I move amendment No. 1:
To delete all words after "Dáil Éireann" and substitute the following:
endorses the Government's consistent adherence, as reflected in the National Plan, to a strategy of sustained and soundly based growth of the economy; recognises the importance of the building industry in this process and notes the continued high level of investment in the Public Capital Programme in roads, housing and other services affecting the building industry; and supports the Government in its continued efforts to redress the undisciplined management of the economy in the late 1970s and early 1980s and to create conditions of enterprise in the economy generally, from which the building industry will benefit.
I am glad that Fianna Fáil have put down this motion on the building and construction industry. I welcome this opportunity to speak on the motion and to set the record straight concerning the Government's policy in relation to the industry.
The past year saw a continuation, although at a reduced rate, of the pattern of declining output and rising unemployment which has characterised the industry in recent years. This trend in a year which saw a resumption of moderate economic growth in the economy in general underlines once again just how difficult an adjustment the building industry has had to make in the aftermath of the inflationary expansion of the late seventies and early eighties. The industry has had to pay a very high price in terms of falling output and rising unemployment for the disastrous debt-financed inflationary boom unleashed between 1977 and 1981.
To appreciate the Government's response to the present recession in the industry it is important to understand the cause of decline in output in recent years. The root cause of the industry's difficulties has been the decline in private investment, particularly in areas of industrial and commercial development. While a certain amount of development continues to take place in those areas the fact is that there is a surplus of office accommodation, retail units and factory space and this surplus is discouraging new private investment. The Government are determined to see the decline in the building industry reversed and orderly growth resumed as soon as possible. The problems of the industry are being tackled on two fronts, by raising public expenditure affecting the industry to the highest sustainable level and by creating conditions conducive to increased private investment in the industry.
The national plan provides for an increase of almost 9½ per cent in Public Capital Programme expenditure affecting the building industry between 1984 and 1987. This increase will occur in spite of the fact that some public investment programmes with significant building elements have been wound down as they neared completion. Over the period of the plan construction will account for an increased share of the total public capital expenditure. By increasing public expenditure in the industry, by promoting recovery of the economy generally, by stabilising the burden of taxation and by restoring order to the public finances, the programme of action set out in the plan will help to restore private sector confidence and increase private investment. The plan contains also a number of specific measures which will have the effect of boosting output and employment in the industry.
The volume decline of output in the construction industry in 1984, estimated at approximately 5 per cent, was significantly lower than the volume decline in both 1983 and 1982. Further evidence of the bottoming out of the recession in the building industry is provided by the unemployment figures. Average unemployment rose by 3,900 in 1984 compared with increases of over 7,000 in 1983 and almost 5,700 in 1982. It was widely expected that 1985 would see further progress in halting the decline in output and rise in unemployment in the industry. However, I was heartened by the forecast of the volume increase of 1½ per cent in building investment for 1985 contained in the latest commentary of the ESRI.
Having said that, I should like now to refer briefly to major programmes of my Department — roads, sanitary services and housing — and to outline the various measures taken in each of those areas to increase output and employment. First, I should like to inform the House that overall investment on these programmes will increase by 15 per cent by 1987 — this is the targeted expenditure set out in the national plan. Given the economic constraints under which we now operate this is a very substantial commitment.
On roads I can say categorically that this Government have done more than any other to redress the neglect of our major roads network, to promote road construction as a priority of infrastructural development. The Government's commitment to roads and their role in the future economic development of the country is unprecedented, far outstripping anything done heretofore. During the previous Fianna Fáil administration Members of this House became accustomed to successive Ministers for the Environment pledging major improvements to our roads network. In 1979 their development plan for the eighties, was launched amid a fanfare of publicity. It was heralded as being the first major road plan of this type since the foundation of the State, as being unprecedented in its time span and format and as charting the course for bringing our road network up to a standard capable of meeting present and anticipated traffic demands. To be fair, the plan was accepted by politicians, transport and commercial interests, and motorists, as constituting a serious attempt to improve road standards to meet the ever increasing transport demands of our developing economy. Alas, however, our hopes were not to be realised. In 1980, the very first year of the operation of the 1979 road plan, the provision for road improvement grants fell short of the level projected in the plan by a massive 43 per cent in real terms. Hopes of the new bridges and by-passes, inner relief roads and improved national routes promised in the road plan, began to fade. We were back to the piecemeal, year to year straitjacket approach with no realistic forward planning framework. This Government, on the other hand, have provided for real investment in the road improvement programme. The 1983 and 1984 provisions for road improvements represented increases of 93 per cent and 98 per cent respectively, in real terms, on the Fianna Fáil provision in 1980.
Early in 1984 a review of the 1979 road plan was completed by my Department, taking into account the experience of the plan's operation since 1980, the effects of the serious under-financing of the programme from the start and the priority to be accorded to the major improvement projects outlined in the plan which had not yet been undertaken. This review concluded that while the road needs identified in the 1979 plan were still real and urgent, a considerable additional financial commitment was required. The review was considered by the Government and formed the basis for the first firm multi-annual financial commitment for road development announced in the national plan.
Nowhere is this Government's commitment to the building industry more evident than in their decisions in relation to road improvements. In the national plan, the Government not only introduced the concept of multi-annual financing but also indicated their intention to increase substantially State investment in improvement works each year from 1985 to 1987. 1985 is the first year of our national plan and we have fully honoured our commitment to roads. The provision of £125 million for improvement work in 1985 represents an increase of 23 per cent or 17 per cent in real terms, on the 1984 provision. The 1986 provision will be increased to £140 million and by 1987 the annual provision of £155 million will be 53 per cent greater than the 1984 figure. In fact, the total provision for the period will be 10 per cent greater in real terms, than the target set for the period in the 1979 plan.
Not only do we now have, for the first time, a firm financial commitment for three years, but the level of investment will be far in excess of anything provided by previous Governments. It will enable the most ambitious roads programme ever undertaken in this country to get underway immediately. Details of the programme of major improvement projects to be undertaken during the three year period and beyond were set out in the new road plan, "Policy and Planning Framework for Roads", which was published on 29 January. In addition to the planned expenditure on road improvements, the new plan includes an additional three year commitment of £89 million for road maintenance, bringing total State expenditure to £509 million by 1987. It is expected that this level of expenditure will provide an additional 1,100 direct jobs over the period, together with an annual increase in spin-off employment of 400.
The recently published Policy and Planning Framework also provides, as its title suggests, a clear and definitive statement of road development policy and thereby provides a framework for the activities of local authorities, the building industry and potential private investment.
While State investment in roads is being increased considerably the Government are aware that the availability of additional finance could speed up the programme of priority projects and allow them to be constructed earlier than would otherwise be possible. For this reason the Government have made clear in the Policy and Planning Framework document that they welcome private sector investment in projects coming within the programme whether through tolls or loan finance. I wish to emphasise again that any funds invested by the private sector or obtained through tolling by local authorities, will be in addition to rather than in substitution for State investment.
The Government have already indicated that one such proposal has been examined and is generally acceptable. In accordance with my commitment at the launching of the new road plan, my Department have this week issued details of projects considered suitable for tolling to commercial and financial interests. The list is not meant to be exhaustive and any realistic proposals put forward will be carefully considered and evaluated in conjuction with the relevant local authorities.
This Government have approached the roads problem in a practical and realistic way. For the first time local authorities, the building industry, potential private investors and transport interests can clearly see the road ahead; they have a firm medium term commitment of State finance and a clear statement of policy to provide a planning framework for investment. We can all look to the future of the road development programme with confidence.
I should like now to speak about sanitary services. Since this Government took office considerable progress has been made in bringing sanitary service schemes to tender and construction stage, especially in 1983 and 1984 when the value of schemes approved totalled just £200 million. This compares very favourably with the previous two years 1981 and 1982 when the total value of schemes approved was less than £90 million.
In 1984 alone I was able to approve the release of 102 separate schemes with an overall total value of £101 million which was a record for any one year and this cleared the backlog of schemes that were technically in order and awaiting release in my Department. The release of these schemes, some of which are already under construction, will ensure that local authorities have sufficient work on hands to continue the significant progress that has been made in bringing schemes to construction in recent years. It will also allow local authorities to advance other proposed schemes which are at various stages of planning.
The value of tenders approved during 1981 and 1982 was less than £80 million. This compares with over £120 million in tenders approved by my predecessor, the Tánaiste, and myself. These approvals show quite clearly the substantial progress made in bringing schemes to construction over the past two years. These releases have brought the value of the programme at tender and construction stages to £450 million as compared with £300 million at the end of 1982.
The capital investment in the sanitary services programme over the past two years in respect of public schemes, grants to schemes in the western package and grants for group water schemes was £193.2 million and this shows a considerable increase in comparison with the provision for the previous two years which totalled £165.3 million. The overall additional capital investment made available by this Government during these periods totals £28.65 million. This increase in capital investment must be considered very substantial especially in the light of the economic situation prevailing and shows our commitment to ensuring that sufficient capital investment is made available to local authorities and individual groups to ensure that progress is made in the actual construction of schemes.
The provision in the Government's plan Building on Reality will allow many other schemes to be completed and get to construction stage as soon as possible and will allow for the progress that has been made to date to be maintained. It is essential that adequate resources are made available to meet housing and industrial development requirements as well as increases in demands as a result of increased urbanisation and the national plan will ensure that this is done. The total capital investment over the next three years has been set at nearly £280 million. This substantial capital investment will allow for considerable improvements to be made in existing services and bring supplies to others who have no supplies at present. It will also allow me to approve high priority schemes that are presently at various stages of planning.
The sanitary services programme not only provides the necessary water and sewerage systems to encourage development but also provides additional facilities for fire fighting and abatement of pollution. The releases over the past two years have allowed for some of the recommendations of the Water Pollution Advisory Council to be implemented and I have no doubt that further progress will be made in this area during the course of the plan. Progress on the programme continues at a satisfactory level with 870 schemes serving about 37,000 houses and associated farms in progress and 140 other schemes at design stage which could serve about 7,200 houses and associated farms.
On local authority housing there can be no doubt about the Government's commitment to the local authority housing construction programme. The programme in 1984 accounted for the completion of about 7,000 houses which is the highest total number of completions in any year since 1976. In that year under another Coalition Government local authority house completions totalled 7,263 following an all time record of 8,794 in 1975. The average monthly employment during the year was about 6,800 which was about 400 higher than the corresponding figure for 1983. To me personally it is an extremely satisfactory feature of the programme to have such a source of steady well-spread employment. With the policy as set out in the national plan of maintaining output at an even level the local authority programme will continue to have a steadying influence on employment in the building industry.
While the healthy state of the local authority house construction is largely due to the increased capital being provided, the measures introduced by the Government to ensure the maximum return on State investment have also been a significant factor. While it is too early at this stage to quantify the full effects of the cost control procedures since the bulk of schemes to which they have been applied are still under construction, nevertheless they have provided my Department with a framework within which we can ensure that the best value for money is being obtained every time a housing scheme is initiated.
Because there has been some confusion about what is involved in house procedures, I should like to emphasise that they do not involve any recourse to low cost methods. I do not think there can be a public representative who is not too well aware of these "so called" low cost methods introduced in the bad old days of the late sixties and early seventies which, in the end, turned out to be not so low cost after all. They are still being paid for and, indeed, are absorbing some of the scarce capital which would otherwise be spent on new construction.
The procedures now in operation are geared to achieve more efficient financial management of the programme both at local and central level. They are, as I have said, aimed at getting the best value for money and in this way in the long term can benefit not only the finances of the State but also the finances of the builders who operate the housing construction programme. The national economic plan also contains several other initiatives that can only boost activity in the private construction sector.
Under the arrangements for joint venture housing, local authorities can provide sites under licence to private contractors for the construction of modestly priced houses for sale to selected purchasers. While this scheme has been reasonably successful to date, it has yet to realise anything like its full potential. In line with the commitment in the national plan to promote joint venture housing my Department have recently written to all housing authorities to assess fully the potential for joint venture housing schemes in their areas and where practicable to enter into arrangements with builders to make land available for this purpose. They were also informed that as an added incentive to those who were otherwise depending on the local authorities for housing a site subsidy of up to £1,000 or one third of the site cost would be extended to participants in joint venture housing schemes who were approved applicants for local authority housing or who were tenants or sub-tenants of local authority houses but did not qualify for the new £5,000 grant. This incentive is, of course, additional to the new house grant and the £3,000 mortgage subsidy which is payable to first time private house purchasers.
Demands from the industry and from Members of the Opposition that local authorities should give land to builders for joint venture schemes at nominal cost continue to be made. The situation in Britain is quoted in support of this and it has been brought to my attention on numerous occasions how successful the joint venture arrangement has been in Britain. However, the situation there is completely different inasmuch as there has been a deliberate policy by the Government there to run down the local authority house building programme. As the land is no longer needed for local authority housing it can be disposed of at nominal cost to builders who will provide houses for people who would otherwise look to their local authority for housing. While this may appear to be a very good, sensible way of dealing with a housing problem it can have the effect of leaving people who are in need of housing, and who cannot afford to pay, out in the cold. I do not think this would be acceptable here and for this reason I cannot see that it would be justified to have local authorities disposing of land at nominal prices to house people who can afford to pay while others who cannot afford to pay are in greater need.
The Government have also decided that where there are opportunities to do so economically, and to the advantage of prospective tenants, local authorities should be able to buy private houses. One of the objects of this arrangement is to create a better social mix but as the main emphasis of the scheme is geared to the purchase of newly built houses this could give a considerable boost to the private house builder. I would hope that as the benefits of the arrangement become clearer to local authorities and builders a substantial number of such houses are acquired by local authorities to add to their existing stock.
I would now like to look briefly at the future prospect for the industry given the fact that it has put the worst behind it and taking account of the Government's commitment to keep their financial support at the highest practicable level; the national plan in Building on Reality and its policies in relation to the industry; the recent budget which is designed to leave more spending power with people and bring about an improvement in private demand and, as a consequence, private investment and the recommendations of the Sectoral Development Committee and the Sectoral Consultative Committee.
