I move:
That Dáil Éireann calls on the Government to take immediate action, as a matter of urgency, to revive the building and construction industry.
The construction industry has been starved of funds deliberately since this Coalition Government came into office and is now in deep recession of crisis proportions. No other sector of our economy has suffered to the same extent. Yet the attitude of the Government to the industry is one of total indifference and continuing neglect.
Twelve months ago this House debated a Fianna Fáil motion calling on the Government to recognise the serious jobs crisis in the construction industry and urged the introduction of urgent measures to stimulate the private and public sectors in order to avoid the collapse of the industry. Time has shown that our concern then was well founded. Unfortunately, our warnings went unheeded and during the last year the industry has suffered a further 13 per cent contraction in activity. If present Government policies are not changed radically this dangerous trend will continue. All the economic indicators continue to reflect the rapid decline in construction activity. The major fear now is the danger of a more accelerated rate of decline.
The construction industry has a workforce of approximately 125,000, of which some 45,000 are now unemployed. Men who have worked all their lives in the building trade are idle. Youth training in the skills of the various trades have no prospect of work and apprenticeships are practically impossible to get.
The importance of Government economic policies and their implications for the industry have never been more crucial to its survival. Yet we see the Government cutting back severely on public capital expenditure, introducing measures calculated to reduce the level of private investment in the industry. It is well known that both the Taoiseach and Minister for Finance are of the belief that it is wrong for the State to support construction in times of recession. Their steadfast adherence to this mistaken belief is the major obstacle to change in Government policy. It seems that the socialist Minister for the Environment, Deputy Kavanagh, is failing at the Cabinet table to win greater State investment for this industry in the same way that his predecessor, the present Tánaiste, also failed. The Labour Party is seen now to talk with two tongues. During the recent election campaign their chairman, Senator Michael D. Higgins, called for greater State investment to reduce unemployment in Europe, while at home his party in Government have been cutting the volume of State capital investment in construction by 25 per cent in the two years 1983 and 1984 to date. The contradictions inherent in the present Government have resulted in the neglect of major sectors of our economy due to indecision and failure to implement any planned strategy. It is clear that the Labour call for increased investment does not find favour with the Taoiseach and the Minister for Finance. We end up falling between two stools with no policy for the future.
The role of an Opposition party must be to highlight inadequacies in Government performance and to demonstrate how their policies would succeed if in Government. In this case there is hardly any need to demonstrate that Government policies are having a detrimental effect on the construction industry as the crisis is now a matter of common knowledge. To see the extent of the crisis one need only examine the level of unemployment in the industry. As I have already said, the construction industry has a workforce of approximately 125,000, of whom some 45,000 are now unemployed. This trend of increasing numbers of unemployed persons in building and construction has been prevalent since 1979. In 1979 there were 19,900 unemployed in this industry. In 1980 that figure had increased by 8 per cent to 21,500. The following year it increased by 29 per cent to 27,800; in 1982 it increased by 21 per cent to 33,500; in 1983 by a further 21 per cent to 40,500; and the latest figures, for March 1984, show 45,302 people unemployed, constituting an increase of 9 per cent or 4,654 on the March 1983 figures. Figures published by the Government in May of this year show that approximately 13,000 people have lost their jobs in building and construction firms in the private sector since this Government came into office.
Sales of cement are another strong indicator of the level of activity in the industry and they have been showing a continuous drop since 1979. For example, in 1979 cement sales amounted to 2,067,000 metric tonnes; in 1980 the figure was 1,815,000 metric tonnes, constituting a drop of 12 per cent; in 1981 there was a standstill in cement sales. In 1982 there was a drop of 18 per cent in cement sales to 1,486,000 metric tonnes. In 1983 there was a drop of a further 7 per cent to 1,383,000 metric tonnes, and for 1984 the projection is a drop of 5 per cent to 1,300,000 metric tonnes. In the first four months of this year cement sales were down approximately 7 per cent on the corresponding figures for the first four months of 1983, the actual figure being 374,000 metric tonnes.
Present policy can be assessed by studying Government decisions regarding public capital programme allocations and expenditure. The Public Capital Programme fell by 16 per cent in 1983 and is expected to fall by 9 per cent this year, that is, on the basis of the Public Capital Programme published at the beginning of the year. However, it has become clear already that the funds allocated are not to be spent at the rate they were last year. Exchequer returns for the first quarter of 1984 showed that the Local Authority Loans Fund was down 24 per cent in money terms when compared with the same period last year. In addition voted capital services were down 9 per cent in money terms, equivalent to 15 per cent in volume.
If further evidence is needed of the serious decline in the construction industry one need only examine the figures for new house completions. In 1981 there were 28,917 houses built. In 1982 that figure had dropped to 26,798 and, in 1983, it had dropped to 26,138.
A disturbing feature of the new Housing Finance Agency loans is that the number of loans for new houses comprises 49 per cent only of the total. With over 50 per cent of the agency's funds going to second-hand housing the question must be posed as to whether it should be included at all in the public capital programme, because there can be no way that money for second-hand housing represents new investment.
Another disturbing feature is that despite the introduction of the Housing Finance Agency the number of new house loans being provided in 1983 by that agency, and under the Small Dwellings (Acquisitions) Act, at 5,603 was more than 500 units down on the figure for 1982. SDA loans approved for new houses during the same period fell from 4,920 to 3,592, a fall of 1,300 units. The figures for the first quarter of 1984 show that the trend is continuing with the number of loans down 16 per cent on the same period last year.
The high level of unemployment, and the continuing drop in output and investment, as illustrated in the figures quoted, are clear evidence that this important sector of the economy is in serious trouble and urgently in need of Government action to reverse the dangerous trend. The National Planning Board in their Proposals for Plan 1984-87 published in April this year, recognised the extent of this problem and the need for further action when they stated:
The present level of unemployment among building and construction workers represents a waste of manpower that should be utilised as far as possible within the financial constraints to provide productive infrastructure. While this cannot be done without net additional cost to the Exchequer it should be done in such a way that the extra cost is kept to a minimum.
It is interesting to note that the National Planning Board specifically recommended increased capital investment in the construction industry and deemed it appropriate to finance productive projects by foreign borrowing. I am very pleased they have made this recommendation. It fully supports the views expressed by Fianna Fáil in the debate on the construction industry in 1983 and completely refutes the attitude of the Tánaiste, Deputy Spring, who was adamant that any further investment of public money in the construction industry would be simply compounding the problems, postponing the ultimate solution and making them all the more difficult to solve. He said on that occasion that the Opposition may take it that he would not be party to such an approach.
Looking back at those remarks some 12 months later it is disturbing to see that not alone did we not get the increase in investment that we were encouraging then and which he so adamantly opposed but the Government did not even spend the amount allocated in the public capital programme and about 10,000 people have lost their jobs in this industry. Surely, that was an extraordinary statement for a so-called socialist. All our pleadings of last year for increased public capital investment and an introduction of tax and other incentives for private capital investment, were ignored. Yet we see the Government's own National Planning Board supporting the moves we urged last year. I should like to quote from the report of the National Planning Board:
(ix) The area in which projects are most likely to meet the criteria set out in Chapter II.4 on Public Investment Planning is the backlog of road, bridge and by-pass construction recommended in the National Road Development Plan (1982). Less than one per cent of GNP has been spent annually on road building over the last ten years, despite the increase in the level of traffic congestion. The amounts allocated to road works in 1982, 1983 and 1984 have not been large enough to prevent the backlog of investment documented in the 1982 National Road Development Plan from increasing. The Board are of the view that a much higher level of investment in roads than is at present being undertaken could be justified using the public sector investment appraisal techniques outlined in chapter II.4. To the extent that the commencement of essential road works is more constrained by delays in planning, public hearings and the issuing of compulsory purchase orders than by a shortage of funds, pressures could be eased by legislation streamlining the entire process by which major public works projects are undertaken.
(x) It would be appropriate to finance projects which met the criteria set out in Chapter II.4 in full — that is, which were productive — by foreign borrowing. To the extent that road development projects do not meet those criteria in full, their cost should be met by reducing the level of expenditure on other headings in the PCP which have (a) a higher import content, (b) a lower domestic labour content, and (c) commit the State to substantially higher additional current spending in the future than would road construction.
(xi) It is not easy to identify areas of capital spending other than road building that would meet the criteria in Chapter II.4. However, over the current year and into 1985 it is very likely that substantial items in the PCP would fail to meet this requirement by an even larger margin than would an increased allocation to certain labour intensive/low import content headings. In the absence of detailed input-output studies of the capital programme, it is not possible to identify such items precisely, but the Board recommend that as a first step an additional £20 million be made available in 1984 for headings such as the provision of serviced sites for housing development, the construction of sporting facilities, leisure centres and related community facilities (such as pre-schools and health centres). The money should be found by reducing the allocation to headings in the PCP, which have a high import content.
(xii) The goal of this accelerated infrastructural programme should be to reemploy an additional 1,000 persons in the first twelve months. In the following twelve months, the programme should be on a scale that would create additional employment for 4,000 persons.
I thought it important to put that quotation on the record so that we can refer to a Government agency that has authoritatively refuted the type of ridiculous answers we have been getting consistently from Government Ministers, that they will not agree to any further investment in this industry. The Government's own National Planning Board are now recommending that. I accept that it is a very timid recommendation but it is a positive one. Is it too much to hope that the Government might now take the action we recommend and which so obviously has the support of their own planning board?
Fianna Fáil in agreeing with the board's recommendation for an increase in the 1984 PCP expenditure feel that the industry needs an immediate injection of £200 million, not just £20 million. That would create 10,000 jobs. Approximately £120 million of the investment would return to the State through a reduction in social welfare costs and an increase in tax revenue. Expenditure at this level would quality for EC grant aid of between 20 per cent and 40 per cent of the project cost. Fianna Fáil are firmly committed to the investment of an extra £200 million in construction programmes immediately on return to office.
This debate is taking place at our insistence to highlight the present problem and in the expectation that the merited response will be forthcoming from the Government. We await with keen interest the reply of the Minister and hope for something more responsible and substantial than the Tánaiste's response to last year's debate which consisted of a speech prepared some hours before the debate started and did not make any reference to the positive suggestions made by Fianna Fáil. That speech completely ignored the serious problems that were being discussed and was mostly an irrelevant political tirade ignoring the Government's own responsibilities to adopt policies to deal successfully with the industry's problems and forgetting the Government parties' commitment to the electorate on which their mandate was based.
I am not encouraged to see that so far tonight we have not had present in the House the person who carries responsibility for the industry, the Minister for the Environment, Deputy Kavanagh. It is a feature of the Government that Ministers absent themselves from debates of major importance to their briefs. It is another indication of disinterest and the lackadaisical approach of Ministers to serious problems for which they carry responsibility. It is not the responsibility of the Minister of State, Deputy Fergus O'Brien. He does not sit at the Cabinet table with other members of the Government. He is not involved in making any of the decisions that have affected the industry and contributed so greatly to the increase in the number unemployed in the industry.
It has become popular for members of the Government to dismiss their failures with the excuse that there is a serious recession, that the Government do not have any money, cannot do anything and the Opposition will always be complaining and cannot offer any solutions to the problems. That is the standard response trotted out to any serious discussion we have sought to create here or outside on the problem of the construction industry and the dire crisis it is in. This negative attitude on the part of the Government is frightening. It is a policy of despair and it is having a demoralising effect on our people. It is making the young, and the not so young, very cynical of politics and politicians and represents a potential threat to our democratic system. The widespread apathy so evident in the recent elections to the European Parliament is largely the result of the Government's attitude, their lack of policies, concern and general complacency. To be crowing over who won what seats in an election where less than 50 per cent of the citizens bothered to vote is a vain exercise and ignores the real message from the people.
If the Government and the institutions of State continue to ignore the problems confronting our people there is the danger that impetuous youth and others may seek more extreme solutions on the fringes of democracy as we have known it. It is no policy for the Government to say that the Opposition have no solutions, no positive suggestions on how to deal with the difficulties in the economy, in this case concerning the construction industry. I want to anticipate that kind of response because I am becoming accustomed to the gist of what the scriptwriters have been putting before the Minister and which the Minister has been regurgitating here in Dáil debates. For that reason I want to repeat briefly some of the positive suggestions that I have made in previous debates here.
I asked the Minister previously to promote actively joint venture housing but he took no new initiative in that area. Were he to empower local authorities to provide land at a nominal cost per site I have no doubt that many of the 33,000 families on local authority waiting lists would participate in joint venture schemes to provide housing for themselves. We got a big silence to that proposal. I also asked the Minister to initiate equity sharing schemes which I believe would result in an additional 5,000 new houses per annum being built, 7,000 man-years of employment, £70 million extra cash into the Exchequer and 1 per cent GNP growth. I elaborated on the mechanics of this scheme at the Fianna Fáil Árd Fheis in February. My proposal for the introduction of a co-ownership scheme was well received in the industry and commented on favourably in the media, but did not evoke any response from the Minister, Deputy Kavanagh, who has failed to take any major initiative himself since his appointment.
I also asked the Minister on another occasion to initiate a scheme whereby deposit interest on special savings such as building society savings accounts be relieved of Government tax as the money is eventually invested in construction and helps to boost the economy and provide employment. I have received no response yet to that suggestion. I have asked the Minister to introduce new incentives to encourage investment in construction projects particularly in the residential building sector where the demand far exceeds the supply. I pointed to the success of the Fianna Fáil 1981 Act section 23 incentive which provided possibly up to 10,000 jobs in the construction industry. The response to that suggestion was to so modify the section 23 incentive as to restrict the incentive radically for private investors and practically render it useless. This action above all others has given a clear indication of the Government's attitude to private investment in construction. They are opposed to incentives of this kind. Indeed, the Minister for Finance, Deputy Alan Dukes, is known to have told a group of businessmen that he considers the 1981 section 23 incentive to be immoral. Because of this conscientious moral judgment up to 10,000 unemployed construction workers had to tell their wives and young children that they would have less food on their tables and less money to buy clothes and shoes and that any little plans for holidays or leisure pursuits would all have to be abandoned.
On another occasion I asked the Minister to relieve the industry of the heavy taxation burden which was a serious dis-incentive to private investment in construction, especially as it was evident that private investment had already dropped by 50 per cent in the period 1979-82. The response to that suggestion has been to impose new and increased levels of taxation, thus increasing costs and causing further unemployment. Among the Government measures introduced in 1983 and 1984 affecting the construction industry are the following: the list is fairly long and it is not a full list.
They increased the VAT rate, planning charges, and development levies. They introduced a new residential property tax. They increased the PRSI costs for employers in the construction industry and other industries. There was the withdrawal of the construction industry from the Employment Incentive Scheme, the abolition of the residence-related tax incentive scheme, the decision by the Government to reduce the mortgage interest relief and the exclusion of the industry from the new risk venture capital incentive scheme. That list alone is sufficient evidence of this Government's anti-development attitude. It is sufficient proof, if proof is required, of this Government's desire to reduce the level of private investment in the construction industry. Yet the standard reply from the Minister when challenged on the continuing decline in output, employment and investment in this industry is: "Ah, the private sector should be putting more into it. You cannot expect the State to keep bolstering up the construction industry to compensate for a withdrawal of private investment". What the devil do you expect only withdrawal of private investment when the Government themselves are introducing substantial new measures which are acting as a disincentive to investment, which are forcing people not to invest in this industry, instead of having a positive approach and introducing new incentive rates which would bring more money into the industry?
It has been very difficult for anybody who is in any way concerned about the high level of unemployment and lack of activity in construction to understand the Government's mentality in this matter. If it was Government policy to replace private investment completely with State investment, which would be pure socialist theory, then one could understand the logic in bringing in these penalties against investment by private individuals in construction; but it seems that that is not stated Government policy or intention. It is very hard to establish whether there is any policy or strategy or whether the Government even know where they are going or understand the effects of the measures they are introducing. If the Minister of State, Deputy O'Brien, sticks to his prepared script probably he will say that £3 out of every £4 in the construction industry is coming from the State, that this is not good enough, that there must be more private investment in the industry. We agree that there must be more private investment, but the Minister must understand that people will not invest and risk their money if there is no return. It is all right for the Minister to stay there and not be affected by the outcome of these measures personally; but he must accept that they are having a detrimental effect on an industry which has given employment to up to 125,000 people and are driving money away from the industry.
Therefore, again we wish to avail of this debate to appeal to the Government to reverse their policies, to abolish many of the new disincentives they have introduced and to come forward with positive proposals along some of the lines we have suggested, or to come up with their own suggestions; but we get no new ideas from the Government. They are absolutely bereft of ideas and, it seems, of interest and it is incumbent on us as an Opposition party to haul them in here and make them listen to the problems they are creating and make them appreciate the extent of these problems and the poverty they are creating in so many homes throughout this land. The Government sit idly by. All of last year and, it seems, all of this year they have given no indication of their intention to do anything to reverse the disastrous trend. I do not know how long the Government are going to sit and do nothing. Are they going to wait until some of the biggest firms in the country collapse and come down around their ears? Nearly every month numbers in this industry are becoming unemployed equivalent to the number who became unemployed in the Ford factory in Cork. Up to 800 a month are losing their jobs. There is no outcry from the Minister, no expression of regret or concern at the extent of the damage that his Government's policies are having. He is washing his hands of them in Pontius Pilate fashion and claiming there is nothing he can do.
There are things he can do. We in Opposition have suggested some of them. Some are already known to be very successful in other countries and could result in massive investment and the creation of thousands of new jobs here without the State having to make any major contribution, but we have received no positive response. In the absence of the Minister tonight it seems that we will not get any great response to this debate, but we will wait until the debate concludes tomorrow night before we say anything about that.
On coming into office one of the first steps taken by the Government was to reduce the public capital programme by £220 million to £1,890 million and to renege on the commitment to invest an additional £100 million in the construction industry. These two decisions resulted in a loss of £320 million to the industry at that time — all during 1983 — but the position was further aggravated when the Government reduced public capital expenditure during 1983 by a further £150 million. It is well to remember that the original Fianna Fáil budget allocation for the 1983 Public Capital Programme was £2,110 million. The Coalition reduced the budget allocation to £1,890 million but the actual expenditure outturn of the public capital programme was only £1,740 million in 1983. In all, therefore, the Government left the industry short £470 million on expected capital investment during 1983. The industry has been struck a mortal blow by the Government and has little hope of reviving unless the Government take some positive steps at an early date.
In these circumstances the House looks forward with great interest to hearing what the Government intend doing to save this important industry and to give some hope to the 13,000 men who have been thrown out of work by this callous Government and their ineffective and inept Ministers for Labour.
What has happened in relation to the Government policy to built 30,000 houses per annum? After two years in office they will be 8,000 houses below their target. It has been reliably estimated that in the second half of the eighties, between 6,000 and 7,800 more new houses per annum will be required than was the case in 1983. With 30,000 families approved and waiting for local authority houses, it is clear that most families will have to wait five years to be housed. Unless the number of local authority houses being built annually increases greatly from the present level of 6,000 the number of years families will have to wait for housing will be increased greatly as will also the social problems associated with that situation.
Radical new policies are required to tackle this great social problem. In addition to the suggestions I have made already, there is a need for a further package for private housing to bridge the deposit gap between the sale price and the loans currently available particularly for first-time buyers. Suggestions on those lines have been made at housing seminars which were attended by the Minister and his officials. The time has come for the Minister to take steps to deal with the developing situation.
The amendment being put forward by the Government is pathetic and displays yet again their callous disregard for the needs of this vital sector of the economy. It is just not correct to say that the decline in activity and employment in the building industry arises from factors outside the Government's control. That statement is so inaccurate as to imply on the Government's part a misunderstanding of their role and an abdication of their responsibilities in this area.
I have shown how the public capital programme expenditure has fallen short of the Government's own published targets in 1983. Similar trends are evident in 1984. The early indications are that capital spending will again this year fall short of official targets. These figures give the lie to the theory being propounded by the Minister that private investment, rather than public investment, is at fault. When the committed public investment is not being fulfilled, when the Government are not fulfilling their published intentions regarding the level of public capital expenditure, how can they blame the private sector for the situation? Many hundreds of millions of pounds have been withdrawn from the industry deliberately by reason of Government decision.
The Government amendment refers also to the reduction in private sector investment. It has been accepted by all sides that there has been a reduction in private sector investment but, as I have shown, some imaginative Government initiatives along the lines I have suggested would result in a massive increase in private sector investment, particularly in housing, but so far the Government have failed in this area and are seen to be opposed to incentives to encourage private investment.
The amendment refers further to policies pursued by Fianna Fáil while in Government as being the cause of our present problems. Is it not time the Government realised they have been in office for nearly two years, that they have been responsible for the budgets of 1983 and 1984 and that the acceleration in the decline in construction has been due largely to financial decisions made in both of those budgets?
The Government amendment seeks endorsement of their present disastrous policies and refers to their being designed to maintain public support for the industry at the highest practicable level. As we have said all along and as is now confirmed by the National Planning Board, this is manifestly untrue. The board are recommending that even in this year there should be a further increase in public capital investment. The Government amendment is a sham and must be rejected by the House. By their inaction in this area and by their lack of concern, the Government are seen to be adopting a very callous attitude to the problems they are creating and compounding for those thousands of families whose main bread winners were employed all their lives in the construction industry. The Government are responsible, too, for the problems facing parents of young people who have been training in the various trades, whether as electricians, plumbers, carpenters, or bricklayers. All of these young people had looked forward to a bright future and to steady employment in an important sector of the economy, but there are no openings for them now. The industry in which they had hoped to spend the rest of their lives is in a serious state of decline. Despair is permeating the whole industry.
The number of public tenders being invited has fallen dramatically while no action is being taken on many of those tenders that have been received. The level of activity and of State investment in the construction industry in the first four months of this year has fallen so dramatically that the crisis we recognised last year is seen now to be continuing and to be entering a very dangerous phase.
We in Fianna Fáil appeal to the Government, to the Minister present and to the Minister who is absent to rethink seriously the policies they have been adopting and to show that they have some initiative and some spunk. First, they must show that they understand the full extent of the problem and then that they are prepared to do something about it. It is not good enough for a man sitting in the Custom House, having responsibility for an industry of this size, not to take any action but to be negligent in his duty. The public revulsion of the inactivity of Labour Ministers in the Government has been witnessed in the recent elections. Surely the Labour Party, who claim to have concern for the homeless, must recognise that in Government they have not delivered on any of the policies they claim to be their party's policies. They have not been seen to be active in seeking to have those policies implemented. So far, the Labour Ministers in Government have been a miserable failure. The Minister for Finance has proved to be a major obstacle to investment in the construction industry and he is supported fully by the Taoiseach. If the Labour Ministers cannot surmount the obstacles presented by those two individuals, they should take the decent course — leave the Government, let the Coalition fall and allow a party to come into office who are committed to dealing with social problems, a party who are prepared to make the commitment and the investment and to create a climate which will bring growth back into our economy. I ask the House to reject the Government amendment and to support our motion. I hope this debate will bring home to the Government the seriousness of the problem and that it will evoke from them a positive response that will bring benefit to those who are facing a very bleak future.
