The Construction Industry Federation (CIF) has welcomed the Government’s announcement that they are to provide an additional €150m in Exchequer capital spending along with a new PPP pipeline valued up to €250m. The CIF has said that the investment will create additional construction work, benefitting the economy and the construction industry. They also noted that capital spending had fallen by 62% over the past six years.
“We are delighted to see the Government bring forward a positive attitude towards creating construction work and increasing capital spending,” said CIF Director General Tom Parlon. “This is a signal that the Government realises the strong impact on the economy that can be generated by bringing forward investment in capital projects. Capital spending helps stimulate economic activity. It creates jobs and improves cash flow throughout the economy, while also improving our infrastructure, benefitting Irish businesses and the Irish public. The CIF has repeatedly been pressing for this approach to be adopted and we are glad to see the Government is beginning to take this onboard.
“Capital spending has been one of the areas that has really borne the brunt of austerity. It has fallen by over €5.5 billion in the space of six years since the downturn, dropping year on year from €9 billion in 2008 to €3.4 billion for 2013. That represents a fall of 62% in the past six years. When capital spending goes to Irish companies approximately half of that money is repatriated to the State in the form of taxes – be they income tax, PRSI or VAT on materials for the project.
“The investment in 28 schools, either in the form of new school buildings, extensions or refurbishment will be of particular benefit to the construction industry. This is the type of work that creates construction jobs on a regional basis, one of the major problems in our sector which needs to be grasped. If you were to average out the spending for schools across the 28 it would seem that approximately €1.78m is being invested per project. That can make a significant difference to the schools, the students and to the construction industry.
“The investment in energy efficiency is also to be welcomed. The CIF has been actively encouraging more retrofitting work to be carried out. With about 25,000 houses involved in the Government’s plan that works out at about €2,000 per house on average. We would expect the work that is being carried out to be limited to attic insulation and cavity wall pumping based on that type of budget.
“Unfortunately the investment in the regional and local roads programme is unlikely to have too strong an impact on the construction sector. With the Government committing to rehabilitating 600km of the road network, this work will be mainly conducted by the various local authority road staff. At an average cost of approximately €83,000 per kilometre there will be a limit to the amount of actual improvement that can take place.
“The commitment for a new pipeline of PPP projects valued at up to €250m is another progressive step by the Government. While the details of these projects are still to be published it is important to note the Government’s commitment. PPPs have been a strong way of generating construction activity at a time when the greatest group of people on the Live Register are former construction workers and our sector is going through a prolonged period of decline.
“Measures like those announced by the Government today will help improve the fortunes for Irish construction, increasing jobs, decreasing social welfare payments and bringing more tax revenue into the Exchequer,” Mr. Parlon concluded.