to the committee.
The Minister has replied to the query that was raised in terms of bonding. This has always been a bone of contention not alone in international tendering but in other areas as well. There are a number of items which apparently are not required under the directives. It is stated that restrictive procedures may be used only where there is need to maintain a balance between the contract value and procedural costs or if the specific nature of the products so warrants. I am not sure of what exactly that means. The negotiated procedure may be used in the case of irregular or unacceptable tenders —unless certain conditions are satisfied a tender notice will be required. That procedure may be used without prior publication of a tender notice in the absence of tenders. I can see that in cases of extreme urgency there could not be a tendering system, for example, where a bridge falls down or where it is necessary to do something which could not have been foreseen.
There is reference to "products manufactured for research and development for additional deliveries". I am not too sure if that is giving carte blanche to a contractor who tenders at a specific price for a contract and then adds on value which would nullify the original tender price. As regards “where technical or artistic considerations apply”, I am not too sure exactly what relevance there is in technical or artistic considerations because it would seem that there is no contract that would not have technical considerations.
It is also stated that it is necessary to protect the exclusive rights of a supplier. I thought that the exclusive rights of a supplier would go against other rights or other laws. This would mean that a supplier would have the sole rights to a product and if he had the sole rights then obviously he would control the price.
I am glad that at the beginning of each fiscal year contracting authorities will have to make known by notice their procurement requirements for the year by product area where the value equals or exceeds 750,000 ECU and also give notice of procedures to be adopted and contracts awarded. Under the supplies directive, the figure of 155,000 ECU for regional, local and other authorities is quite small but I wonder why it is only 101,000 ECU for Government Departments. It would seem that on the supplies Government Departments would be procuring their figure should be higher because of the fact that they could be dealing on a bigger than regional basis. It depends on what you call a regional basis.
In regard to the works directive, the £3.8 million means that there will not be in this country a large number of contracts available for outside tendering. If I read it properly, anything under that can be dealt with on a national basis and does not necessarily have to be advertised at the EC level. I would just like clarification on that point. It would seem, therefore, that at the level of £3.8 million and over, there will not be that many contracts available here, which would mean that the balance of advantage would be for Irish firms competing in this area, because in Europe obviously there would be a lot more work at the over £3.8 million level which would be available for Irish manufacturers or Irish firms.
As I have said, it is important that the public be made aware that we are heading towards 1992. It is essential that the public be made aware that there are not that many days left until the end of 1992 —322 days. It is worth the effort to get in there to be ready for the beginning of 1993, to be ready to take advantage of every available opportunity to take contracts out of Europe. In doing so there is no doubt in my mind that we will see an upsurge in the numbers of people employed, in particular, in the construction industry as a result. If 1992 or 1993 is to be of any value it will only be of value if we see a rise in the number of people that can be put to work inside Ireland by Irish firms or by foreign firms.
I welcome the work that has been put into this report. I know that as usual, the directives have been gone through in a painstaking way by the Joint Committee and I am glad that the Seanad was able to take the opportunity today to look at these directives, because in many cases a number of directives have gone through and have never been debated in the other House. I can assure the Joint Committee that at every opportunity possible as they give reports we will have them debated here. Sometimes some of these reports are of a highly technical nature and because of that they are not the areas that people have expertise in; but whether they be of a technical nature or a non-technical nature the Seanad will attempt at all times to give them an airing. It is important now to note that this report came out in September of last year and we are at last getting down to looking at reports which are fairly topical, because it did happen in the past that very good reports were issued by the Joint Committee on Secondary Legislation and by other Joint Committees and it took years before they got an airing and the relevance in a lot of areas was gone from the debate.
I wish to compliment the Joint Committee on the issuing of this fine report and I would have to say that its implementation could have nothing but beneficial effects in Irish industry in the future.
I would like to compliment the Joint Committee on the production not just of this report but on the fairly large number of reports that it has been producing on matters dealing with secondary legislation over the past number of years. The report we are discussing now was largely compiled by Senator Robinson, a Member of this House, who in passing may I say, is I believe, about to be conferred with the honour of being the Mayoman of the Year — not "Mayoperson of the Year" but Mayoman of the Year — an honour which will be conferred on her this Friday and I am sure all her colleagues in the House would like to congratulate her on that honour. This report is largely her work. She was vice-chairman of the subcommittee which examined this problem.
Like the last speaker, I believe the Joint Committee has a particular role to play in giving access to the various interest groups to tell the Members of the Oireachtas, and through us the wider public, how the directives and regulations will affect them as they come into operation. Over the years in providing access to a variety of groups, many of whom would have had strong objection to the European Community, it ensured that their views were heard and in doing that the Joint Committee has performed an extremely valuable public service.
I am not carping in any way, but I would like to say in passing that I think it is a great pity that other committees of this nature are not in place in both Houses of the Oireachtas at present. I have said so before and this Minister has heard me say — I think he possibly would agree with me — that it is a great pity that the Committee on Overseas Development Aid was not re-established at the outset of this Oireachtas. That committee did enormous good in focussing public attention on our contribution to Third World Development Aid. It raised the level of public debate; it helped public representatives to become informed; it showed to the public and to the agencies involved that there was a general and genuine concern in this House, not alone that Irish aid be there but that it be used effectively and that there would be a degree of accountability for the way in which overseas aid was spent. Once again, through the Leader of the House here and through the Minister, I would ask them to use whatever influence they have within their own party to ensure that the Overseas Development Aid Committee might well be reinstated. The amount of good it did to this House through the outside perception of what it was doing was totally beneficial. Indeed, as I say in Topic, I note that in recent times an unofficial foreign affairs committee of the House has been set up and that to some extent shows the degree of frustration which Members of both Houses feel about their inability to have detailed structured debates on aspects of foreign affairs. In passing I would simply say to the Leader of the House and to the Minister that if they can use any influence in seeking to have these two initiatives take place then I would ask them earnestly to use their energy and their persuasive powers in this regard.
The purpose of this report is fairly straightforward but it is of fundamental importance. The main purpose is to ensure that there is full access by contractors right around the Community to the tendering for major public works, that the competition is fair and that, as the Minister said, there is as much transparency as possible in the awarding of contracts so that there is not a hidden agenda, so that there is not any hidden advantage.
All of this is an inherent part of one of the ideals of the European Community. It has long been on the agenda. It assumes a much greater importance with the imminence of 1992. In passing I think Senator Lanigan announced here today that there were 352 days between now and 1992, I am not sure if there is some plan to shorten the week or some other proposal, some surprise in store for us here that perhaps he will tell us about later on. In any event, the time is coming close and it would be very wrong if there were any sense of complacency that we do have time on our hands. We do not have time on our hands. There are many people who would perhaps believe that 1992 was an unduly optimistic target date for the European Community itself to set. Nonetheless targets are there to be met and this target date is now ahead of us.
When we talk about openness and fairness and the level playing field and all of these new terms in terms of tendering, we will probably have to examine our own conscience in this matter because in all of us there is a very natural, understandable instinct to give whatever advantage we can to our own people, to our own contractors, to our own work-force, to try to ensure as far as possible that if an Irish firm can do the job in Ireland then whatever balance of advantage there is should lie in the way of that Irish firm.
We do not need to be too apologetic about this. Personally, if other things are equal, or nearly equal, I certainly would have no objection to make to the Irish firm getting the work in this country. There are very understandable reasons, the reason that we have a huge compulsion to see that as many as possible of our own people are enabled to get good work in their own country. That is not in any way in contradistinction to the European ideal. Of course we want our people to be free to travel around Europe and of course we are delighted when our people can get well paid satisfactory work in other countries in Europe; but in all us there is the feeling that for the most part we would prefer to be in our own country, often in our own county, and if we can get work there, so much the better. There will always be a natural instinct to see that as far as possible the home firm, the home side, is favoured. We are not in any way very different from other European countries in that regard. We have an obligation to ensure that there are no legal obstacles to outside firms getting a fair crack of the whip in this country.
I would hope that we will have a situation where in this area and in others Irish firms will be strong enough, well prepared enough, sufficiently competitive to ensure that they will be top of almost every list; and we have shown in other countries, as the last speaker mentioned, especially in the construction area, that we can be second to none. It is not for nothing that some of the oldest construction firms in Britain were set up by Irishmen, they were peopled by Irishmen who were not just navies who rose to the top levels in these firms and who pioneered many of the great structural developments in Britian.
It is certainly worth noting that over the past ten years the traditional leaders in the Irish construction industry, faced with a recession and a decline in business in this country, got up on their feet and went out to look for work in Britain, Portugal, Germany and France. Firms like McInerney's and Sisks and others deserve every credit for the way in which they have taken the flag and have pioneered development and have shown that, in the whole area of public works tendering and in the quality of work and in the completion of work on time to the highest standards, our firms have nothing whatsoever to fear. In fact, we will be, I am certain, net beneficiaries and very significant net beneficiaries, of the implementation of the directives we are discussing here today.
Again, there is no way in which we can be complacent about this. In many areas, if what we are discussing today is not going to pose a threat to some of the smaller Irish companies, there will be a need in areas such as furniture, the development of office facilities, office equipment, computers and so on, for many Irish firms to take a very hard look at themselves, to spend more time in research and development, to link up with the third level institutions here who can be of help to them in questions of research and development to realise that in marketing and in research and development unless we network our resources, we are not going to be able to compete in an effective way, that we are a small country and it is in all our interests that whatever resources we have are as far as possible pooled in the interests of greater competitiveness, not in the interest of the setting up of cartel arrangements.
The implementation of what we are discussing today presents us with both dangers and with enormous opportunities. The dangers are that we do not sufficiently protect our own domain in this country in this area. I say this not in some major companies coming into this area and damaging the industries which have been built up here in this particular area. I am not worried about that. I think that we can withstand any competition in this country in this area; I say this not in any complacent sense but on the basis of what is there already. Aware of the challenges and displaying the sort of entrepreneurial determination and strength which has characterised so much of the Irish construction industry in the past couple of years, I believe we have very little to fear in that regard. I do believe that the implementation of these directives in this particular area — it may be different in other areas — does provide us with enormous opportunities in the other countries of the Community.
On balance, I welcome this report today. I welcome the fact that some of the leading figures in Irish industry were given the opportunity to voice both their fears and their hopes to the Joint Committee. The overall conclusions of the report are one which are in our national interest and I welcome the update which the Minister gave us on progress and developments since then.
In conclusion, I once again compliment the Joint Committee on the report. I believe that it is very much moving in the right direction and that its conclusions, if implemented, are very much in our interest.
I should like to join with my colleagues on all sides of the House in welcoming the debate on this report of the Joint Committee and without going over a lot of the ground that has been covered by my colleagues in relation to defending the interests of Irish manufacturers, I am pleased to note that the Minister in his address to the House elaborated somewhat on the impact that 1992 will have on this country in the area in which he has his particular brief.
The whole question of free trade as it will affect this country and the dismantling of the trade barriers is something that has concentrated the minds of, initially, industrialists and, more recently, public representatives, as is only right. The impact of 1992 on this country will have far-reaching implications not only for the quality of life but also for the economy of the country and how it will be managed in a free situation. It will have an effect on the economy both from the legislative aspect and from the market aspect.
I must confess that I am a little concerned at what I see as disturbing trends in Europe as we lead into 1992 and the opening of the Community to 270 million people. For example, in recent weeks a group of countries in middle Europe, if one could use that expression — Italy, Spain, France and Germany — intend to open their country barriers to free access along with the Benelux countries, who of course have had this type of operation for many years. Anybody who has had occasion to drive on the Continent will testify that particularly in the Benelux countries sometimes one is not quite sure whether one is in Belgium or Holland or Luxembourg at any particular time because of the fact that the physical evidence of customs barriers was removed many years ago and it does not seem to have had any adverse effect on life in those countries. The contrary is quite true; it has had a major beneficial effect on the economies of those countries. The decision of the other three major economies now to implement a similar type of dismantling in advance of 1992 seems to suggest that before 1992 we will have a two-speed common market, something which was commented on at great length during the debate on the Single European Act when it was suggested that if Ireland did not pass the Bill and be seen to be good Europeans we would somehow be left out and a two-speed market would operate.
In that context the old reality of our being so close geographically and economically to Great Britain has reared its head. The Margaret Thatcher administration has certain individualistic attitudes towards the future of the Community and the direction they believe it should go, primarily to protect British interests. Unfortunately, because of our geographical location and because of our traditional trade with Great Britain, we sometimes have no choice but to go along with some of the economic decisions that are being taken by the British Government. There have, of course, been honourable exceptions. The decision of this country to enter the European Monetary System in 1979 was one such example of a country asserting its sovereignty and hindsight has proved that over the past of ten years our decision at that time was a wise one and, in the economic context, the correct one.
However, Irish industry should be vigilant about the changes that are taking place in Europe, literally on a monthly basis. Italy is the home of the small entrepreneur. Although we tend to think of Italy as having large corporations such as car companies, etc. their economy is primarily based on the small to medium-sized business. A recent survey indicated that 80 per cent of small businesses in Italy are gearing themselves towards and are very conscious of the impact that 1992 will have on their economy. I wonder if Irish industry at the small and medium level is as aware and conscious of the impact that 1992 will have?
In studying the report of the Joint Committee and in reading the Minister's address to the House, it is quite obvious that both the members of the committee and the Minister, acting no doubt in tandem with the Government's general policy thrust, are in a sense advising companies yet again to gear themselves up for the winds of change, not to ignore the clarion calls that are being sounded regularly here in Ireland, that the reality of 1992 is but three years away and that the impact on this country will be far greater than any other trade or economic agreement between this country and any other sovereign country since the foundation of the State. Even the opening up of the trade route between Britain and Ireland or the Lemass Administration in 1965 in negotiating successfully the Anglo-Irish trade agreement, while it in itself was a major economic leap forward following the era of protectionism and the economic war of the thirties and forties, even it pales in comparison with the effects that 1992 will have on Ireland.
Another area of concern in the context of the report and of the liberalising of the market is the headlong rush that seems to be developing among Japanese multinationals to relocate or to start factories and industrial development in Europe. There is a widespread perception outside Europe, outside the European Community to be more specific, that from 1992 onwards there will be what has been referred to generally as a Fortress Europe concept, that Europe with its 270 million market, will be one of the major blocs along with the Pacific rim which includes Japan and the United States of America. It will be one of the three major trading blocs in the world. There is a growing perception outside the European Community that Europe will retreat behind these barriers, that it will have a sufficient a market within Europe to develop and sell its products and consequently will deny access to the market to nonmembers. This is a perception that is held not only among the United State administration and the Japanese but also in Europe itself where over the past 12 months, since the speed of change and the gearing up towards 1992 have gained impetus traditionally neutral countries such as Austria are now frantically looking towards the European Community as a way forward and a way out of any proposed economic difficulties that may arise from being outside Europe.
The Swedes, again a traditionally neutral country, with a highly developed economy, are also initiating a debate on whether they should seek, if not full membership of the European Community, associate membership. Even the dour conservative Swiss are debating, admittedly in a tentative way, what their relationship should be with the European Community following 1992 and for the Norwegians, who were a member of the European Community and who in a referendum opted out, suddenly European Community membership is central to their political thinking. It is back on the political agenda and some experts suggest that Norway may be back within the Community some time in the mid-1990s. All of these portents indicate that the situation as it will develop leading up to 1992 needs to be constantly watched and every opportunity needs to be taken by Irish companies to ensure that they will not be left out.
I am pleased that in the report there are certain exclusions in relation to the directive. These relate to water, energy, transport and the telecommunications sectors. However, the report goes on to say that the Community is studying these sectors and, in fact, the final note in the report says that the Joint Committee has been informed by the Department of Finance that proposals are being prepared in the Commission relating to public procurement in the energy, water, transport and telecommunications sectors; that liberalisation in those areas could have considerable economic impact having regard to the large scale of public purchasing involved but that the Joint Committee proposes to reserve comment until the Commission's proposals have been finalised and published.
Of all of those particular sectors, the one I would be concerned about from an Irish perspective would be the liberalisation in the telecommunications area. The statistics indicate that of all the sectors in the economy — and I talk here not just of the Irish economy but the European Community economy — the one sector which will show the most significant growth between now and the end of the century is in the telecommunications area. We have been blessed with an initiative which was commenced in the late seventies by a Fianna Fáil Administration and specifically by the present Minister for Finance, who as the Minister responsible embarked on a very significant overhaul of the telecommunications system.
Telephones and telecommunications generally had always been seen to be the poor relation. In fact, I can remember growing up and whenever a Government was being formed one always regarded the Department of Posts and Telegraphs, as it was then known, as being one of the positions in which a politician was given the job either on the way up or on the way out. It was never a strong political ministry as were Agriculture and Industry and Commerce. I am glad to say that has changed. In fact, the telecommunications industry is now central to our ongoing development as an economy within the European Community but because of the significant changes that are taking place in the area of telecommunications I am not so sure that Irish companies fully realise the market that is going to be out there for products.
The rate of technological advance is quite staggering. As recently as last month, the British Government awarded franchises to three companies for the development of a new type of telephone which, when it comes onstream by 1990 or 1991 will, they say, herald the beginning of the end of the office and home telephone as we know it. By the mid-nineties most citizens in the European Community will be carrying a pocket telephone around with them and will be using it in much the same way as we use a notepad today. Such is the scale of change in the telecommunications area that sometimes I am a little concerned that Irish companies may somehow get lost in the rush towards liberalisation, and that this country could find itself being little more than a dumping ground for the finished product. We need to spend more on research and development in the technological area. We need to gear our graduates in our technical-oriented universities and institutes of higher education toward telecommunications.
I am glad that in the recent past the orientation of education for the next generation of Irish students seems to be towards the technological rather than the academic area. I think that for a long time education in this country had the wrong priorities. I am glad to say that certainly the current Minister for Education, Deputy O'Rourke, is very conscious of the demands there will be on Ireland's young, articulate and well-educated generation leading into and beyond 1992. I hope that the Government, when the Commission finally formulates its proposals in the areas which are currently exempted, will take cognisance of the important impact that liberalisation in the telecommunications area could have for this country.
I should like to echo the compliments which have been paid to those sectors of Irish industry that are gearing themselves effectively and properly for 1992. It is particularly pleasing that in the area of building construction Irish companies are to the fore, not only in Britain where, of course, there has been a tradition in road construction and in the building industry generally among Irish emigrants, but are competing with the very best in Europe. It is significant because of the proposals outlined by this Government in the recent budget and by the ongoing discussions which will culminate at the end of March in a submission to the European Commission for substantial and significant funding for the development of infrastructure. The vast sums of money sought and hopefully received from Europe coupled with significant expenditure from the Irish Exchequer will ensure that over the next 15 years the Irish road network can be brought up to the standard of its European partners.
Figures of between £8 billion and £10 billion have been mentioned by experts in this area as the amount needed to bring Irish roads up to the standard necessary to compete effectively in the European market. Indeed in the other House, in the past few days, the Minister for the Environment announced that a sum of almost £200 million had been set aside for the road building programme in the current year, the highest figure ever allocated in the history of the State. While complimenting the Minister, I think all of us would agree that it is not before time, particularly those of us who come from certain rural parts where the road network has been deteriorating to such an extent that one wonders if by 1992, unless serious decisions are taken and implemented, not alone will commercial traffic be unable to travel on these roads but private traffic also.
It would be churlish of anybody to criticise the Government at this stage on the development of our economy. They have taken the decision that the development of our infrastructure will be a number one priority, and in that they are quite correct. From that will follow economic benefits, and then jobs resulting in the regions being able to compete effectively from 1992 onwards. In the context of this report, I hope that when the contracts are being put out to tender by this Government for the road construction we hope to see over the next three to four years at least and ten to 15 years further on, that many of the companies in Britain, our nearest neighbour, which are Irish-owned and which in the main employ Irish labour will not only tender but will tender as competitively as possible for the Irish contracts. Not only will this ensure that Irish workers will have jobs in Ireland but they will also be better placed to link up with the indigenous Irish industry here for joint operations.
The amount of capital required for the road building programme is huge: it is monopoly money, £8 billion to £10 billion staggers the imagination. With the best will in the world it is highly unlikely that any Irish company in the country would have the sort of finance necessary to engage in that type of development. Obviously, they would have to seek help and assistance and what better place to seek it than from the many Irish people who left in the forties and fifties, as the saying goes "with the backside out of their trousers", but who now proudly head major corporations in the United Kingdom and beyond. I hope that in the liberalisation resulting from this Commission directive many of those companies will tender when the time comes and perhaps it will be a way back for many Irish workers, whose skills have been lost to this country, I hope temporarily.
Overall, I welcome the report. I particularly welcome the opportunity this House has to debate reports from the Joint Committee on the Secondary Legislation of the EC, because sometimes matters of this nature do not always percolate down to the man or the woman in the street and, as a result, there is at best apathy towards Europe and things European and at worst a negative attitude towards Europe. I would not like to see that particular trend developing. In fairness to the Irish people I think they have a realistic attitude towards the impact that 1992 will have on this country while, at the same time, retaining the traditional Irish cynicism about whether everything will work out as promised. However, I think the foundations that have been laid by this Government, particularly over the past two years, the decisions that have been taken in recent months and the process that is currently underway by Government Departments to co-ordinate the various regional programmes will bear fruit and that we will see the ushering in of a new era of prosperity for Ireland from 1992 onwards.
At the outset, I sincerely thank the Members of the House for their very enlightened contributions and for the very positive approach which they have adopted towards achieving the completion of the single market in 1992. In the contributions which have been very varied the Members have shown and signalled warnings for Ireland and Irish industrialists and everybody that the opportunities within the enlarged and consolidated Europe of 1992 and beyond when the single market is completed go hand-in-hand with increased competition, professionalism and high standards.
The European governments' meeting at the European Council have recognised that the opening up of government procurement was a key component of the internal market programme in turning the Communities into a single market by 1992.
The new supplies directive which came into force on 1 January 1989 was the first in this field, and its preamble explicitly recognised the 1992 deadline. The proposed works directive is also set in the context of measures aimed at progressively establishing the internal market during the period up to 1992. Of course, the policy in opening up public procurement is only one of a number of important policies to be pursued in connection with 1992. However, it is a major area of endeavour for European governments with much to be gained if they act with determination.
Notwithstanding all the publicity about 1992, and indeed the air of near euphoria at times generated, one cannot help feeling that some firms and enterprises secretly believe that not much will change and that the likely impact of the single European market has been exaggerated. Therefore, they may feel that nothing in particular needs to be done by them in preparation. Such an approach should be rejected. On the contrary these firms should set out to acquaint themselves with the opportunities in the Community which will emerge, while not being unmindful of the keener competition likely to be experienced on the home market. At the end of the day it is only the industries and individual firms that are competitive that will successfully penetrate Community markets while those that are uncompetitive will be at risk. It is vitally important that we realise that situation.
The European Commission has introduced important services in conjunction with the proposals for the single market. To develop competition and facilitate firms who wish to participate in the European Community public procurement market, the Commission introduced tenders electronic daily, knows as TED. This service enables clients by specifying details relating to products and geographical areas to receive prompt notice of all tenders for public procurement and construction contracts throughout the European Community. The Commission is committed to helping small- to medium-sized firms adapt and avail of the advantages that exist beyond 1992. In pursuit of this objective they have recently introduced the business communication network, known as BC Net.
Following a scaling down of European Community support funds for the Common Agricultural Policy, a greater proportion of Community assistance for disadvantaged regions will be channelled through the Regional and Social Funds in the new Structural Funds Programme. Private business as well as local authorities should now identify how this shift in emphasis will affect the future funding of capital projects.
To qualify for funding the demarcation between what constitutes a private or public sector project is becoming less pronounced. Private business in future may receive funding for capital projects undertaken under regional development programmes. At this stage, Ireland is deeply involved under the direction of the Government, and particularly under the personal direction of the Taoiseach, in preparing its programme before 31 March to be submitted to the European Commission under the new Structural Funds Programme. We look forward with great anticipation to Europe accepting many imaginative recommendations which will be made by the Government to the Commission over the next five years for special structural funding.
I fully share the sentiments expressed by the Joint Committee in backing Community legislation for a single market and in taking the view that the Europe of 1992 will provide opportunities for Irish industry and business. In the new spirit of confidence which this Government are fostering, I expect to see Irish firms tender for contracts throughout the Community as the challenge of a widening market is increasingly taken on.
I would like to refer to the various contributions. Senator McDonald, the Leas-Chathaoirleach, made a number of points. He stated that we have relatively few contractors of any great size and they would be up against severe competition from companies in other EC states. Our firms will have the opportunity to compete with other EC firms and grow in the greater market being opened up. The market in Ireland is small and has not permitted the growth of very many large contractors, but in the new enlarged Europe these contractors should be able to expand and develop using the expertise which they have garnered here over the years.
The Senator also stated that there was uncertainty regarding the number of directives coming and being amended. The Commission is to organise an awareness campaign for informing those in the market of requirement in the field of public procurement, and I referred to that earlier. He referred also to the fact that housing projects with local authorities had not a great scope in certain areas, not only for buildings but also for fittings etc. and he worried how Irish suppliers could become aware of all the possibilities and opportunities.
The Commission is to set up a special data base which is to be readily accessible to potential suppliers and contractors throughout the Community and I have already referred to this. It will create the opportunity for people to be made aware immediately of whatever opportunities, contracts or programmes are available so that they can prepare themselves, perhaps six to 12 months in advance, to take advantage of opportunities that will be available and be able to tender for them to the maximum advantage on a very equitable basis with other Community contractors.
He also referred to the fact that open procedures under the new supplies directive for practically all public authorities requirements is about to be implemented in 1987 as things stand some 30 contracts were advertised by Irish authorities for supplies. Many supply requirements came in under the need to advertise.
However, Irish suppliers as well as being able to compete for supply contracts at home will also have the greater European Community markets to target in the future.
Senator McDonald also referred to the fact that there has been poor adherence to the directives. The measures to ensure compliance, which I have already mentioned, and other directives and other measures are being designed at present to remedy this situation. After 1992 we can be certain that they will be implemented with severe rigidity.
The Leader of the House, Senator Lanigan, in a wide-ranging speech referred to the fact that the new supplies directive does not apply in the case of additional deliveries. Contracts may be broken up so that deliveries are artificially brought down below the advertisement threshold. Contracting authorities will be answerable to the Commission in this regard. Under the heading "Technical and Artistic Features", in certain cases special expertise or artistic ability will only be had by a small number of tenderers and he was worried about this situation. Exclusive rights in certain cases have been established. He worried about the advertisement threshold for local authorities as against that for Government Departments. The lower limit for Government Department derive from the GATT Agreements on public procurement which is separate to that from the European Community. Government Departments probably have more contracts, including recurring contracts, than local authorities would have.
The Senator also referred to the fact that there is to be a requirement to advertise fewer public work contracts in Ireland under the proposed works contracts programme. That should be the case with the substantial increase in the advertisement threshold. Only above a certain threshold, will it be necessary to advertise these public contracts and consequently, the smaller Irish contractors will still be protected once the contract is under the threshold.
Senator Manning referred to the fact that Irish people had done exceedingly well over the years in various countries and despite the fact that many people had to emigrate they have reached the top in their chosen careers, particularly in the construction industry in the United Kingdom and elsewhere. Not alone, in construction but in many other industries, some people have reached the top in business and commerce throughout the world and I am confident that in the enlarged Europe, Ireland will be up there with the best of them, competing successfully in securing the contracts both in construction and procurement of goods, supplies and services.
Senator Mooney in a very good speech referred to the two-speed common market. The balance of opinion on the prospects for Ireland in 1992 is positive. There is much in evidence already to suggest that Ireland will play a full role in the expanded market. He referred to the fact that to help small and medium-size industries, special business information centres are already being developed around the country and throughout the Community.
The Senator also spoke about 1992 as a Fortress Europe. Developments between the big economic powers may be deliberated upon, but the important thing for us is to ensure that Ireland prospers further within the European Community. There is no such thing as staying as we are or as we were. Before we entered the Community in 1972, we could not stand alone. As an open economy and an island nation away from the markets of Europe, we would be very vulnerable, and the Government of the day decided that it was in the best interests of the country to join the Community. As 1992 approaches, we must again ensure that we avail of the single market and adhere to the single market, because if we do not we will be isolating ourselves from the opportunities of Europe, our nearest neighbours and our greatest market.
Senator Mooney also referred to the fact that opening up telecommunications would be good for Irish business and I agree wholeheartedly with this. One of the areas where we have made rapid progress over the past five years, or indeed during this decade, has been in the area of telecommunications. Irish companies, Irish inventions and Irish services in the field of telecommunications, with our expertise and our computer-literate people, will have a bright future in the enlarged Europe of 1992 and beyond. The opening up of the European market, particularly in the communications field, is still at the proposal stage. The Council recommendation of 12 November 1984 concerning the first phase of opening up supply contracts in this sector had little effect. However, increased competition and increased opportunity should improve with the implementation of a new directive on this matter.
Ireland has a long tradition of outstanding service and achievement all over the world, and particularly in Europe. We have great European connections and a great commitment to the European ethos. Centuries ago in missionary work, and over the years the contribution of Irish people in all services, industrial, sporting and in other areas, have been of the highest standard. We can hold our heads high all over the world in the achievements of Irishmen and Irishwomen. I have every confidence that in the expanded market of 1992 and beyond Irishmen, Irishwomen and Irish companies will play a key role, they will achieve much success and create further job opportunities, despite the increased competition. The commitment and resilience of our people and our achievements and experience over the years will lead to Ireland playing a key role in the Europe of the decades ahead.
I sincerely thank the House for the contribution to this debate and I commend the motion to the House.
Question put and agreed to.
Sitting suspended at 12.55 p.m. and resumed at 2 p.m.