Wednesday, 7 June 1939
Seanad Éireann Debate
Parliamentary Secretary to the Minister for Local Government and Public Health (Dr. Ward): The system of combined purchasing originated at the session of Dáil Éireann in 1920, and practical steps were taken in December, 1921, to carry out the decision that was, at that time, arrived at. In 1925, the Local Authorities (Combined Purchasing) Act, 1925, was enacted for a period of three years, but  since 1928 it has been continued from year to year under the Expiring Laws Acts. The system has, therefore, been in operation for a period of 17 years, and in that time it has resulted in substantial savings in the cost of certain commodities required by local bodies owing to the increased competition which the pooling of requirements brings about. At the same time, it has had a marked effect in raising the quality of commodities. Much waste competition has been eliminated by the adoption of standard samples and standard qualities of goods and by reductions in variety of sizes and designs.
A system of combined purchasing to be fully effective must have the complete co-operation of all local bodies. The present Bill, while embodying the main provisions of the Act of 1925, contains two new important features in Sections 12 and 13. Provision is made in Section 12 to enable annual estimates of commodities which are in regular and current demand to be obtained from local authorities. When advertising for contracts for the supply of such commodities the quantities required during the contract period will be made known, and intending contractors will therefore be able to quote better terms for specified amounts. Manufacturers of such goods should also be helped by such a policy in maintaining production at an even level throughout the year.
Local bodies will only be required to give estimates of commodities that are in regular use which can be kept in store such as tweeds, shoes, tea and tobacco. A fair average of requirements in any year can be ascertained from commodities used in previous years. A local authority will be required to accept delivery up to its estimate. In the Dáil criticism was directed against charging a local authority a higher price than the standard price for commodities supplied in excess of its estimate. The system of estimates is designed to bring about better competition for commodities in general use and to enable manufacturers to forecast requirements and  provide a continuous employment over the full year. If every local authority could get its requirements in excess of its estimate without some higher charge than the standard price the whole basis of estimating would fall to the ground. If firm estimates are to be obtained the provisions of the Bill as regards the percentage increase are essential. A local authority in a rising market may desire to increase stock and even if the percentage increase is payable, the price may still possibly be lower than would be obtainable under the succeeding contract. In a falling market the local authority would not be likely to exceed its estimate unless the estimate was entirely inadequate. In such a case if a higher price is payable the local authority will in succeeding years be more likely to submit a firm estimate of the commodity or commodities for which estimates are required and in time there should be very little divergence between estimated requirements and the quantities of goods required.
Section 13 of the Bill, to which I also referred, is intended to prohibit dealings with persons who are not official contractors. If local authorities were to have the option of purchasing materials locally the system of estimates provided for in Section 12 could not be enforced. Certain exceptions will be permitted in emergencies. These exceptions will be covered by regulations under Section 14 of the Bill.
The Bill only contains such penal provisions as are considered necessary to ensure its enforcement. The provision in Section 13 (3) as regards members and officers of local authorities is necessary if the main principle of the Bill, that is an all-in system for the purchase of the main commodities required by local bodies, is to be made effective.
Existing contracts are distributed fairly evenly throughout the country. Besides the four county boroughs there are official contractors for supplies in at least 29 other areas. The current list of commodities contains 2,404 items and the names of 220 contractors. It is proposed in the administration of this Bill to secure a continuance of the existing policy and possibly an even  wider distribution of contracts throughout the country.
Tenders will not be invited for perishable commodities or for commodities which can generally be obtained with greater or equal advantage locally, such as bread, bacon, cement, coal and many items of building materials. Further, commodities of a highly specialised and technical character, as also those which do not form part of the regular requirements of local authorities, will not be brought within the ambit of the scheme.
The system of combined purchasing has been helpful in some instances to the establishment of native industries and in most cases to their development and expansion. This important matter has not been lost sight of in the Bill now under consideration. Attention is directed to the provisions of Section 6 dealing with the appointment of official contractors. In that section wider powers have been taken for the supply of commodities to all local authorities or to particular local authorities. Subsection (4) will permit of the formation of special economic areas which it would be possible for the smaller industries to supply on competitive terms. This is an important departure from the present Act and it is hoped it will enable smaller industries to compete successfully within limited areas. The concession should lessen any objection that there may be to the provision in the Bill prohibiting dealings with persons who are not official contractors. As I have said, this provision is essential to the main principle in the Bill, namely, the securing of a system of combined purchasing in which all local authorities will co-operate. If local authorities were to have the option of purchasing materials locally the Department would not be in a position to give prospective contractors any idea of the quantity of material likely to be ordered from them and, consequently, the best possible prices would not be generally obtained.
The other provisions of the Bill follow generally on the lines of the present Act, except Section 11 of the Bill which enables the Minister to  declare that another specified commodity may be termed a substitute for the original commodity and therefore subject to the same regulations as the original commodity. This section is also intended to implement further the provision against dealings with persons who are not official contractors. There have been instances of local bodies when inviting tenders for supplies having made variations in specifications for commodities or alterations in conditions of supply so that their requirements, not being specifically provided for under the combined purchasing system, could be obtained from non-official contractors. In reality, the requirements of these bodies should be adequately met by commodities obtainable from an official contractor, and to prevent the continuance of such a practice the provisions of Section 11 have been included in the Bill.
Mr. Cummins: There are a few points on which I should like some information. In Section 8, the words “conditions of employment” are used and I should like to know what the Parliamentary Secretary understands by those words and whether they refer to the ruling local rate or to the trade union rate. In the case of many institutions in this country, purchases are made only where a firm's employees receive trade union rates. “Conditions of employment” is a very wide term and might mean anything. Of course, the reply might be that the Conditions of Employment Act regulates these matters, but I foresee a possible conflict with a trade union if trade union rates are not observed. These official contractors do, I understand, pay trade union rates, but there may be cases in which these rates are not paid.
With regard to purchases from the official contractor, it very often happens that he cannot supply the goods within a reasonable period, and works of an important character are held up for lack of materials. I have known cases where local ratepayers, who are both wholesalers and retailers, could supply the materials and it would seem that they are prohibited to some extent under this Bill. There is the other point, that responsible retail and wholesale merchants through  the country keep a very large stock of the materials required by local bodies. They are not listed as official contractors, but their prices, in some cases, may be lower than those of the official contractors. In view of the fact that they are very large ratepayers, and in justice to them and to the local bodies which they supply, I think they should be given the opportunity of supplying the goods when their price is lower. It may be argued against that that for the official contractor there have been laid down certain specified rates and if others are permitted to come in at the eleventh hour and sell the goods ¼d. in the £ less than the official contractor that that is not fair competition. I do not see that a great injustice can be done in that event. If the local contractor can do it at a lesser price than the official contractor, I think the local contractor should be allowed to do so. Those are the few points that I want to make. Possibly at a later stage an amendment to this effect will be moved. Perhaps the Parliamentary Secretary would give us an indication of what his mind is on this aspect of the question.
Dr. Ward: As regards the definition of “conditions of employment,” I should be reluctant to bind myself to a definition without full consideration. But as I understand it, “conditions of employment” in a provincial area is usually held to mean employment at the trade union rate of wages prevailing in that particular area. I will look into the matter between now and the Committee Stage and see if that is beyond any doubt the interpretation that the Department have put in the past during the operations of the Combined Purchasing Act on these words but that is what I always understood “conditions of employment” to mean. On the point of giving what would amount to a preference to local manufacturers and traders in the matter of contracts and supplies, it seems to me that that would cut across the entire principle of the Local Authorities (Combined Purchasing) Bill. After all, 17 years experience of the operations of the Act has established  that the system is a sound one, and that the ratepayers are given better value under the system and that a higher standard of a commodity is being supplied than previously obtained under the old arrangement. We must either maintain that system of combined purchasing or abolish it altogether. There is no half-way house between the two. I have a great deal of sympathy for the view put forward by Senator Cummins, as every provincial Deputy and Senator has.
Senator Cummins would like to see, if possible, the local merchant who is a substantial ratepayer getting a share of the local contract. But we cannot have that uniform standard. We cannot allow the local contractor to come in when the market is falling and supply the local authority for a short period, and then get out when the market is rising holding the official contractor as liable to supply. I think the Senator realises that while his heart is with the local contractor his head is with the principle of the Combined Purchasing Bill.
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