Dáil Éireann debate -
Wednesday, 8 Oct 1997

Vol. 481 No. 2

Written Answers. - Construction Industry.

Ruairí Quinn

Question:

120 Mr. Quinn asked the Minister for the Environment and Local Government if his attention has been drawn to the concerns expressed by the construction industry in relation to the prospects for the industry in 1998 due to the excessive amount of demand; the action, if any, he proposes to take to meet the industry's concerns; and if he will make a statement on the matter. [15701/97]

Minister for the Environment and Local Government (Mr. Dempsey)

The Construction Industry Council, which is the principal representative body for the construction industry, has not expressed any concern that there may be excessive construction demand in 1998. The Construction Industry Council's membership is made up of the Association of Consulting Engineers of Ireland (ACEI), the Building Materials Federation (BMF-IBEC), the Construction Industry Federation (CIF), the Institution of Engineers of Ireland (IEI), the Royal Institute of the Architects of Ireland (RIAI) and the Society of Chartered Surveyors (SCS). In fact, one Construction Industry Council member — the CIF — has expressed reservations on the Government's intention to limit increases in public capital programme spending on construction to an average of 5 per cent per annum, in the period up to 1999. Neither have I received any representations on this subject from the Irish Congress of Trade Unions (ICTU).

The output of the construction industry has grown by 48 per cent over the three-year period 1994-96; and is forecast to grow by at least 8 per cent in 1997. At present, forecasts of growth for 1998 range from 3 per cent to 8.5 per cent. While this cumulative growth in construction output is remarkable in Irish and European terms, it follows a period of recession during the 1980s and early 1990s. The output of the industry only recovered to the peak level of 1981 in 1996; and will exceed it, for the first time, in 1997.

In the absence of growth in construction investment, economic and social development and job creation would be constrained. For example, the resulting drop in the supply of new houses would put further upward pressure on house prices. My Department has recently initiated a consultancy study of the factors giving rise to increased house prices; and how these factors are likely to operate in the future. While there are recent reports of significant increases in tender prices for general contracting, this follows a period when such prices were highly competitive relative to trends in building costs. Tender prices for civil engineering projects, e.g. roads and water services, remain competitive.

I acknowledge that there are signs that the remarkable growth in construction activity is beginning to put a strain on capacity — which, if ignored, could fuel increases in building costs and prices. For example, there are localised shortages of certain categories of skilled building workers — notably blocklayers and bricklayers. The Construction Industry Federation have advertised in British newspapers encouraging migrant Irish building craftspersons to return. These advertisements have elicited about 3,500 responses which are being matched with vacancies notified by building employers.

There are reports of emerging shortages of suitably zoned and serviced land for development. My Department intends, with the co-operation of local authorities, to improve data on the availability of zoned and serviced land — with the objective of ensuring that any emerging scarcity is identified and addressed in good time.

Overall, my approach is to welcome and accommodate the growth in construction demand by addressing any emerging supply side constraints in partnership with the industry — rather than seeking to limit the development of the industry in a way that could damage the employment prospects of the 130,000 persons who work in it; and curtail Ireland's capacity for future economic growth, which is partly dependent on improving the quantity and quality of our infrastructure.