Written Answers Nos. 186-205
186. Deputy Joan Burton asked the Minister for Finance the analysis his Department has undertaken in respect of the United States of America Tax Cuts and Jobs Act 2017 regarding the new US legislation's provision relating to base erosion and anti-abuse tax; its impact on Irish foreign direct investment from the United States and impact on the Exchequer's corporation tax receipts; and if he will make a statement on the matter. [36955/18]
View answerAs the Deputy will be aware, the base erosion anti-abuse tax or "BEAT" is an anti-avoidance measure that applies to very large companies ($500 million of sales in the USA per annum) who make large payments to foreign related companies. It works by requiring the company to re-calculate its entire US tax bill to see what it would pay if it were subject to a 10% tax rate but all deductions for payments to related foreign companies were denied.
Much of the detail of the proposed changes remains to be clarified in US IRS and Treasury regulations and questions remain particularly regarding the compatibility of some aspects of the reforms with WTO rules and other international obligations, and until these issues are clarified it is not possible to estimate any potential Exchequer impact.
The BEAT and other reform measures reduce the ability of multinational companies to erode the US tax base. To the extent that the US rules prevent companies from achieving globally low effective tax rates, this change is to be welcomed.
Naturally, US tax reform is of great interest to Ireland given the large volume of US investment here. Foreign Direct Investment has been a key contributor to Ireland’s economic development and growth. It has provided rewarding employment for over 300,000 people directly and a transformation of the enterprise base in Ireland.
The level of investment from the US into Ireland cannot be attributed just to corporate tax policy – that is not a fair reflection of the many other reasons that companies choose to locate in Ireland.
Factors such as availability of physical and technological infrastructure, availability of skilled staff, access to the EU market as well as culture and quality of life are also significant and important considerations.
US business will always want to have operations in the EU, and Ireland will remain very competitive and attractive as an EU location to invest in and do business from. US multinationals locating real substantial activity in Ireland will continue to be subject to Irish tax at 12.5% on their profits properly attributable to activity located in Ireland.
BEAT and other measures have been critically received internationally, by the OECD, European Commission and larger EU Member States.
The Department of Finance, and the Irish Embassy in the US, will continue to monitor the situation regarding US Tax reform and will continue to engage with business and others to fully understand the potential impacts of the changes in the US.
188. Deputy Joan Burton asked the Minister for Finance his plans to tackle overheating in the construction sector, specifically the increase in land prices and lack of skilled workers in the construction sector; his view of the studies which have been carried out in respect of this, in particular land price increases in the greater Dublin area; and if he will make a statement on the matter. [36963/18]
View answerThe Department of Finance continues to monitor developments in the construction sector, including the risk of overheating. While professional training and skills needs in the industry are the responsibility of the Department of Education and Skills, the Department of Finance also monitors developments in this area.
The key indicators for the construction sector do not suggest overheating. The construction industry accounts for approximately 7.4 per cent of GDP. For comparison, in 2007 it accounted for 18.6 per cent. In terms of labour supply, workers in the construction industry account for 6.3 per cent of all workers. In 2007, they accounted for 10.6 per cent. Overall, the contribution of construction to the economy is expected to grow with the Department forecasting this to rise to 9.7 per cent of GDP by 2021. The rise is consistent with delivery of the National Development Plan as well as the much needed increase in housing supply. An increase of this magnitude in the overall contribution of construction to the broader economy is both sustainable and desirable given our investment requirements. I also note the results of the recent Quarterly Labour Force Survey showing that the construction sector gained 17,800 employees over the year to Q2 2018, the largest sectoral increase for the period. While there may be a shortage of labour with specific skill sets there does not appear to be a more generalised labour supply problem in the construction industry.
I am nevertheless aware that specific pressures exist. A report by SOLAS earlier this year entitled “Overview of Construction Sector Skills” identified skill shortages in the sector. It also outlined the Agency’s response, which includes a very significant increase in apprenticeships.
Separately, the issue of land price inflation is another matter that my Department continues to monitor. While there are no official data on residential development land prices, reports on construction costs, including land prices, have been published by the Department of Housing, Planning and Local Government as well as by the Society of Chartered Surveyors Ireland. The Department of Housing, Planning and Local Government report specifically looks at the drivers of land price inflation.
To help tackle land price inflation - and housing inflation more generally - the Government introduced the Vacant Site Levy. The levy aims to encourage land owners to either develop their sites or sell them to those who will. The Vacant Site Levy presents a strong disincentive to land hoarding. In addition, in Budget 2018 I increased the rate of stamp duty on non-residential property from 2 per cent to 6 per cent with a view to refocusing construction activity. Finally, the Department of Housing, Planning and Local Government is finalising proposals around the new State land management agency, which will maximise the use of State land as well enter partnerships with private land owners to ensure strategically important land banks are used efficiently.
189. Deputy Joan Burton asked the Minister for Finance the level of preparedness if there is to be a hard Brexit, in particular the requirement to expand the customs and excise unit of the Revenue Commissioners; and if he will make a statement on the matter. [36966/18]
View answerThe Government’s contingency planning for Brexit was initiated well in advance of the UK referendum in June 2016. To this end, co-ordination of the whole-of-Government response to Brexit is being taken forward through the cross-Departmental coordination structures chaired by the Department of Foreign Affairs and Trade and on 18 July the Tánaiste presented a Memorandum to the Government on Brexit Preparedness and Contingency Planning.
Contingency planning for a no-deal or worst-case outcome, bringing together the detailed work being undertaken by individual Ministers and their Departments on issues within their policy remit, was identified as an early priority and is now well advanced. Its focus is on the immediate economic, regulatory and operational challenges which would result from such an outcome. It assumes a trading relationship based on the default WTO rules, but also examines the possible effects on many other areas of concern.
My Department, along with the Revenue Commissioners, is actively engaged in this planning work which has intensified in recent months and is now well advanced. The planning, as appropriate, includes any specific responses necessary according to regional needs and at the county level.
This work has provided baseline scenarios for the impact of Brexit across all sectors, which can then be adapted as appropriate in light of developments in the EU-UK negotiations. This is enabling the modelling of potential responses under different scenarios, such as one where a withdrawal agreement, including a transitional arrangement, is concluded and where a Free Trade Agreement is the basis for the future relationship between the EU and the UK.
On the basis of this work, relevant Departments have now been tasked by the Government to rollout detailed Action Plans with a view to advancing, as appropriate, the mitigating measures which have been identified in the areas of their responsibility from the planning to the implementation phase.
In line with this approach, the Government has already approved a number of key Brexit preparedness measures focused on East-West trade and by the end of September, detailed and costed plans will be presented to Government on additional full time customs staff to carry out relevant controls at ports and airports; and upgrading of infrastructure at ports and airports, in particular Dublin and Rosslare Ports, to facilitate increased customs and SPS controls.
Revenue’s priority to date has been on upgrading relevant IT systems to have the most advanced systems possible to support and facilitate smooth and efficient trade flows. Performance testing is well advanced and I am assured by Revenue that based on the work completed to date they are confident that the various IT systems will support the expected additional work load arising from Brexit, ensuring customs processes can continue to operate effectively and efficiently post-Brexit.
190. Deputy Joan Burton asked the Minister for Finance the further studies and assessments his Department has carried out on the impact of the UK varying its VAT rates post-Brexit, in particular in Northern Ireland; the various policy scenarios it has tested with regard to substantial changes in the UK VAT regime; and if he will make a statement on the matter. [36967/18]
View answerThe Department of Finance has been assessing and preparing for the impact of Brexit since well before the referendum on 23 June 2016, with this work now intensified. The primary policy areas for the Department relate to the economic and financial sector implications stemming from Brexit. This work is being undertaken within the whole-of-Government framework coordinated by the Department of Foreign Affairs and is vital to guaranteeing Ireland’s interests are protected in the negotiation process to ensure that any adverse impacts on our economy are minimised.
The Department undertakes a rolling analysis which focusses on the key Brexit related policy issues, which includes taxation. The issue of VAT and Brexit was analysed in four papers as part of the Tax Strategy Group (TSG) in 2017 and 2018. (TSG 17-06 – Selected VAT Issues, TSG 17-09 – BREXIT Taxation Issues, TSG 18-05 – VAT Issues and TSG 18-08 – Brexit).
The papers identify the rules governing the European Value Added Tax System for goods and services within the VAT Directive (2006/112/EC) to which all 28 EU Member States must adhere and notes that post Brexit, the UK will no longer operate within those EU frameworks. This change has a number of implications for business and consumers.
Like all Government agencies, the Revenue Commissioners are also actively engaged in examining a range of scenarios in order to support Ireland's objectives. However, until the shape of post-Brexit arrangements becomes clear, it will not be possible to formulate specific plans.
There remains a large level of uncertainty in the UK position and the precise future arrangements for taxation shall depend on the outcome of future relationship negotiations between the EU and United Kingdom, and those discussions are currently ongoing.
191. Deputy Joan Burton asked the Minister for Finance the further work which has been carried out in respect of the national payments strategy with the Central Bank and financial services industry, in particular the expansion of such services that can be carried out by credit unions; and if he will make a statement on the matter. [36971/18]
View answerOver the past number of years, the EU has been creating a single market for payments across the Member States and my Department has been working on transposing those measures.
The Payment Accounts Directive was transposed in September 2016, ensuring access to a payment account with basic features for anyone who does not have a payment account. The revised Payment Services Directive (PSD2), transposed earlier this year, further opens the EU payment market for companies offering consumer or business-oriented payment services based on access to payment accounts and ensures a level playing field for both existing and new players.
The Deputy may also be interested to know that the Central Bank intends to establish a forum on retail payments, and that my Department has commissioned research to benchmark payments in Ireland.
The provision of payment services by credit unions is subject to the provisions of the Credit Union Act 1997 and the Credit Union Act 1997 (Regulatory Requirements) Regulations 2016, which allow credit unions to engage in a variety of payment services. Certain additional payment services, including current accounts, require Central Bank approval.
To date the Central Bank has approved a suite of additional services known as a Member Personal Current Account Service (MPCAS) for 46 credit unions having aggregate total assets of €8.1bn of total sectoral assets of €17.5bn. The approved MPCAS service allows credit unions to offer debit cards, overdrafts and a full range of payment services. The Central Bank has published details of MPCAS on its website along with the approval process, details of the application requirements and related guidance. The timing of the roll-out of MPCAS is a matter for credit unions themselves.
192. Deputy Joan Burton asked the Minister for Finance if his Department has received the budget 2019 submission from an organisation (details supplied) in respect of the financial difficulties in the sector such as the shortfall in many residential developments' sinking funds, the possible impact this may have in future years on the public purse; the relief which can be given to home owners who own apartments in such developments; and if he will make a statement on the matter. [36974/18]
View answerMy Department has so far received in the order of 200 Pre-Budget Submissions from a wide range of groups and individuals. These are being considered by the relevant officials in the context of Budget and Finance Bill preparation. I can confirm that a submission from the organization in question has been received. However, as the Deputy will be aware, it is not the practice of the Minister for Finance to discuss the details of measures which may be under consideration as part of the Budget and Finance Bill.
193. Deputy Joan Burton asked the Minister for Finance if his Department studied the recent report by a company (details supplied) in respect of residential rent increases; the work which has been carried out in conjunction with the Department of Housing, Planning and Local Government on this; and if he will make a statement on the matter. [36975/18]
View answerThe Department of Finance monitors developments in the residential rental market on an ongoing basis. My Department uses data from daft.ie, the Central Statistics Office, the Residential Tenancies Board and myhome.ie to monitor rental prices as well as the supply and stock of rental properties.
Rental market policy is primarily the responsibility of my colleague the Minister for Housing, Planning and Local Government and his Department leads on work in that area. The Government’s primary response to mitigating rental inflation is to increase supply of residential property. ‘Rebuilding Ireland: An Action Plan for Housing and Homelessness’ sets out a comprehensive package of actionable measures designed to restore the housing market to a sustainable equilibrium.
Officials from my Department regularly meet with officials from the Department of Housing, Planning and Local Government and the Department of Public Expenditure and Reform to discuss housing policy. The Department of Finance is leading the work on the establishment of Home Building Finance Ireland, which will provide finance to home builders on a commercial basis and further improve the supply of residential property in areas where it is needed.
The construction sector is expanding strongly, and this is now feeding into the growing supply of residential property. New house completions in the four quarters to Q2 2018 are up 40 per cent to 16,314, while planning permission was granted for 8,405 units in Q1 2018, up 81 per cent on Q1 2017. This growing supply response will mitigate the pressure on residential rents.
194. Deputy Catherine Murphy asked the Minister for Public Expenditure and Reform the activity levels in different sectors of the construction industry; the extent to which the industry is active in commercial development, residential development, hotel and leisure development, student accommodation and so on; the way in which such activity and trends in the sector are monitored by or on behalf of his Department; and if he will make a statement on the matter. [35429/18]
View answerI should begin by explaining my Department's role in relation to the matter raised by the Deputy. In February 2018 my Department produced the National Development Plan (NDP) 2018-2027 which, together with the National Planning Framework makes up Project Ireland 2040.
The NDP sets out a strategic vision for Ireland’s public infrastructure priorities over the next 10 years and is strictly aligned with the National Strategic Outcomes contained in the National Planning Framework (NPF). The plan signals a shift to a greater integration of regional investment plans, stronger coordination of sectoral strategies and more rigorous selection and appraisal of projects to secure value-for-money.
Achieving value-for-money is dependent on, among other things, a healthy, sustainable, competitive and well-functioning construction industry which offers good long-term quality employment and a sustainable level of construction output.
To that end, a commitment was made in the NDP to establish a Construction Sector Group in order to ensure regular and open dialogue between Government and the construction Sector.
The first meeting of the Group has taken place and an ambitious work programme is now in development.
As an important initial project, the Investment Projects and Programmes Office within the Department of Public Expenditure & Reform is compiling a Construction Sector Activity Report which will chart key trends in the sector including output, costs, labour market trends and productivity.
This work will add to the information and research which already exists in relation to this sector. For example the Department of Finance produce a "Housing and Property Sector Chartpack" (https://www.finance.gov.ie/updates/housing-and-property-sector-chartpack-july2018/)
Furthermore, the Central Statistics Office produce a number of relevant statistics in relation to this matter, including:
- Gross Domestic Physical Capital Formation by Item and Year
- Volume of Production Index in Building and Construction by Type of Building and Construction
- Planning permissions granted by type of construction
The Construction Sector Activity Report will incorporate statistics such as these in order to give a comprehensive assessment of trends across the different components of the construction sector.
195. Deputy Mattie McGrath asked the Minister for Public Expenditure and Reform the reason public servants are paying slightly more in pension levy than in pension contributions; if this can be reversed; the amount collected from this levy since 2011; the way in which the revenue has been spent; and if he will make a statement on the matter. [35526/18]
View answerThe Pension-Related Deduction (PRD) is provided for in law under the Financial Emergency Measures in the Public Interest Act 2009 (as amended). PRD is a deduction from the salary of Public Servants who
1. are members of a Public Service pension scheme,
2. have an entitlement to a Public Service pension benefit, preserved or in payment, or
3. who receive/have received a payment-in-lieu of such a pension.
PRD confers no additional pension benefit and is not linked to the pension contribution an individual is required to make. The PRD thresholds, as provided for in law, are currently set for the year 2018 as follows:
- First €28,750 of remuneration – 0%
- Next €31,250 of remuneration – 10%
- Balance of remuneration – 10.5%
PRD collected forms part of voted appropriations-in-aid, offsetting the gross expenditure of individual Departments.
There are no plans to amend the thresholds provided for under PRD legislation. It should be noted that PRD will be replaced by the Additional Superannuation Contribution (ASC) with effect from 1 January 2019.
The PRD yield for the years from 2011 to date is detailed as follows:
|
Year |
PRD Yield |
|
2011 |
€960,224,000 |
|
2012 |
€934,739,000 |
|
2013 |
€925,986,000 |
|
2014 |
€877,800,000 |
|
2015 |
€875,985,000 |
|
2016 |
€705,998,000 |
|
2017 |
€732,064,000 |
|
2018 |
€744,966,000 |
Note 1: The years 2011 to 2016 do not include Local Government PRD yield.
Note 2: The years 2017 and 2018 are estimated yields.
196. Deputy Eoin Ó Broin asked the Minister for Public Expenditure and Reform the cost in 2016, 2017 and to date in 2018 of all contracts awarded to private contractors via the Office of Government Procurement for secure printing across all Departments and other agencies covered by the GDP. [35530/18]
View answerThe Office of Government Procurement (OGP) supports and facilitates Contracting Authorities in awarding contracts for a variety of print services. The OGP does not have a specific category for 'secure printing' however has facilitated procurement competitions on behalf of Contracting Authorities for print services which have included elements of security. Such competitions have involved printing materials which included security features, and print jobs where the security of the printed materials was paramount.
The total aggregated spend on contracts which the OGP has facilitated on behalf of Contracting Authorities which included elements of security is as follows; 2016: €1.84 million, 2017: €1.7 million, 2018: €7.6 million.
197. Deputy Jim O'Callaghan asked the Minister for Public Expenditure and Reform the reason the reply to Parliamentary Question No. 119 of 12 July 2018 stated that Lauragh Garda station, County Kerry, was sold for €115,000 on 16 February 2016 when the State property register states that the property was sold on that day for €50,000; and if he will make a statement on the matter. [35717/18]
View answerThe former Garda station at Lauragh, Co. Kerry closed in 2013 under the Garda Rationalisation Programme. The Commissioners of Public Works sold the property for €115,000 and the monies were received in March 2016.
The Residential Property Price Register is produced by the Property Services Regulatory Authority pursuant to Section 86 of the Property Services (Regulation) Act 2011. It holds the date of sale, price and address of residential properties purchased since January, 2010, as declared by the purchaser to the Revenue Commissioners for the purposes of Stamp Duty. The data is provided by persons conveyancing a property on behalf of the purchaser. Therefore, the data entered on the Register in this case is not a matter for the Office of Public Works.
198. Deputy Margaret Murphy O'Mahony asked the Minister for Public Expenditure and Reform the annual turnover a construction company needs to have in order to tender via the e-tender system; and if he will make a statement on the matter. [35731/18]
View answerPublic procurement in Ireland is governed by legal requirements, rules and guidelines set both at national and EU level. The aim of European and national rules is to promote an open, competitive and non-discriminatory public procurement regime which delivers best value for money. The general requirements for works and works-related contracts are set out in the Capital Works Management Framework (CWMF). This guidance incorporates key elements of EU legislation that have been transposed into Irish law and is complemented by circulars and guidance issued by this Department and the Office of Government Procurement.
The management of the tendering process for a public contract is a matter for each contracting authority. It is the responsibility of each contracting authority to ensure that tenderers comply with all the requirements of the process.
Under the EU Directives governing public procurement, contracts above certain thresholds must be advertised on the Official Journal of the EU and awarded on the basis of objective and non-restrictive criteria. For works contracts the threshold is €5.548 million; for supplies and service contracts awarded by Government Departments the threshold is €144,000 and for local authorities and non-central bodies the threshold is €221,000. In the case of contracts below the threshold levels, the Treaty principles of proportionality, transparency, non-discrimination etc. apply where there is the potential for cross-border interest. Under national rules, all contracts for works and works-related services over €50,000 and over €25,000 for supplies and general services must be advertised on the national public procurement website www.etenders.gov.ie. Contracts below these thresholds, should be awarded on the basis of a competitive process of direct invitation to an adequate number of suitable suppliers.
The eTenders website is for use by the wider public sector including semi-state bodies, both commercial and non-commercial. Voluntary and community groups which are publicly funded are also entitled to use the site for their procurement activity. Registration on eTenders is free and there is no charge to submit a tender. Contractors can register as a ‘Supplier’ on the eTenders system. As part of the registration process a contractor should select the Common Procurement Vocabulary (CPV) codes that describe the type of works that they are interested in tendering for. This will ensure that they receive an automatic notification email alert when contracting authorities publish contract notices on eTenders for public works of a type that they select. The form for eTenders supplier registration can be found at https://irl.eu-supply.com/ctm/Company/CompanyRegistration/RegisterCompany.
Where tenders are invited in this manner it is incumbent on contracting authorities to ensure that those who are awarded public contracts have the financial standing and technical capacity to complete the works in a safe and timely manner.
Bodies procuring public works projects must comply with the provisions of the CWMF which contains extensive guidance covering all aspects of the procurement and contract administration stages. Specific guidance and templates are also published to manage the pre-qualification stage of a procurement process. It is important, when assessing the financial standing and technical capacity of a contractor to undertake a particular project, that the contracting authority should set standards that are proportionate to the project and its associated risks.
To provide targeted assistance to contracting authorities on this important stage of the procurement process guidance note GN 2.3.1.3 - Minimum Standards for Suitability Works Contractor Criteria (Open, Restricted Procedure) was first published on 6 October 2010.
This guidance note sets out standards under each of the criteria that may be used to assess a contractor’s financial standing and technical ability. The guidance was developed in consultation with industry at a point where the recession had commenced and took into account reduced capacity generally. The guidance was revised in May 2013, primarily to reflect changes in the requirements for performance bonds on public works projects.
Turnover represents a reasonable indicator of the capacity of a contractor to deliver projects of a particular scale. Construction projects require main contractors to manage a significant supply chain and where turnover is lower than recommended levels contracting authorities are entitled to have legitimate concerns over the capacity of a contractor to deliver the project in question.
Guidance note GN 2.3.1.3 (page 11) states that, for building projects, turnover should be set within a range of 75 – 150% of the annualised turnover of the capital value of the contract which is the capital value of the project divided by the number of years over which the expenditure will occur. For a straightforward building project of 2 years duration with a capital value of €4m the turnover sought can be as low as €1.5m. For general civil engineering projects this is reduced to 30 – 60% but rises to 200 – 300% of the annualised turnover of the capital value for complex civil engineering rail projects.
The 2014 procurement directives set a cap on the level of turnover at a maximum of two times the estimated contract value except in duly justified cases. The ranges set out above result in turnover levels that are well below this cap with the exception of the range specified for complex rail projects which, because of their exceptionally high risk, is justified.
199. Deputy Thomas Pringle asked the Minister for Public Expenditure and Reform the person or body responsible for cleaning debris accumulated in a river (details supplied); and if he will make a statement on the matter. [35820/18]
View answerThe Office of Public Works (OPW) is responsible for the maintenance of Arterial Drainage Schemes and catchment drainage schemes designated under the Arterial Drainage Acts of 1945 and 1995. As the channel referred to does not form part of an Arterial Drainage Scheme the OPW has no responsibility for its maintenance.
Local flooding issues are a matter, in the first instance, for each local authority to investigate and address. It is open to all Local Authorities to submit a funding application to the OPW under its Minor Flood Mitigation Works and Coastal Protection Scheme. The Scheme’s eligibility criteria, including a requirement that measures are cost beneficial, is published on the OPW website, www.opw.ie.
The OPW consider each application in accordance with the scheme’s eligibility criteria and having regard to the overall availability of resources for flood risk management.
200. Deputy Fiona O'Loughlin asked the Minister for Public Expenditure and Reform his plans for a building (details supplied) in County Kildare. [35956/18]
View answerThe OPW's policy with regard to non-operational (vacant) State property including the former Garda station, Rathangan, Co. Kildare is to:
1. Identify if the property is required/suitable for alternative State use by either Government departments or the wider public sector.
2. If there is no other State use identified for a property, the OPW will then consider disposing of the property on the open market if and when conditions prevail, in order to generate revenue for the Exchequer.
3. If no State requirement is identified or if a decision is taken not to dispose of a particular property, the OPW may consider community involvement (subject to detailed written submission, which would indicate that the community/voluntary group has the means to insure, maintain and manage the property and that there are no ongoing costs for the Exchequer).
I am advised by the Commissioners of Public Works that a decision has been taken to dispose of this property. The Contract for Sale is currently being prepared and it is hoped to dispose of the property in 2018.
201. Deputy Seán Canney asked the Minister for Public Expenditure and Reform the measures he will put in place to protect subcontractors who are owed moneys on public work contracts but cannot get paid in view of the unprecedented number of building contractors going out of business in the recent past. [36124/18]
View answer202. Deputy Seán Canney asked the Minister for Public Expenditure and Reform if public works contracts will be amended to provide better protection for subcontractors in terms of payments. [36125/18]
View answerI propose to take Questions Nos. 201 and 202 together.
The conditions of most construction contracts in use between construction clients and building contractors in both the public and private sectors require that payments are made at defined intervals and that payment is contingent on work being completed to a pre-determined standard. There is usually no contractual obligation on the main contractor to make payments to sub-contractors because this is left to the commercial arrangements that are contained in their respective contracts.
Poor payment practices prevalent in the construction industry prompted Senator Feargal Quinn to table a legislative response in the form of the Construction Contracts Bill which was initiated in Seanad Éireann in May 2010 as a Private Member’s Bill. Analysis undertaken during the development of the Bill highlighted the liberties that were taken by some in the absence of a structure to determine payments down the supply chain.
The Bill received Government and industry support and was enacted in 2013, it applies to all contracts entered into after 25 July 2016. The Construction Contracts Act imposes minimum payment requirements and provides the necessary tools to enforce those payments between the main contractor and their sub-contractors and so on down the supply chain. It applies to all construction contracts (as defined in the Act), public or private sector, whether they are written or oral and whether they include payment provisions or not.
The provisions of the Act include:
- a maximum payment interval of 30 days and a requirement to honour payment requests within 30 days for sub-contractors;
- a right to suspension for non-payment;
- a right to refer a payment dispute to adjudication; and
- the prohibition of arrangements that make entitlement to payment conditional on certain events, (e.g. ‘pay when paid’ clauses, which delay payments until the payer has, in turn, been paid), which were prevalent in most forms of sub-contract.
The public works contracts were amended prior to its commencement in June 2016 to accommodate the requirements of the Act and to facilitate cashflow in accordance with the payment terms imposed on main contractors with respect to their sub-contractors.
Whilst much of the interest from industry surrounding the Act was centred on the introduction of adjudication, it is the discipline that the legislation imposes on payments that appears to be largely ignored. Arguably these are the most important provisions in the Act but sub-contractors must be proactive in enforcing their entitlements with the contractor for payments that are due.
The Act does not cut across the normal rules for company liquidation/receivership and so where this arises there is no avenue for recovery from the insolvent party. However the magnitude of the exposure that many sub-contractors currently face upon the insolvency of a contractor would not arise if the provision for payments were insisted upon and the remedies available were exercised where payment is not forthcoming.
It is unacceptable that sub-contractors are suffering losses as a result of the insolvency of a contractor on a construction project. It is all the more galling when it arises on a public works project since the State pays what is owed under its contracts. However the issue raised would suggest that sub-contractors are not exercising the rights provided for in the Act which is surprising given the welcome it received by all contracting tiers in the industry and indeed the support it received from members of both Houses of the Oireachtas.
The Construction Contracts Adjudication Service in the Department of Business, Enterprise & Innovation has responsibility for matters in relation to the implementation of the Construction Contracts Act, 2013. The Chairperson of the Ministerial Panel of Adjudicators submitted the first Annual Report on the implementation of the Construction Contracts Act, 2013 to the Minister of State with responsibility for the Act, Mr Pat Breen TD, which covers the period from the 26th July 2016 to 25th July 2017. A link to the report follows. https://dbei.gov.ie/en/Publications/First-Annual-Report-implementation-Construction-Contracts-Act.html
203. Deputy Sean Fleming asked the Minister for Public Expenditure and Reform the annual rental cost of buildings rented by his Department or organisations under its aegis at a location (details supplied); and if he will make a statement on the matter. [36433/18]
View answerThe annual rental costs incurred by the Commissioners of Public Works for buildings leased in Portlaoise for various Government Departments and their agencies amount to €919,790.
The Commissioners are not in a position to provide information on buildings that other Departments may have leased themselves directly from a Landlord.
204. Deputy Niall Collins asked the Minister for Public Expenditure and Reform if the criteria and policy for awarding progression up a salary scale for a new entrant to the civil and public service who enters from the private sector, has relevant experience and is seeking to commence on a point higher than point one of the scale will be published; and if he will make a statement on the matter. [35556/18]
View answerIn December 2010, along with other measures taken to reduce expenditure in order to stabilise public finances it was decided that all appointments through open competitions would be made at the minimum of the scale. These measures are reflected in the rules governing recruitment competitions and the literature provided to candidates.
Where a Secretary General or Head of a Department or Office is of the view that exceptional circumstances justify a starting point above the minimum, the specific sanction of the Department of Public Expenditure and Reform should be sought in advance of any offer being made and on the basis of a business case. Clearly any widespread relaxation of the current policy would have implications for the sustainability of the public service pay bill.
205. Deputy Jack Chambers asked the Minister for Public Expenditure and Reform if the 1% pay increase which is referenced in Parliamentary Question No. 194 of 27 February 2018 has been applied entirely to all qualifying pensions; and if he will make a statement on the matter. [35686/18]
View answerAs the Deputy will appreciate, I have administrative responsibility for the Civil Service Pension Schemes and I exercise a central policy/authorisation role in relation to all other public service pension schemes. Insofar as pension increases are concerned, the main function of my Department is to determine, subject to appropriate Ministerial and Government approval, the pensions increase policy to apply, and to issue Circulars to Departments and public service bodies to authorise and give guidance on the application of the relevant increases. It is then a matter for each pension paying authority to ensure that effect is given to the pension increases authorised in the relevant Circulars, in the present instance, those set out in Circular 02/2018.
The principle of pay parity underlies the pension increases sanctioned in this Circular. This means that pay increases, agreed as part of the Public Service Stability Agreement 2018-2020 (PSSA), are to be passed on to pension recipients to bring the salary on which their pension is based up to the current salary of those still serving after the pay increases are applied. It is important to note that not all pension recipients will be due these increases. This is because of protections in place (known as ‘grace periods’) for public servants retiring after the application of pay cuts under the FEMPI legislation, whereby their pensions were calculated using the higher pay rates that were in effect prior to the application of the pay cuts.
The administrative procedures for applying pay parity to pensions in payment, both in general and in the particular case of Circular 02/2018, are not straightforward. They require an examination of the salary on which an individual’s pension was based and the salary of those still serving in the same grade and on the same payscale point after the pay increase is applied, which I am advised is largely a manual process. The grace periods to which I refer above, a valuable protection for the pension entitlements of the public servants concerned, inevitably impose an additional hurdle to be addressed in the application of pension increases.
The Deputy will appreciate that the procedures I have described are inevitably complex and time-consuming, and that, as a result, not all pension increases will be capable of being paid on any one fixed date.
As I mentioned in my earlier response, responsibility for implementing the increases, within the context of the administrative issues I have outlined above, lies with the various public service pension/payroll providers. I understand that work is underway to apply the 1 January 2018 pay increase, the first pension increase sanctioned in Circular 02/2018, to those qualifying pensions in payment that have not yet benefited from that increase, and that this will include the calculation and payment of arrears backdated as appropriate.
