asked the Minister for Finance if, in view of the fact that the 1966 recession in the building industry reduced employment by 5,000, he will now investigate the use of a more flexible public capital programme to counteract rather than reinforce the instability which hinders this vital industry.
Ceisteanna—Questions. Oral Answers. - Building Industry.
47.
A reduction in activity in the building and construction industry in 1966 followed on the action taken, by the adjustment of the public capital programme and otherwise, to reduce the excessive demand that had built up in the economy and was leading to a balance of payments deficit of the order of £50 million in 1965. As was pointed out in relation to building and construction in the White Paper on Public Capital Expenditure (Pr. 8562) which was laid before each House of the Oireachtas in October, 1965—
Even if balance of payments difficulties had not arisen, the recent rate of expansion could not have been maintained. Some regulatory action would have been needed to ensure that building outlay, by expanding at an excessive rate, did not react unfavourably on the availability of capital for other headings of the public capital programme and for the private sector.
When the remedial measures had become effective the Government took action to maintain the level of building activity generated by the public sector by increasing the allocation for housing and ancillary services in the 1966-67 public capital programme by £1.5 million over the budget estimate for the year. The budget provision for 1967-68 showed an increase of £3½ million or 10 per cent, on 1966-67 expenditure and during the year 1967-68 additional allocations for housing and ancillary services and for secondary school buildings were made so that, in the event, expenditure on building and construction in the public capital programme in 1967-68 exceeded the 1966-67 expenditure by £6½ million, or more than 18 per cent.
The public capital programme, particularly the building sector of it, involves commitments for years ahead and cannot be regarded as possessing any great deal of flexibility. It is exceedingly difficult, and may be wasteful, to reduce the programme at short notice and financial policy can realistically be concerned only with the stabilising or controlling the rate of expansion of the programme. The Government action I have mentioned illustrates this point.