Builders ‘facing collapse’ over pay law delays

The Construction Industry Federation has warned that many contractors in the building sector face going out of business due to yet another delay in introducing legislation which would mean they would have to be paid promptly.

CIF director general Tom Parlon said that the Construction Contracts Act was originally introduced in the Oireachtas on May 10, 2010 by senator Feargal Quinn.

“That was 1,625 days ago,” said Mr Parlon. “After receiving cross-party support, the legislation was signed into law by President Higgins on July 29, 2013. Yet, 449 days after that date, the Government has basically done nothing to ensure this legislation takes effect.”

When enacted, the legislation would create enforceable staged payments to sub-contractors as well as a quick adjudication system to deal with any disputes. It would remove the possibility of payments being withheld for extended periods of time.

This week, it emerged that the Government had transferred responsibility for implementation of the act from the Department of Public Expenditure and Reform to minister of state for business and employment Ged Nash.

The reason given was that the Department of Public Expenditure and Reform is “a major player in the construction industry, in light of its responsibility for the State’s construction procurement policy and the publication of public works contracts”.

The legislation requires the setting up of a panel of adjudicators to ensure resolution of commercial disputes about payments between parties. The Government said it was important that any panel was seen to operate at arm’s length from any major player in the construction industry — including the Department of Public Expenditure and Reform.

“On a daily basis, the CIF is contacted by contractors seeking assistance over non-payment of fees,” said Tom Parlon.

“This is becoming a growing problem in the industry and it is generating real hardship for some contractors. The Government has the power to put a stop to this by implementing the legislation, but there is no sign as to when this will actually happen.

“We are completely dismayed by the ongoing delays. We have received several assurances that this legislation would take effect by a certain date and yet none of those dates have been met. The most recent suggestion is that we will have to wait until spring next year. But in their latest statement, the Government is already watering down that possibility, saying ‘with a tightly managed timeline, it is expected that the new service will be fully operational, and the Act commenced by spring 2015’. That looks like the Government is already preparing to miss yet another expected commencement date.”

Mr Parlon said the fact that various departments kept “dragging their heels” on the issue was really hitting the industry and costing jobs.

“The Government now needs to publicly state a date for when this legislation will commence and stick to it,” he said. “Otherwise, the continued uncertainty is going to create more problems in the industry and will ultimately lead to more contractors going out of business.”