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Seanad Éireann debate -
Thursday, 17 Apr 1986

Vol. 112 No. 2

Fourth Report of the Joint Committee on Small Businesses—Construction: Motion.

I move:

That Seanad Éireann takes note of the Fourth Report of the Joint Committee on Small Businesses — Construction.

In proposing the motion that the Seanad takes note of the fourth report of the Joint Committee on Small Businesses dealing specifically with construction, I want to welcome the report and to put it before the House for discussion. I wish to compliment the members of the committee for the excellent work they have been doing. They have already dealt with, in the course of their deliberations, various other headings involving the manufacturing industry, the retail and distribution sector, the tourism, catering and leisure industry and now they are dealing with what is one of the most important elements in business — the construction industry. The numbers of people employed in this industry are broken down on the introductory page to the report: building and construction, 84,000 people; private consultancy firms, 5,500 people; builders providers, 4,500 people; plant hire, 700 people; and building materials, that is the builders' providers, 23,300. That is a total of 118,000 people who are directly involved. There is no doubt in the mind of any Member of this House or in anybody's mind about the spin-off effects of a buoyant construction industry.

The report also identifies what is commonly known as the recession in the construction industry. There is no doubt that there is an element of recession particularly in the private sector of the building industry. This has been created by depressed demand in the private sector for building, whether of new houses, new factories or anything else. Steps that have been taken in recent times by the Government particularly by way of grants and assistance which stimulate activity in the building sector are to be welcomed. We are aware of the enthusiasm with which the various new grants have been taken up by applicants.

The influence of the State on the construction industry is extremely important. The report identifies it as being huge. There is no doubt that, in the construction of hospitals, State buildings, offices, Garda stations, or in the local authority building area, the State gives most assistance to the building industry. This is generally not recognised. Whereas the building industry as a whole is going through a problem period, the public building programme has escalated. The capital expenditure made available in this area is, to say the least, astronomical. That is how it should be, because there are very welcome developments in the public sector building programme.

As the report points out, we must not be involved with too many white elephants. The building of hospitals and the improvements to existing hospitals have generated much activity in the building industry. I want to refer to hospitals and local authorities because I have some experience in both areas. The hospital building programme over the past four or five years, in spite of what is perceived by the public, has been tremendous. There have been major inputs into the area of hospitals. Total expenditure in the health area alone has risen from £55 million in 1984 to a projected £61 million in 1987. These are in line with the recommendations of the national hospital plan. Real expenditure on county hospitals has increased by 66 per cent on regional hospitals and by 40 per cent on voluntary and other hospitals. The increase was 34 per cent between 1977 and 1982. These have been tremendous developments in this area. Certainly the tag of white elephant could not be applied.

For a number of years Government Departments have been planning a rolling budget over a period of four or five years. There should be continuity of particular projects particularly in the public building area. The Ardkeen regional hospital development project has been in the pipeline for a long number of years. As chairman of that board I presented the plans to the then Minister for Health, Deputy Haughey. It has evolved slowly over the years. The tenders are now with the Minister and his Department and approval should be forthcoming for what is a £32 million project. One can imagine the impact on the construction industry of a major project like that in a region which is in need of stimulus, particularly with the high unemployment rates in Waterford, Carrick-on-Suir and other surrounding areas. I would look forward to a policy where, once somebody says he will build a hospital that he would continue with that programme until the hospital has reached completion.

In regard to local government, particularly in the area of local authority house building, this Government, and indeed previous Governments, have done major work. The improvements that have taken place and the quality of the houses are second to none. The quality of houses now being produced by local authorities are of a standard which is higher than any standard being achieved in the private sector, and rightly so. It is appropriate that our people should have the facility to avail of the best possible housing standard. They should have an opportunity to purchase those houses at some future date. I ask the Minister and his Department to come to an agreement with NATO and other people regarding the initiation of a new purchase scheme which will allow tenants to buy their own houses. I commend the Department on the facilities they made available to local authority tenants to get grants to buy or build houses elsewhere, thereby releasing much-needed stock into the hands of the local authorities. In this way they can come to grips with their housing lists. If anybody looks dispassionately at the figures in the house building area, and at local authority house building in particular, he will see that we have made tremendous inroads into housing people. As a member of a local authority I remember not so long ago when people were living in motor cars and other shelters because the local authority were not in a position to provide them with housing. At present in Dublin, and in Tallaght in particular, houses are left idle because people availed of the £5,000 grants, special category loans, SDA loans and HFA loans to rebuild. The local authority for some reason are not in a position to relet those houses quickly.

Nobody has answered the question being posed by the media and by Gay Byrne this morning on his radio programme about the vandalism that is going on in vacant local authority houses. We understand that these houses in Tallaght cost around £30,000 each to build. The houses which we have difficulty in allocating to people are I presume of an acceptable standard. It is a shame that local authority houses are allowed to be vandalised when there are so many people on the housing list in need of housing.

Last year's provision of local authority houses, over 7,000, was the highest ever reached by the State. My own county in particular has benefitted. The Government are to be complimented on that. There are problems in the private sector of the construction industry which will have to be tackled by way of further incentives if the industry is to meet the challenge.

There has been a debate about the levels of taxation and the levels of VAT on various materials and so on. If that is the sole disincentive the Department should look at it. But I doubt very much that is the real reason. The real reason is that one can always reach saturation point in the provision of private housing. Naturally there must be a limit to the demand that exists in the private sector, particularly as the local authorities are so active in the provision of public housing. We have a responsibility, as a House of the Oireachtas, to look at the problem. I want to compliment the members of this committee for producing such a comprehensive report which deals with all the areas of public and private building. It states that urgent attention should be paid to the problems in the private sector of this industry.

Senator Lynch is vice-chairman of the committee and he will speak at length on this report and elaborate further on it. It would be remiss of me if I did not compliment the committee on their work and commend their report to the House.

I wish to thank Senator Ferris for his kind remarks about the committee. This is a very fine committee which takes its job very seriously. Our report on construction was published at the end of last November, half way through a decade which has seen our construction industry in a state of constant decline and depression. Even in its present depressed condition construction is still a vital component of our economy. It accounts for just over 10 per cent of GDP. It employs between 110,000 and 120,000 people in direct building, professional services, builders providers and material manufacturing. In our report we chronicled the decline in construction over recent years, as far back as 1984, resulting in 25,000 job losses, a growth in the black economy and a disbandment of experienced design teams. I hope that the Acting Chairman, Senator Fitzsimons, will contribute to this debate as he has some experience with regard to what has happened to design teams.

The decline continued in 1985 to the tune of 4 per cent to 5 per cent. I would like to be able to say that the decline in construction has now bottomed out and that growth is again on an upward patch. Sadly, that is not the case. Although predictions of various economic commentators made late last year from a decline of 1 per cent to a growth of 2 per cent in construction for 1986, it now seems that there could be a decline of up to 5 per cent. Cement sales for the first three months of this year certainly do not give much hope. I come from an area which is very much involved in producing cement and materials for the building industry.

As a committee we considered many construction related issues but two priorities emerged. Firstly, the vital need to resume growth, and secondly, the need to ensure some sort of stability in demand. The first priority is self-evident against the background of recession which I have outlined. The second priority is equally important but perhaps less readily understood. Construction by its nature will always have a large element of volatility and to pretend otherwise would be foolish. Construction as a proportion of GDP nearly doubled and halved again in as many years. Fluctuations in demand of such an extreme nature are unreasonable and take away the possibility of any planning framework for firms in this sector. These extremes can be mitigated particularly when we remember that the State accounts for ultimately 70 per cent of construction demand due to the collapse of the private investment sector. However, due to continuing infrastructural investment, the State component is unlikely to fall below 50 per cent of demand for construction. In this context I urge the adaption of recommendation 2.3 of our report, which states:

The State should endeavour to ensure consistency in the proportion of GDP taken up by construction. A target range of 12 per cent to 14 per cent of GDP on an ongoing basis is suggested as appropriate to Ireland's circumstances.

At this point I would like to express my disappointment at the lack of progress on the implementation of our first recommendation for a development council in the sector. I quote from our report:

We urge the establishment forthwith of the proposed construction industry development council as recommended by the sectoral development and sectoral consultative reports on the construction industry. The council, which would be representative of Government, builders, trade unions and the professions, should be provided with adequate staffing and budgets to ensure that it will be able to play a pivotal role in the future development of the construction sector. It would provide continuous assessment of performance by the sector for both Government and sectoral interests, together with forecasts of output and recommendations for construction policy.

The original recommendation was made by the sectoral consultative commitee as far back as 1984 and it is a matter for regret that nothing has happened. If ever there was a sector which needed a forum for all relevant interests, including the State, it is construction.

With regard to private house building, there is a crisis of the first magnitude with terrible economic and social implications. In 1985 the number of private or non-local authority house completions came to 17,000, 5.3 per cent fewer than the previous year. The 5.3 per cent drop in private house completions for last year is serious but the underlying pattern is even worse. Private house completions have fallen considerably since 1981, when they totalled over 23,000, and it is getting worse. The 5.3 per cent decline in 1985 masked the fact that new private house completions in the second six months of 1985 were 15.8 per cent lower than the same period of 1984. This is disastrous. I believe we are witnessing a total collapse of private house building. Housing is a primary social need. Provision of a high level of housing is vital in a country with our population structure. In retrospect people will see the doubling of VAT to 10 per cent on construction as a catastropic decision, particularly for private house building.

Paragraph 1.7 of the report recommends a low VAT rate of 5 per cent for all labour intensive services, including construction, as a first step to restoring the position. Our committee were so perturbed at what they discovered during the compilation of this report that we made a special request to the Minister for Finance of the day, Deputy Alan Dukes, to come before our committee during the holiday period in August 1985, which he did. I chaired that meeting. The main purpose was to try to pursuade the Minister to reduce that VAT rate level. While the Minister was sympathetic to our request, and indeed to our demands, he failed to do so. He said that he could not bring in that kind of change in a budget that had been passed by both Houses of the Oireachtas. There would be a shortfall, which in his estimation was much higher than we had worked out, with the hopeful development of growth in the building industry had the Minister acceded to our request.

At present the Members of the Dáil are debating the budget which has been changed many times since it was first drafted. In our work we place considerable emphasis on the maintenance and renovation of our existing housing stock and of our more historic buildings, issues which are linked with urban renewal. I welcome the Minister's urban renewal Bill. I understand that the Bill was in the process of being drafted as far back as 1982. Indeed, it is with regret that I say four years have been wasted. This development could be under way had the Bill been ready sooner. This Bill should be expanded to cover urban areas of our smaller towns. There are many new housing complexes and shopping centres in the outer hinterlands of the towns. People are inclined to use these with the result that the traditional shopping centres are being run down through a shortfall in business and lack of renewal of the buildings.

This country has not got a proper conference centre to cater for international conferences. It is a matter of regret that no steps have been taken to provide such a conference centre. It would be a great boon to our tourist industry. Being situatied as we are with access by both air and sea, I feel that Ireland is an ideal centre for major international conferences.

Morning after morning, as I drive in from the Phoenix Park and up by the Liffey, I pass by two so-called civic offices which have been erected on Wood Quay. I hope that this type of development will never again be allowed to happen not alone in this city but in this country. This type of development has been described as fortress architecture. These monstrosities were imposed on the city, which is my capital city and of which I am very proud. They are a monumental insult to one of Ireland's most historic sites. They stand with threatening ferocity and architectural vulgarity in the shadow of Christ Church Cathedral. It is a scandal that that type of development was allowed to take place in our city. I know it was not the Minister's fault that it happened. The type of development that the Minister proposes in the Urban Renewal Development Bill is a right and proper mixture especially with regard to the development of the Custom House.

The Joint Committee on Small Businesses has 16 members — nine Deputies and seven Senators. Fourteen of our members, including Senator Daly who is here now, represent various parts of the country outside of Dublin. We come to Dublin by different routes and we are increasingly anxious with regard to the deterioration of the city. The dereliction along the quays is one case. There is an urgent job to be done in averting this type of decay and dereliction. There are sound, economic and social reasons for doing so. Urban decay breeds crime and vandalism which in turn accelerates the process of decay. It is a vicious circle of social decline. Senator Ferris mentioned this type of social decline when he was speaking earlier on. It is sad if this type of social decline is allowed to creep into our housing estates.

The economic aspect is equally serious. For example, a small country that is serious about developing its tourism industry must maintain a visually and environmentally attractive capital city, particularly a city as well known as Dublin. The rehabilitation of Dublin would be a major boost for small builders. In this context, as I mentioned before, the designation of the Port and Docks Board site near the Custom House, a substantial portion of the quays and the Georgian north inner city centre and Mountjoy Square is to be welcomed. However, while these incentives are very generous, two further measures are required to assist the rehabilitation of Mountjoy Square and adjacent Georgian streets: one, the State as by far the largest renter of office space, must play an active role in taking up office space in rehabilitated buildings in this areas. Recommendation 3.4 of our report is very relevant here. I quote that recommendation:

That the State as a renter of office space should make known that competitively priced refurbished office space of appropriate quality will receive priority in considering future Public Service office space requirements.

Number two, Georgian houses have a floor area of 6,000 or 7,000 sq ft. They are about 200 years old. In the more run down areas of Dublin some of these houses are very dilapidated. To further encourage the rehabilitation — often the very expensive rehabilitation — of these buildings, I would ask the Government to adopt recommendations 3.1 of our report with regard to the 50 per cent refurbishing grant subject to a maximum of £10,000 for listed buildings and buildings in designated conservation areas. This scheme would be in addition to the incentives already announced. I believe that such a scheme is necessary both for the economic life of the city centre and to encourage more construction work.

With regard to the new scheme of home improvement grants, I think we all welcome this scheme and I wish it every success. Many of us are concerned with complaints of the degree of chaos in the administration of the scheme, including inspection, which I hope will be put right very shortly. I know that the Minister in his reply will probably say that many councillors, Senators and Deputies in this House and in the other House and in county council chambers have complained with regard to this prior inspection clause. Now the Minister has removed that clause. You can quite rightly say that we are the people who asked for it, but the reason we asked for the removal of that clause is a different matter from what we are complaining about now.

The reason that clause was put there was because no Government could be expected to pay grant money out of the public purse to finance a bathroom, toilet or bedroom that was built ten or 12 years ago if a grant was not recorded in the Department. What we felt sore and sad and sorry about was the fact that, no matter how well you advertise, there are people who will start this type of development in the hope of getting a grant without consulting their local authority, the Department of the Environment or their public representative. They came to us and to councillors and ask us to fill in application forms for a particular type of grant. It could be a bedroom extension or the provision of bathroom and toilet facilities. The prior inspection clause would rule those people out of a grant. If they had one row of blocks down at that stage, they would not qualify for a grant. The inspector from the Department could not proceed to process their particular claim. You do not build a bathroom if you do not need it; you do not provide toilet or sewerage facilities unless they are necessary. That is the point that we felt sore about. We felt that where people had started this type of work the prior inspection clause should be waived in that instance. The problem now is that with this new type of grant system in operation at present most people who have become interested in it are people who look for the pre-1940 part of the grant. The refurbishing of those houses to bring them up to a proper standard, such as the Department would wish them to be, might entail a lot of expense and work. I am talking about replacement of roofs and insulation and work on the fabric of the house plus replacing windows, doors, plastering of walls and laying of floors, etc. A person could be spending anything up to £20,000.

The grants are generous, but you will find that many of these people are people who have not got the capacity to repay a loan to a building society, a bank or a local authority. This particular type of applicant should know before they commence the work the amount of grant that is available. That is where the chaos, as far as I am concerned, exists in the Department. I know that the Department were flooded with grant applications. It happened before: I think it was with the new house grant scheme introduced by our own party. There were so many applicants that the Department had not got the staff to cope with them. I know that the Minister has appointed extra inspectors in this case but this is not enough I am sorry to say, because the new house grant scheme is being affected by it. There is a delay with the inspections and a delay in processing and, most important of all, there is a delay in payment of new house grants, delays of up to ten or 12 weeks after inspection. That is the time when the newly-married couple, with local authority or finance agency load, need that extra money to tide them over for the first six months.

As vice-chairman of the committee, I must also express some regret that the Government announcement of its schemes was made last October at a time when the Government knew that our committee was looking at these very issues and was due to report within a very short time. I believe the Government could have waited to consider our recommendations and still have announced a package in good time for the spring and summer months when most construction activity takes place.

I want to place on record, with no blame attributed to the Minister, that a certain amount of resentment was felt by our committee when the Government hijacked this grant scheme which was the brain child of the Oireachtas Joint Committee on Small Businesses and announced it prior to the publication of our report. It is a good scheme, but it is almost identical with the scheme that we had recommended in our report. It would have given impetus to our report, it would have given great credibility to the Oireachtas joint committee system that operates at present where Members of all parties of both Houses sit down together and work out reports on various aspects of various industries and try collectively to eradicate many of the problems and social evils that exist in our community.

If that system is to work two things, in my opinion, are very necessary. This example of the grant scheme should not be repeated. The committee reports should be published and debated in this House and in the Dáil and they should be taken seriously. The recommendations of the Oireachtas Joint Committee should be given a chance to work. If this Oireachtas Joint Committee system is to make progress they this of incident should not happen again. I am not blaming the Minister; I am blaming the Government for doing it and all Members of all parties feel very sore about it.

I ask the Government to show a little more flexibility in home improvements for the handicapped by implementing paragraph 3.7 of our report, I personally pushed this particular aspect with regard to the handicapped. I quote the recommendation:

With regard to the recently announced home improvement grants scheme we recommenmd that, in the case of hardship, the maximum grant limit of two-thirds of building costs applicable under the Disabled Persons Grants Scheme be increased to 80 per cent, subject to the existing requirements of medical supervision.

It was I who proposed this recommendation based on my own experience as a member of a local authority.

Twenty per cent of the population of this country — I am talking mostly about rural Ireland — have not got the necessary basic facilities — water and toilet facilities. As we reach the end of the twentieth century surely this is a terrible situation that we find ourselves in. Many people who would be regarded as eligible for disabled persons' reconstruction grants are again people unable to repay loans and have not got the income or salary to repay loans. I know that members of their families have or should have a responsibility to help out in these situations. But, sadly, I think we must all agree that we have come to an age where the support that should be given by members of families and relatives of families with disabled people is on the decline. That is sad. When we have so many societies working in the interest of the handicapped and the sick and the old, it is sad that in many cases families do not live up to their responsibilities. But that does not get away from the fact that 20 per cent of the people in this country, especially in rural Ireland, have not got these basic facilities. That is why I put in that recommendation. If we remedied this position as a once-off job and made 1987 a national toilets year and implemented that recommendation, the Minister would then go down in history as a Minister with compassion for this sector, the neglected members of our community.

I read in The Irish Press recently that the number of companies closing down either through liquidation or receivership jumped dramatically from 136 in 1979 to 574 last year. All the indications are that a high level of business failures will continue. I feel that these recorded business failures understate the true picture. For example, how many firms have failed in situations where the banks and other creditors decided that the proceeds from a receivership would not even cover the receiver's expenses?

Again, how many sole traders here quietly closed their doors in recent years, people who have simply given up? In five or six years we have seen a fourfold increase in the number of annual recorded liquidations and receiverships. These figures represent only the tip of the iceberg.

Our committee have published four sectoral reports to date. The first one was on manufacturing industry, the second on retail and distribution, the third on tourism, catering and leisure, and now this fourth report on construction. The first three reports we found all related in one way or another to the construction industry. Our latest report on insurance and the problems of insurance is listed for debate in this House, and the sooner it comes here for debate the better because the problems with insurance in relation to the construction industry are horrendous and have a direct and very bad effect on the industry.

Our reports were published on average at six-monthly intervals during 1984 and 1985. I believe these reports accurately reflect the mood of our small firms today. I will give a brief quotation from a report that conveys the mood I am trying to express here today.

A deep sense of depression coupled with a very low level of business confidence is widespread among those operating within this sector reflecting the difficult trading conditions prevailing. The traditional wholesaler and retailer are being decimated by the pincer effect of large multiple stores on one side and on the other by casual traders and those operating in the black economy. These changes are dramatically aggravated by an acute, economic recession and high taxation rates.

I am quoting from one of our reports. Figures with regard to the construction industry showing the changed relationship of construction to gross domestic product do not adequately convey the trauma to which the sector has been subjected in recent years. The effects of the continuing downward shift in demand for construction include unemployment at 44,500 in 1984, or one jobless person for each two in the sector and representing 25,000 job losses alone since 1980; the growth in the black economy, which is more a feature of constructions than any other sector of the economy. Members of the Oireachtas Joint Committee wish to put on record our respect for the Government in putting in the clause which provides that contractors who carry out major works must be registered. Having said that, many members of the committee, many members of local authorities and many Members of this House feel that where a skilled tradesman is unemployed, rather than have to borrow money and stand by and watch a registered contractor carry out the work, grants should be made available under some type of supervision to that type of applicant himself.

We mentioned structural decline right across the whole construction spectrum, including a decline in the average size of contracting firms and the disbandment of experienced design teams. That was the mood for 1984-85. We have to ask ourselves: is the mood for 1986 any different? In our reports we made over 300 recommendations which if implemented, we feel, would transform the face of small businesses in Ireland and would be more relevant to the construction industry than to any other business.

I want to stress here that our recommendations are not a shopping list which would increase the demands on the public purse and consequently the already overburdened taxpayer. I believe that the benefits arising from the implementation of our reports would include a vibrant community of small firms right across the whole business spectrum and a significant shift upwards in the level of employment, which we are all concerned about. It is axiomatic that more new business and more expanding businesses mean many more new jobs and unemployment and the crushing burden of taxation are the two central economic issues in Ireland today.

May I ask the Minister what is the Government's response to our recommendations to our long nights of hard work in subcommittee meetings that began sometimes at 6.30 and went on until 10.30 or 11 o'clock at night, to a committee that sat I thought probably as often or maybe more often, especially if you took subcommittee meetings into account, than any other committee? It is a committee that has a dynamic chairman, Deputy Ivan Yates, and on behalf of the members I express our appreciation of the tremendous work that man has done. One of the finest civil servants in this country I believe, is the secretary Mr. Shane McAuley. We would like to put on record our deep appreciation of the tremendous work that man has done for this country in conjunction with our committee.

It would be wrong of me not to concede that some of our recommendations have been implemented by the Government. They are not many but nonetheless we can be grateful. I acknowledge the implementation of the low VAT rate on such tourism-related services as hotels, restaurants and car, caravan and boat hire compared with the former unsustainable VAT level of 23 per cent. However we see this type of change as only a shifting of deck chairs as far as the overall burden of taxation is concerned. The 23 per cent rate of VAT now jumps to 25 per cent affecting many other services ranging from a traditional area, legal and auctioneering to the new growth area in computer services. A VAT increase from 23 per cent to 25 per cent is a real increase of 8.7 per cent in the VAT burden and that is a serious matter for small firms.

In our report on construction we recommended a low VAT rate of 5 per cent for all labour intensive services including construction. In that report we said as long as there is no distinguishable lower VAT rate for services including construction and related professional services the incentive for black economy operators will be substantial. Small legitimate businesses encounter the consequences of that simple statement every day of the week. Sadly, there was no response to this recommendation in the recent budget.

There are many other recommendations that I could mention which to date have been ignored by the Government and the implementation of which could make such a difference. For our small manufacturing firms we need a more flexible aid package, which we recommended and which simply would include grant approval for secondhand machinery, an option between grants for new employees or for fixed assets, long term repayment loans, much more emphasis on management development with follow-up mechanism within the State agencies.

In 1985 the number of private, non-local authority completions came to 17,000, or 5.3 per cent fewer than the previous year. In our report on regional distribution we asked for an ongoing committee of small business representatives to liaise with the Department of Finance on all tax procedures including forms, appeals procedures, interest charges and the number of VAT rates. In the same report we recommended that each small businessman be provided with a single publication which outlines in simple terms all the regulations with which he must comply in his particular trade. We are saying in essence that the whole legal and administrative environment must become more friendly for the small firm. The lack of Government response to our recommendations here is a real disappointment.

All these areas I mention relate directly to construction. We take pubs and hotels. The traditional family publican at present has to comply with safety and fire regulations which are being very strenuously enforced by the local authorities, health regulations which are also very strenuously enforced by the health boards and, being in the business, I know that the publican is the greatest tax collector in this country. Twenty five per cent of your take straight away goes back to the Government in VAT and over 50 per cent of the remainder is customs and excise. Yet no grant assistance has been made available by any Government at any time for the renovation of family businesses such as these. There is Bord Fáilte grant assistance for hotels but the people who ran the licensed trade down the years, and handled it very well, were the family publicans who were handling the sale of intoxicating liquor. We had none of the problems that we have today as regards drug abuse and alcohol abuse. We are promised a Bill in this House to update the law in that regard and I hope the Government will bring it in in the near future.

Many people relate the total collapse in new private house building to the doubling of VAT on construction in the 1984 budget. I certainly do. In our report on construction we ask the State, which is the major customer in the construction industry, to ensure consistency in the proportion of GDP taken up by construction. We suggested a target rate of 12 to 14 per cent on an ongoing basis, and last year construction fell to an all-time low of approximately 10 per cent of GDP.

I conclude by saying I am glad that the Minister came in here to listen to the Members debate this report. I am sorry it went rather long. I feel that the construction industry is vital to this country. From what I have said it is clear that the whole business environment must change. We cannot afford to be ambiguous in our attitude to small firms. They are our most important engines of growth and employment. The policies for their development are there in black and white and we have provided them in our reports. All that is needed is implementation.

We must, I feel, produce a climate in which business success is applauded, risk taking is encouraged and valued and in which hard work is finally rewarded.

I would like to join with my colleague, Senator Lynch, in paying tribute to the Small Businesses Committee, which is an all-party committee, and the work they have done. He has outlined a number of reports that have been issued. It is not often that I disagree with Senator Lynch but I have to disagree with him about a feeling of resentment that the Government appeared to jump the gun by bringing in the construction grants——

They hi-jacked them.

——before our report, I would say to Senator Lynch and to anybody else concerned that I do not feel any resentment because our main problem in this country as in other countries is unemployment and surely, if the Government move ahead of, instead of after a report with a scheme that creates employment and stimulates the building industry, whatever we would think about somebody jumping the gun, we must all agree that anything that is done to alleviate unemployment is good for the industry.

The construction industry has been through a traumatic time in recent years. Jobs have been lost, firms have closed down and there are many empty factories, office blocks and other vacant premises on the market. While construction will always have peaks and valleys in demand, more so than in many sectors of the economy, the fundamental reason for the present crisis is that it grew too big too quickly in the seventies. If the construction sector reaches a stage where it accounts for nearly one-fifth of the national output of any developed country, as happened here in 1979, there is only one direction for construction to take — a very sharp turn downwards. In future we will have to plan a more stable environment for the construction industry based on real needs rather than on illusions such as (1) that the State will take up to 60 per cent of new office space, as happened in the 1970s; (2) that if the State builds advance factories all over the place manufacturing tenants will automatically follow; (3) that if we build an international airport in lightly populated areas there will be major increases in commercial air traffic. That may be seen in the near future. Apart from the dubious commercial basis for these investment decisions they were also deemed to be good for construction, that a healthy construction industry would, like a rising tide, lift all boats. It does not work like that.

The present state of construction is in part a consequence of these illusions. These remarks are not designed to denigrate construction but merely to put construction in its proper perspective so that it and the economy as a whole may benefit. Our report recognises that the State, which now ultimately finances 70 per cent of construction output, has a role to play in ensuring some relative stability in the sector. In the report we chart the future priorities for the public capital programme as national and regional roads, sanitary services, renovation of existing housing stock and urban renewal, tourism, leisure and community facilities.

A good trunk road infrastructure is an essential and integral part of any part of any developed economy. We neglected the development of our roads for years. We are starting to put that right with the allocations announced in the national plan. We allocated for road improvement in 1985 £125 million, in 1986 £140 million and in 1987 £155 million. We have years of road construction ahead of us. Before we achieve EC standards in recommendation 261 of the report we advise that investment in national and regional routes be maintained at a high level. We also have two recommendations, 61 and 67, designed to encourage private investment in infrastructural projects. Roads should be our primary infrastructural priority. Because we have built over 250,000 new dwellings since 1970 we tend to overlook the fact that we have also 250,000 or so houses that are over 60 years old. We need to conserve our older buildings where this is possible and to renew our decaying town centres. We have published a series of recommendations in this regard, Nos. 31 to 38 of the report. The Government package of 23 October has lessened the impact of our recommendation which we published on the 28 November but I have already dealt with that. Nonetheless I commend our recommendations as an important contribution to urban renewal.

In our third report, which dealt with tourism, catering and leisure, we identified the problems which have caused very poor tourism performance and all the things we need to do to get it right. We need tourism related investment in construction. On page 37 of our report we stated:

There is an urgent need to invest in leisure facilities to meet the needs of both the resident population and tourists. This investment should aim at updating existing facilities to the highest international standards, and providing new facilities in strategic locations to meet the requirements of the market.

Areas of investment would include indoor leisure facilities; restoration of historical buildings and industrial architecture; development of marinas and facilities for pleasure craft users swimming pools.

The south-west is the main tourism region in this country and there is a major regional need for both public and private investment in these areas.

As we have the Minister for the Environment present, I would like to say a few words to him about the Custom House dock area. I believe the work in progress there at the moment is excellent and going in the right direction. However, there is a suggestion I would like to make to him. There is a crying need in this country for an exhibition centre. I was in Glasgow recently where they have built a custom-built exhibition centre in the docklands. They are also providing for a hotel on those lands. The RDS is not suitable for industrial exhibitions because it was not designed for this purpose. I am a member of another body and we run a motor show there every two years. Each year the attendance at the show is increasing. This year it was 106,000. Unfortunately many people have only the weekends to attend these shows. We had 27,000 on the Sunday and I am sure 4,000 or 5,000 were turned away. People queued for a long time to gain admission. It was not safe to allow too many people in at the same time. The result was that many were disappointed. I have no doubt that we could double that attendance if we had accommodation for it. The same would apply to other people. I would like if the Minister would go to Glasgow and have a look at the project over there. It is the nicest building I have seen. I go to motor shows all over Europe. There is a new building in Birmingham which has only been there for two years. The building in Glasgow is custom built and is a beautiful job. I do not think it would be too expensive and it would serve many purposes. It would earn its keep in that the revenue received would cover the costs and it would provide something for this capital city of which we are all so proud. It would give a facility that is badly needed. If the Minister cannot go himself perhaps he could send somebody to have a look at it.

I would like to pay tribute to the chairman and vice-chairman of our committee and all its members, also our very efficient clerk, Mr. Shane McAuley. It is an all-party committee and has worked long hours. Each and every member of that committee is a dedicated member and there has never been any hassle in there. Everybody works, takes their turn and contributes, and there is great attendance.

I am glad to get this opportunity to make a brief contribution on this report. It is a very important report, particularly coming at this time when we have a deep recession in the construction business. I have never seen the situation as bad in my time and people who are longer involved in the construction industry than I am have told me that they never saw the situation as bad. What makes it worse is that in the view of many experienced people there is no light at the end of the tunnel. In spite of what has been said, in spite of improved grants, in spite of many other aids, in the short term we are not going to see any great improvement.

I want to congratulate the chairman and all the members of this committee, a very hard working committee, as has already been said, with a number of reports already debated in this House. This must be the most important of these reports.

I value very highly what Senator Ferris says in this House and I would be in agreement with much of what he said in relation to this report. He referred to the vandalism of new houses. He was referring specifically to the Dublin Corporation area. This is, as I understand it, in relation to the £5,000 special grant for local authority tenant purchasers where they vacate their houses and before a new appointment is made. During the time in which the house is vacant this vandalism takes place. I was one of the many people who welcomed those grants, but there were problems in relation to the grants. That special grant did help considerably. That has been established and nobody will take away from that. One problem is that only the most enterprising people in areas availed of the grants, which perhaps left in some cases a ghetto situation or something bordering on that, in which the less ambitious would be all left together. In all housing situations we should look for a balance. We should never have a situation where we have people of the same classes housed together. I have no doubt that should be a priority. When there is balance there is an incentive for those who are less motivated as regards the environment and as regards landscaping and keeping their property in good shape. This is very well established. In relation to that vandalism something special should be done. There should be an attempt made to reallocate those houses in such a way that there would be no interim period or failing that, special protection should be afforded by the police to those houses during the interim period.

Senator Ferris referred to the high standard of local authority housing. I would agree with him that there has been a great improvement in this area, although the floor area of local authority houses has become smaller. However I would not agree with Senator Ferris that the standard of local authority housing is higher than for the one-off buildings and for the private sector. The very opposite is the case. All the reports from An Foras Forbartha prove quite clearly that in every way that can be considered — the size of the house, the type of materials used, the standard of workmanship — private housing particularly the one-off house, is far superior to any other type of housing.

This Bill gives us an opportunity to discuss in some detail the urban situation, the deplorable situation in the city of Dublin where large areas look as if they had been indiscriminately bombed. In the suburbs and other areas there is ribbon development. Time could be very well spent in discussing this in some detail. Senator Lynch has said we will have the Urban Renewal Bill coming before the House in a relatively short period. This will give us an opportunity to go into the matter in some depth. I certainly look forward to the opportunity to discuss all these aspects and to give a balanced view of the whole situation, which I do not think by and large has been given. While people would rightly deplore and condemn ribbon development and insensitive development and any type of development that would interfere with the environment and the rural situation, nevertheless the causes of those situations should also be considered. The finger of suspicion should not always be pointed at the individuals who build these houses or structures. That is a subject which is referred to peripherally in this report. It is an important subject. It is of such importance that it merits a full debate which will be possible within the terms of the Bill which will come before the House shortly on urban renewal. I will leave it until then to go into that aspect in some detail.

I always find it difficult to decide, when dealing with those reports, whether to take a global overall view or to deal with some sections in detail. It was obvious from Senator Lynch's contribution that he was very well acquainted with all the details of the report, as one would expect from the vice-chairman. There is no need to go over the course that he has already covered. I will take some of the areas with which I am concerned and make some minimal reference to them. It is a comprehensive report and it was an in-depth investigation.

The report concentrates on ways of improving construction demand and performance against a background of deep recession which was acknowledged by the committee. It refers to renovation, maintenance and urban renewal. I will be dealing with that on another occasion. It states that it is clear that Ireland differs from most of Europe in the lack of priority accorded here to the preservation of existing buildings. As a generalisation I would not quibble with that. Nevertheless, in a longer discussion it would certainly bear analysis and taking apart and consideration from different aspects.

The report goes on to give some instances of the emphasis placed on repair and maintenance in other countries. Then it states that in Ireland the situation is entirely different, that there is a tendency here to abandon our existing buildings and rebuild without considering the renovation option. As someone who in very many occasions has had the responsibility of advising people as to what course to take in investing their hard-earned money, I would not be in entire agreement with that statement. Let us take one area which I mentioned before in this House, that is our heritage of thatched houses. It is deplorable that there is no assistance whatever given to the owners of these houses. I remembered mentioning the situation in regard to thatched houses to an individual who was intelligent, caring and in the position of some power and his reaction was: "Bulldoze them, get rid of them all and let the people who live in them come into civilisation and have modern facilities". It is a viewpoint with which quite a few people might agree. I, for one, would disagree with it. On the Bord Fáilte literature we have the thatched house as the emblem of this country. I am sure it serves its purpose in encouraging people to come here. Many of they will be disappointed when they reach our shores. We have still a considerable heritage. We have close on 100 thatched houses in County Meath. Waterford has beautiful thatched houses and also other parts of the country. It is fair to say in relation to thatched houses that a considerable time ago a definite decision was made by the Government not to build thatched houses. When one considers the costs and the hard work in thatching and rethatching, I would not question that decision. That decision was taken anyway. There was no specific encouragement to keep those thatched houses in good repair as opposed to the situation in the North where thatched houses are listed buildings and where special grants are available in order to preserve them. The report hits the nail on the head, particularly in relation to our heritage of thatched houses. Time is passing. When thatched houses are abandoned for a short while the roof becomes damp and takes in the rain. It becomes very heavy. The structural members of the roof are unable to support the heavy load. In a short time there is a collapse of the roof structure. This is a heritage from the past. It is irreplacable. We can, of course, build modern thatched houses, but they would be spurious. We have this heritage where people lived, where people are still prepared to live with whatever restrictions are there. I believe, having made a survey of the thatched houses of County Meath, that a very special type of people live in those thatched houses, which is more important than the buildings themselves.

This is a loss which can never be restored. There are restored thatched houses in different places, which of course have their use as museum pieces, but in the actual situations where there are people living in those buildings a special grant should be available, considering that to have the roof of the smallest thatched house rethatched costs £2,000 plus. I would agree with the report in that respect.

Once again I am making a special plea for our heritage of thatched houses. All things considered the money expended on them would be very well invested. The report also states that the members accepted that in some cases the correct thing to do is to demolish and build anew rather than rehabilitate, for example when the cost of structural repairs on factors such as dry rot, damp proofing, damp proof coursing and areas obsolescence would result in the cost of rehabilitation exceeding the value of the property. There are other areas too. You can get a building in reasonably good shape which would need renovation in order to increase the room sizes. In the Congested District Board Cottages, the old county council cottages or the Board of Guardians Cottages, the Land Commission buildings, in all of these the room areas were much smaller than the areas which would be required nowadays. There is a considerable problem about them.

Indeed in my experience, and I have been responsible for the renovation and extension of many county council cottages, I have never seen a successful conversion. It is an adaptation. The houses are too narrow for two rooms in the width of the house. In circumstances like that what happens when you have a very beautiful old county council cottage which cannot be condemned for its state of repair, but which is much too small? The average county council cottage from the past and the Congested Districts Board cottage would average under 600 square feet, whereas the maximum floor limit for a bungalow under the grant regulations is 125 square metres or 1,346 square feet. In circumstances like that what should be done? Referring of course to the problem of damp coursing which many of the old buildings did not have, dry rot can be a considerable problem. All these things must be taken into consideration. In really condemning any situation it should be clearly seen that the circumstances of that case might make it necessary to bring about a decision which would lead to the demolition of a building.

Thatched houses and small cottages look very quaint and beautiful to the passer-by, to the priest driving in his car or to the doctor or the tourist, but if we should we put ourselves in the position of the people who live in those houses and those conditions, not very many of those people who admire them and rightly admire them would care to live in them and suffer the restrictions which would be imposed on them by living in those houses.

Sitting suspended at 12.30 p.m. and resumed at 2 p.m.

The main thrust of what I wanted to say I have said it in relation to thatched houses and the main plea I wanted to make was in relation to thatched houses. I am disappointed to some extent that thatched houses were not specifically mentioned in the report. They are important enough, as part of our heritage, to warrant it, particularly as the report did refer specifically to tourism potential in this regard. I have an unusual interest in visiting old graveyards and reading the tombstones and in the inscriptions on these tombstones it is very easy to read a précis of the history of the people in the families buried in those cemeteries. They are always very interesting, but at the same time I am always conscious that for each individual wealthy person buried there there would be, perhaps, hundreds of people whose families could not afford memorials and I am sure their lives would have been equally interesting and well worth reading about.

The same situation applies with regard to thatched houses. We have people who have championed and spoken in favour of the retention of Georgian and Victorian houses, country houses and town houses and all the other important big buildings; but, like the people buried in the graveyards without any tombstone memorial, the thatched house is equally worth preservation. I make that plea on behalf of the thatched houses.

The report tells us that the preservation of an existing house will often cost less than the construction of a new dwelling and I have dealt with that already. I agree that that may be so. But perhaps in terms of what people want to get out of life and their house it may not be possible to get that with regard to an old house and very often people, in order to extend an old house to get the kind of accommodation they would require, would make it an adjunct to the new building. This is very often undesirable from many points of view. I do not have to go into them at this stage.

The report tells us that the residential aspect of inner urban areas is made up almost entirely of older housing, and an existing infrastructure of roads, sanitary services, schools and shops supports this housing stock but that some of this infrastructure may be in parallel decline with housing. I have pointed out on other occasions that land in the centre of the city is costly and far more costly than land on the periphery in the suburbs.

For that reason it was possible with a certain amount of money to do far more by way of providing houses and housing accommodation for people by building in the suburbs away from the city centre.

Nevertheless, in doing this we have the situation of urban decay. It was a political decision in the first instance — I do not mean a party political decision — that could have some justification. Nevertheless, it was wrong and now there is an attempt being made to right this. We have dereliction in our city and town centres and, of course, as the report says, it affects tourism. One of the things I notice in the few journeys I have made abroad is that the towns are far tidier, that people are far more conscious of keeping their towns tidy than we are. In this respect we should pay a tribute to the Tidy Towns competition and what it has done for this country.

The report tells us, with regard to modern architecture and planning, that the committee was critical of the type of modern architecture represented by the new Civic Offices at Wood Quay and described them as being totally insensitive to and out of harmony with neighbouring historic buildings such as Christ Church Cathedral.

Senator Lynch has specifically dealt with this. I am not going to wrack my brains to try to find appropriate adjectives or metaphorical phrases that would cover it. I would simply say that this is very well covered in the recent treatise by Frank McDonald The Destruction of Dublin which I feel should be compulsory reading for anybody who is interested in the environment and the professionals associated with the environment. It covers all of this in very great detail, sensitively and bravely. I refer to that book in passing and all the good that can come from it. It should be one of the text books in third level educational establishments for the professions involved with the environment.

The report goes on to deal with urban renewal and the schemes which the Government have implemented to help out in this respect. The Urban Renewal Bill will be coming before the House shortly and we can deal with that. The report also deals with the housing reconstruction grants for the improvement of houses. I welcomed those on a number of occasions and I do so again.

Senator Lynch referred to the requirement of prior inspection. On a number of occasions I made a plea to the Minister about this with no results. It is a penal clause. The primary purpose of any improvement grant should be to relate it to the improvement of our housing stock. This has inhibited people in the past and I think it has been used by the Department as a means of avoiding the payment of grants. I say this conscious of the great help and the difficulties the Department have with regard to this area. I say it in a general sense. I think it is wrong. I made a plea for it and the fact that the Minister recently, as Senator Lynch said, sanctioned in the region of 20,000 applications, that these applicants could go ahead without prior inspection. This proves that it is not necessary. If that could be done for 20,000 applications, why could it not be done in a general sense? There could be some restriction by way of reducing the grant or curtailing the grant where a start had been made. A new house can be built and people can be living in it for a year before they apply for the grant and they are still eligible. There is a particular hardship in this area. The Minister said that he was sympathetic in certain circumstances. I accept that but at the end of the day the situation is that many people have lost their grants through starting the work without prior inspection.

With regard to the grants, I made a plea on the Adjournment, to the Minister about the do-it-yourself people. In my view very many of the grants availed of in the past were possible only because the people did most of the work themselves. Even in Britain this is accepted and in the regulations which were published last May "Home Improvement — A New Approach", there is specific provision for the Do it Yourself Builder. It states on page 9, section 41:

Local authorities will still be able to approve assistance for do-it-yourself work where they believe the applicant is competent to carry out the repairs or improvements to a satisfactory standard. DIY work will attract help only towards the cost of materials used.

I ask again if the Government are all that concerned about the improvement of houses. As there is such a need for it why is specific provision not made for people who can do the work themselves? With second level education and with the vocational schools and technical colleges, I think the people who have passed through them are far more competent now to carry out this work themselves than in the past. Yet the Government have specifically brought an end to that. They have said "no, under no circumstances". That is wrong and both of those conditions, the prior inspection and the do-it-yourself builder, should be looked at again. While I have accepted the Minister's intention to take these works out of the black economy, I think there are other ways of doing it. There are other ways of encouraging this work. Nothing from my experience would change my view that both of these conditions are wrong. They are penal.

It would be interesting, too, if the committee had given us some costs with regard to houses. The cost as regards local authority houses are high for the State. The case has been made many times that it would be cheaper to build these houses and hand them over to the people who qualify for local authority houses without the collection of rents or rates or whatever. It would be cheaper to do that. With regard to private houses, I am sure the cost to the State is much the same when we take into consideration the grants, the rebates on loans and so on, and it would be a useful exercise and something I would have liked to see the committee doing.

I would be in favour of the suggested programme of environmental improvement by local authorities by way of planting trees and providing other amenities. Another area which is getting publicity at the moment is litter control. It is very difficult to comprehend that so many people are concerned. This takes up a considerable amount of time on the popular radio programmes at the moment. Litter is thrown along the sides of the main roads, bogs and in cities. People are just not concerned with tidiness. It is difficult to understand it. It is not taught in civic classes in the schools and people are not taught in their own homes to be sensitive with regard to tidiness.

The black economy has been covered in considerable detail and rightly so. There is an extract from a UK magazine which tells us, that home owners are used to two different prices being quoted by builders depending on whether it is a cash job or otherwise. This is a tax evaders' paradise. From my experience I would not concur. I have heard stories of works being carried out by people who are drawing social welfare payments. I have heard a few complaints but I have not witnessed any of them. I believe that in this situation there should be some way of pinpointing the areas where there is a big problem.

The report tells us; "Most significantly, however, firms who engage workers as unregistered subcontractors are not required to have any evidence of the workers' true identity and it is, therefore, possible for a worker to be engaged as a non-registered subcontractor under a fictitious name while drawing Social Welfare Benefits in his own name". I do not believe this can go on on a very large scale. People have their books audited every year. I am sure there must be some way of ensuring that no fictitious names are used. I have some difficulty in believing that this could be carried out on a wide scale. Perhaps that is so on big schemes in urban areas, perhaps, in the city area, but certainly in my experience, and I say this honestly, it is not carried out on a wide scale in rural areas.

The report tells us further that "It is not unusual to have a decorating job, an extension or a re-wiring of a house costing £8,000 or £10,000 and to find that it is not done by a contracting firm at all. It is being done by a couple of lads `on the Labour'. This is what is putting us out of business". This was based on evidence to the committee from the Construction Industry Federation. It goes on to housing, could I say that I would reckon there are as many as 3,000 houses being built through the black economy. I am not sure there could be that many. There must be some basis for this statement. I am not sure if there would be very many jobs costing £8,000 or £10,000 to be carried out "by a couple of the lads". What kind of jobs would they be and where are they being carried out?

With regard to the houses on the black economy, I gathered from the budget speech of the Minister for Finance that it was intended to have the same regulations with regard to new houses that only registered builders would be accepted. Again, in my experience, many of the people who built new houses were able to do so only because they did much of the work themselves. They were in a position to organise the work. They were in a position to order materials. They worked hard and they succeeded in building houses. I hope the same condition will not be brought about as regards new houses as applies at present to improvement works. In the case of houses, usually once off houses, built with the assistance of State grants, the person from whom the house is being built may use direct labour without any deductions for tax, PRSI, or other levies. Again, provision could be made for this.

Some time ago I made the case that the old system of stamping cards was much easier for people who would be in that position. Where people employed labour they could put on the necessary stamps. That should be introduced again in some way to cover all these contributions. The people who build these houses are decent, honest people working hard trying to improve themselves and have a decent home for their families. That is something which the State should encourage and the State should be with them all the way in trying to provide their own houses. The State does not have to do it. Many of them would qualify for local authority houses. It would be a retrograde step if the same condition applied to the new houses as applies to improvement grants at present. I would urge the Minister to ensure that does not happen.

The report then says:

However, the Construction Sector itself could do much more to promote a real awareness in the community of the risks attached to employing "cowboy" builders. The average person's main investment is his dwelling, much more should be done to make him realise the greater risks and real costs of poor workmanship and consequent lack of legal redress.

This is true and very many of those people who would build their own houses would not be conscious of the importance of some structural elements, for example, the foundations, the walls or the roof.

Many of them would be more concerned with finishes, plaster or skimming on walls, something that could be remedied at any time not realising that if something goes wrong with the foundations or walls or roof they have a serious structural problem. Of course, this is important, The building regulations, the Department specification and the inspections by the Department tend to ensure that this does not happen on a large scale.

With regard to Structures, Management and Practice, the report tells us that "ease of entry has always been a feature of Construction". Of course, this is true. In the past it was easy to get into the construction industry. Little capital was needed. We hear of the old days where the building contractor might have been a man with a bicycle and a ladder and half bag of cement on the back. That day has gone. I am not sure that "ease of entry" is the same now as it was then.

The report is opposed to imposing controls on entry to the sector... I, too, would be opposed to very strict controls but I do think that some kind of grading is necessary, some kind of examination where a builder would be able to show that he could build to a certain standard. This is necessary and it would be a different aspect and it could very well be employed. The report goes on further to say that the committee is of the view that:

larger firms employing 30 to 50 and more would be more capable of identifying and responding to new market products, techniques and utimately of developing an export capability.

This is true. At the same time, it would be wrong to overlook the importance of the small builder. The small builder has done an enormous amount of work in the construction area. The small builder has worked hard himself. He is a knowledgeable man in many areas. In most cases, too, he has borne the brunt of the financial problems where bridging loans were difficult to get, where loans were delayed, there was a delay in the grants. Very often the small building contractor was the man who had to carry the can. This should have been spelled out in this report. Our indebtedness to the small builder should have been stated quite clearly in this report while I do agree with the importance of the big and medium sized contractor. The report goes on to say that:

...there is a strong case for closer technical liaison and integration between the design and construction phases for larger projects and that earlier involvement by the contractor during the planning stage would improve effiency and communication, and reduce cost.

Senator Lynch has gone into this. I would agree in general with what has been stated. At the same time, there is a limit to what can be done. At present in most cases we are close enough to that limit. There has been a considerable improvement.

The report deals with the costs of works and the changes in costs, the changes in design which increase the costs and has made some suggestions. It states that:

Changes in design are often caused by the client changing his mind as he sees the reality of the building emerging during the construction process.

This is always a problem with people who are not used to drawings. The report very rightly suggests that models would be a help. Models, indeed, are a help but, unfortunately, models are very costly. A very good case could be made for a course in model-making in our vocational schools. This is an area where there is room for considerable scope. To the best of my knowledge to get a model of a small house at present would cost in the region of a minimum of £500. To suggest models to a husband and wife who are scraping hard and having difficulties and who in most cases have to work to pay the mortgage, is unrealistic. I realise that the report does not deal specifically with housing but with all kinds of buildings. Fair enough, that recommendation could be accepted in big schemes.

As regards planning and the environment in big schemes it should be mandatory and compulsory to prepare models so that people would see what a particular scheme would turn out like. People in a particular area should be taken in at the early stages of planning and have their views considered. Nothing should be imposed on them and they should be given an opportunity at the tail end to appeal to An Bord Pleanála or through any other means to prevent a building going ahead. When something is being done in a particular town the local community should be brought together and have their suggestions taken and considered at an early stage. They should be kept abreast with what is going on and with what is decided as the project goes along.

The report in dealing with the legal and administrative environment tells us that smaller firms find the regulatory environment increasingly complex. The growing numbers and variability of conditions attaching to planning permissions, the imminent introduction of building regulations and tax gathering requirements with the Revenue Commissions all refer to them. I mentioned before with regard to builders registered for VAT that a contractor whose turnover does not exceed £18,000 to £20,000 does not have to register for VAT. There is no specific allowance made for that in the regulations. I understand from the Department that in the situation where the application is returned because the name of a registered contractor is not given anyone who is working under that clause is allowed to do the work. I think the amount of £18,000 to £20,000 is too small and should be increased with regard to building contractors.

There are many middle-aged contractors who do not want to fill up VAT forms weekly along with all the other returns. They do not want to enter into that area. They have great experience and expertise in the building area. It would be a pity to lose that. Many of them do not want to become registered simply because they have to cope with all these forms. For that reason and the reason that when we consider the building regulations and how difficult they are, even for students and for people starting off, the Minister should consider concessions. He should increase the amount whereby people whose turnover does not exceed, say, £50,000 which would be realistic for a builder would not have to register for VAT. By not registering for VAT the State is not losing out in any way. I have gone into that in great detail previously with the Minister.

The report tells us that Ireland is unique in Europe in having very few national standards. Indeed, this is true. In making specifications reference is usually made to British standards. There are many people who ask if it is totally necessary to have standards of our own and having to go to the high cost of preparing standards on specific materials when we have those available in Britain and which we can use. The same has been said about building regulations. A considerable amount of money was spent on preparing those regulations which still have not come into force. By and large, these regulations were copied from the UK. There are people who say could we not have made some kind of arrangement to pay the UK for the use of their standards rather than having to go through this costly exercise. I am not making a judgment one way or the other but I am saying that we are deficient in standards. While we are, it is no great drawback because we have the UK standards to use.

The report in its recommendations deals with roads in some detail. Our roads are a big problem — main and county roads. Of course, our roads were mainly designed for the horse and cart. The foundations, alignment and the whole planning of our roads are far behind. The foundations of our roads are unsuitable for modern traffic. Certainly, this is an area that should be concentrated on.

I would like to say with regard to the national sanitary services plan that on another occasion I referred to the method of dispersal of raw sewage into Dublin Bay. This is wrong. Only treated sewage should be allowed to be diverted out to sea.

It is important that this problem should be looked at when we talk about the national sanitary services plan. Specifically in relation to Dublin and the disposal of raw sewage into Dublin Bay I take this opportunity of saying once again that this is unacceptable. Senator Lynch has dealt with the private sanitation programme. He pointed out with regard to domestic piped water services that there have been major improvements nationally. By 1981 some 90 per cent of households had internal piped water supply but in rural areas 25 per cent of houses were without a toilet, 30 per cent were without a fixed bath or shower and 20 per cent were without internal piped water. This is unacceptable.

The report goes on to say that many of the residents of these houses are dependent on social welfare and do not have the resources to install basic facilities, even with the aid of existing grant schemes. I am sure that in this situation especially with our big unemployment problem that some scheme could be developed whereby the unemployed could be used to help with these provisions. I know there would be a problem, say, where the value of the house would be increased but that could be recouped by the State when these houses are sold.

The report makes a reference to listed buildings on page 34, which presumably means buildings listed in the five year development plan. I am not too sure if these have any great value and I would like the Minister to elaborate further on the value of having buildings listed.

There is a fairly lengthy section in relation to tourism, leisure and community facilities. Like Senator Daly, I agree that there is a strong case to be made for investment in these areas. The report tells us that investment should include indoor leisure facilities, restoration of historical buildings, industrial architecture, for which there is a big area to be looked after, development of marinas, facilities for pleasure craft users and swimming pools. In relation to swimming pools, we have the position in County Meath, which I am sure applies to every other county, where we have three swimming pools which have to be closed for six months of the year. Swimming pools are not of much use when they have to be closed down.

Fishing could have been included in that list. Damage has been done to the environment by drainage schemes. I realise however that farmers and the agricultural area have rightly cried out for an improvement of their land by drainage schemes; but cases have been made many times in respect of areas which have been reclaimed and in which we had wildlife, fauna and flora, which would have cost many millions to put there in the first place if we did not have them naturally. The preservation of those areas, boglands and areas of that nature which are under threat from development, should be considered. I mention that in passing.

Regarding loans, the report deals with the Housing Finance Agency as one of the other areas where finance is available for housing. The Housing Finance Agency have helped greatly in this area. A big problem with the Housing Finance Agency is that in the earlier years of the loan the amount outstanding increases. People who would have to sell their houses in that situation would have an enormous problem. While I appreciate the value of Housing Finance Agency loans, this is a serious drawback. Very many people would not avail of these loans if there were any other avenues open to them. Very often it is the last coach and they have no other source to turn to.

I would like in passing to pay tribute to the work of An Foras Forbartha and the contribution they have made over a long period of time in many areas. The report goes into the development of Irish standards. I shall deal with this very briefly and there is no point in going any deeper into it. Standards, of themselves, are not the solution. For example, specifications regarding rafters and timbers should refer to the moisture content, and timber having a moisture content of more than 20 per cent for carpentry should be rejected. I have often gone around with a moisture meter prodding it into timber to see what the moisture content was. Surely, as far as possible it should be under the 20 per cent. A situation arises, when those timbers are being erected, that the house is left for very many weeks during which we have very inclement and very wet weather as a result of which the timbers are saturated. I have never seen a situation where a builder has been asked to dismantle a house because the carpentry timbers were in excess of 20 per cent moisture.

The standards of themselves are not the whole answer. The report refers to standards in the national interest and to firms who supply building materials. I have referred to some of these firms in the recent past. For example, Gypsum Industries, unfortunately had a serious fire not too long ago but are still continuing. This company had very serious problems with regard to the dumping of plaster board.

Senator Lynch resented that the Minister hijacked the report by incorporating recommendations. Of course I can see his point. At the same time, it is something that I would very much like to see done on a very large scale. This is the whole point of reports, that the Government would put into effect the recommendations. I would look on that as a backhanded compliment by Senator Lynch in this regard. Senator Lynch also referred to disabled persons' grants for which I would appeal for an increase. They are generous enough in many instances. The maximum is £5,000 by the local authority. In some cases it might be necessary to have bigger grants and the Minister should consider this. Local authorities, where disabled persons' grants are given, should consider providing plans for people who qualify because very often they have a problem with regard to drawings and sketches. Dublin Corporation, as far as I know, provide drawings for people qualifying for these grants. Perhaps the Minister would be able to do that on a large scale.

With regard to solar energy, some incentives should be given to those who are anxious to avail of this. The ESB have carried out very big schemes and have had favourable results. A mandatory maximum floor area of 1,346 sq. ft. for a new house is required to avail of the grant. Some provision should be made for people who want to build a sun lounge or solar porch but who are not eligible for the grant. The Minister should consider this. Special grants should be available for the provision of installation.

This is a very worthwhile report. It is a report that we could spend a lot of time on. It is a report that, although only published at the end of November last, has had some of its recommendations adopted. This is very desirable and to be commended. In conclusion, I want to thank once again the members for their hard work in preparing the report.

As a member of the Oireachtas Joint Committee which produced this report I am pleased to participate in the debate. I agree with Senator Fitzsimons that it is a good report. It is a very constructive report in so far as it outlines the difficulties being experienced by the construction industry at present. It also outlines the causes of these difficulties and it makes recommendations as to how they can be solved. The construction industry have been on the decline in the past few years, particularly in the house building sector. In 1981 the total number of houses built was approximately 29,000. In 1984 this figure was reduced to almost 25,000. This is a reduction of 4,000 houses. In the Cork area the private housing contractor is experiencing major difficulties in so far as there is little demand for new houses. This may not be true of the rest of the country but certainly in the Cork area it is a major problem.

In 1981 Cork accounted for 1,707 housing starts or 15.8 per cent of the national figure. In 1985 housing starts in Cork had fallen to 1,072, or only 12 per cent of the national figure. There are a number of factors which may be the cause of this. High unemployment is probably the chief cause, particularly since the closure of Fords, Dunlops and the Verolme Dockyard. Up to now people did not have the confidence to invest in new houses. With the recent Free Ports Bill introduced in this House I am hopeful that there will be a lot of activity, especially with small businesses setting up in the Cork area, which in turn will generate employment and bring back confidence and more spending.

On a national basis one of the major problems to hit the house building side was the increase in the rate of VAT from 5 per cent to 10 per cent. This increase was regarded by the committee as being a deterrent to house purchase. Having had talks with a number of builders recently I am told that since the increase in the VAT rate to 10 per cent they are now returning less VAT to the Exchequer as a result of a reduction in sales. This committee, on page 42 of the report recommends that this 10 per cent VAT rate be reduced again to 5 per cent.

The size of building contractor that I am talking about is one who in 1981 and 1982 was selling approximately 70 houses per year. He is now selling 40 houses per year and taking a huge risk in that the purchase price of a land bank is extensive and the interest payable to service the debt is enormous. There are a number of small builders in the Cork area particularly who have gone out of business. A number of these are looking across the water at present to see if they can pick up any work in the UK. In the house building section a good crew of men are put together over a number of years and one is very reluctant to let some of these go. Therefore, there is pressure to take work at a reduced cost or otherwise one would have to travel abroad.

Another area which hit the house building sector was the decision of the major building societies to change the criteria for getting house mortgages. This change was far more damaging than the 10 per cent VAT which I have already outlined. It was possible for a purchaser to get 90 per cent of the gross price of a house. For example, for a £30,000 new house a client would receive £27,000 from a building society leaving a deposit of £3,000. Since the change of rules the building society now give only 85 per cent of the net price of a house, which means that they reduce the VAT and the grant element first before making the calculation. This means that the purchaser will now only qualify on a £30,000 house for £21,250 which leaves a major shortfall of £8,750. This is away beyond the means of young people particularly and hence it mitigates in a big way against the purchase of new houses. The building societies maintain that they were overexposed in the value of the house due to the VAT and grant element.

I welcome the Government package recently introduced for the improvement of old houses. This grant will help generate a number of jobs in this area. I congratulate the Minister on his decision to waive the rules to allow the work to commence immediately. The maximum possible grant for an older building is £8,600, which is a big incentive for people to invest in repairing older houses. It is important that I mention the black economy at this point. In order to qualify for the grant the work must be done by a registered builder. I would like to sound a word of warning to the inspectors involved that there is a possibility of non-registered builders asking and getting the registered number from legitimate builders. This means that some of the work may still be done under the black economy.

The sole objective of the black economy is to avoid taxation and it is, therefore, a creation of the tax system. The magnitude of the black economy is influenced by the levels of taxation. By definition, it is not possible to quantify the size of our black economy in construction, although the report refers to suggestions that the loss to the State arising from it is between £20 million and £50 million per annum. The Construction Industry Federation estimate that the black economy is between 10 per cent to 15 per cent of output and valued at in the region of £250 million, two-thirds of which is estimated to be related to the housing sector. The report states that other sources suggest that the black economy accounts for 5 per cent to 10 per cent of construction output. While estimates with regard to the size of the black economy are necessarily guesswork, all of the parties involved are in agreement that it is a major and growing problem.

A comparison between the official estimates of numbers employed in the industry and the number of workers registered with the industry pension scheme would also confirm that a substantial volume of building work is being undertaken outside the normal system of employment. It has been suggested that there are as many as 3,000 houses per year being built under the black economy. The Government have acknowledged that the black economy is a major problem in the construction industry and recently announced decision to tackle this. I welcome these measurs and also support the implementation of the recommendations made in the report with regard to curbing the black economy.

Construction output grew rapidly in the seventies to reach 18.8 per cent of GDP in 1979. In 1984 it stood at 11.5 per cent of GDP. The Department of the Environment forecast that it will fall further this year. The influence of the State on construction is huge. In 1984 some 70 per cent of finance for investment in construction was channeled through State sources. This is done through local authority, health boards, State-sponsored commercial firms and a wide variety of State agencies. It is unlikely that the State will ever account for less than 50 per cent of total finance for investment in construction.

All of this expenditure is from the public capital programme under the following main headings: (1) Sectoral economic investment, which deals with agriculture, industry, tourism, fisheries and forestry. (2) The productive infrastructure, which accounts for energy, roads, sanitary services, transport, telecommunications etc. (3) Social infrastructure, which deals with housing, education, hospitals, etc.

Much of our productive infrastructure is still below what is satisfactory, and investment in this area make a country more productive, which in turn will aid economic recovery. One of the major costs involved in the construction industry today is what I regard as the outlandish cost of providing insurance, that is public and employer liability insurance. This is a major burden for small contractors, and if they are awarded any public contracts they must first show evidence that they are fully covered by insurance. The rates being quoted by insurance companies are such that small contractors are unable to pay for this service and therefore are precluded from tendering for further contracts. Having spoken with members of the architects office and with quantity surveyors in Cork County Council, I am told that they have major problems in trying to get firms who are qualified for carrying out works.

There is a lot of work being held up at present because small builders and small contractors, firstly, cannot get insurance and, secondly they cannot afford to pay for it. For example, if you wanted to build a £75,000 housing contract one would need public liability and employers liability insurance, which would cost approximately £3,000. In most cases this money is payable in advance. So, before moving onto the site, you must give a certificate or show your policy to the members of the council to show that you have cover. To do this, you would have an outlay of about £3,000. Because they are aware of the difficulties some of the insurance companies have introduced a monthly scheme whereby one can actually pay for this premium over a period of five months. Even so, it is still very punitive. While it may not come under the remit of the Minister present, it has a major effect on the construction industry and should be looked at in detail.

For example, a west Cork builder who completed a scheme of four local authority houses paid his employer's liability and public liability insurance of approximately £3,000. He did not have any claim while he was building those houses. When the scheme was completed he was invited to tender for an extension to the existing sewerage scheme in the area, which he did. The cost of that was around £8,500. He was asked again to provide his certificate of PL and EL insurance because it had not been covered by the housing scheme. This was a separate contract. His insurance was taken out on a contract by contract basis. When he went to get a quotation for his insurance to cover the £8,500 contract he was quoted a premium of £1,500. Only two weeks work with little or no risk were involved, but the lowest premium he could get was £1,500. This is an indication of the outlandish cost of insurance which is having a direct bearing on the construction industry.

To outline further difficulties being experienced by small contractors I quote from a submission on the subject from the Society of Chartered Surveyors. They state:

The extraordinary increase in the cost of providing Employers and Public Liability Insurance over the past few years has caused major problems for the Building Firm. Some contractors have experienced an increase in premium of up to 100%.

In many cases, on Private Contracts the Contractor has difficulty in recovering his increased costs due to:

(a) inability to establish from the Insurance Industry what the market increase in insurance costs have been.

(b) following on that inability to document the increases there is a reluctance on the part of the Consultant to recommend and certify payment.

On Government Contracts the position is exacerbated by the general belief that the GDLA Conditions of Contract do not allow recovery of same.

In addition to the increase in basic rates many Insurers have changed their method of collection. Previously, a Contractors premium was calculated as a set percentage on a provisional amount of wages expected to be paid by the Contractor during the insurance year. A premium was paid on this provisional basis and at the end of the year an adjustment was made resulting in extra being paid or a refund being made. The position is now changed in so far as a lump sum payment is demanded and extra is charged if estimated wages are exceeded but no refund is made if there is a shortfall.

It obviously appears that they want it both ways. They said:

This change means that if a Contractor's workload is running below that advised to Insurers, perhaps he will have a further incentive to tender for work at low overall margin with the intention of using up insurances which are wage related and for which he is going to pay anyhow. These factors contribute to the growing occurrence of unrealistic tenders being submitted for building work.

The Oireachtas joint committee in producing all of their reports — and this is their fourth report — came across the problem of insurance in basically every one of them. They felt so strongly about it that they made an investigation into the whole insurance business. Their report has been written and it will be discussed in this House at a later stage. I should like to draw the Minister's attention to the fact that it is a major problem and is having a detrimental effect on small firms in the building industry.

One other area of discontent in the report was the role played by the banks in the construction industry. The report stated that the associated banks accounted for only 3 per cent of new house purchase loans in 1984 and 5.1 per cent by value of all house loans. The corresponding percentages for the building societies were 53.5 per cent of new house loans and 62.9 per cent by value of all house purchase loans. The banks should be more involved in the provision of house purchase loans.

For some time past the banks have not been making money available to building contractors to enable them to carry out Government contracts or any other type of work. There is a complete close down on getting loans for companies. Admittedly they are being caught by some building companies for bad debts. As far as I can see, at the moment there is a complete blanket policy by the banks not to give money to the construction industry. I regret this because the construction industry is one of the most important industries in this country. Our economy cannot afford that kind of an attitude being adopted by the banks.

I welcome the success of the Housing Finance Agency in providing loans for the purchase of houses. Since their inception in 1982 they have provided £217 million for the purchase of 11,000 houses. The Housing Finance Agency are again expected to play a major role in the financing of new house purchase in 1986, following the Government decision to allocate £86 million for HFA mortgages. This will help partially to offset any falls that may continue in the level of mortgages provided by building societies and local authorities. Building societies and local authorities each financed 9 per cent fewer houses in the first nine months of 1985. The total number of loans for new houses provided by all the mortgage lending institutions fell by 3 per cent to 9,151 mortgages. Loan approvals show similar patterns with building societies and local authorities showing a 16 per cent and 10 per cent drop, respectively. In contrast, the IFA reported a 60 per cent increase in loan approvals during the first nine months of 1985 compared with a corresponding period in 1984, thanks partly to the demand for income rated mortgages and also to the new local authority grants.

I was also pleased to see recently that the Minister notified local authorities of a capital allocation totalling £73.5 million for the payment of SDA house purchase and improvement loans. This money will enable local authorities to meet the demand for house purchase and improvement loans from people whose income in the preceding tax year did not exceed £8,000. Under the scheme, local authori- ties can advance ordinary house purchase loans of up to £16,000 to first time purchasers and special category loans of up to £20,000 to tenants and tenant purchasers of local authority dwellings as well as to certain persons on local authority waiting lists.

The building societies have an important part to play in providing house loans, but the Government should examine with them the possibility of advancing mortgages at the closing date of sale in order to minimise the need for bridging finance. If this option is not acceptable, a system of title insurance should be investigated and encouraged. Some 70 per cent of new private houses in recent years have been financed by way of mortgage. A major proportion of these have been supplied by building societies.

I welcome the recommendation that a housing White Paper should be produced within a year. Some of the topics to be included in this are forecasting, demand and requirement, public finance for housing and the role of rented accommodation. The NESC have estimated the housing requirement for the eighties at: 1981 to 1985, 126,000 to 158,000 houses; and 1986 to 1990, 133,000 to 169,000. The total number of completions for the 1981-84 period was almost 107,000 houses. The principal accommodation sectors are (a) owner occupied, (b) private rented, and (c) local authority accommodation. Over 70 per cent of homes are privately owned. There is a range of incentives to encourage home ownership: First, grants to first time buyers of new houses, £2,000; secondly mortgage subsidies over five years £3,000; and thirdly, tax relief on interest. For a married couple that can be a maximum of £4,000.

Only 10 per cent of total accommodation here is privately rented, which is low compared to European countries. Completion of local authority houses has been in the order of 6,000 per year. The capital allocation for construction of local authority houses in 1984 was £208 million compared to £108 million in 1980. Of the 290,000 local authority houses constructed, 180,000 have been purchased by tenants. The new Government scheme where a tenant of more than three years can vacate a local authority house and get a grant of £5,000 to purchase a private one, plus the first time incentives will boost jobs in the construction industry.

In 1985 when this scheme was introduced a total of 2,000 grant payments were made. About 1,000 of the families availing of the grant are estimated to have purchased new houses. The allocation for these grants in 1986 is up 20 per cent to £11.75 million which should finance a further 2,350 grants. Partly as a result of the grants a total of 3,500 houses from the existing local authority stock became available for re-letting in 1985. Together with the 6,500 new local authority houses built in 1985, the Government have provided housing for 10,000 families. The national plan provides for 9,000 local authority houses to be made available each year. This, with the other measures mentioned, will help to solve the present problems of the industry.

As Minister of State at the Department of the Environment I am pleased to have this opportunity of contributing to the debate on the fourth report of the Joint Committee on Small Businesses which deals with the construction industry.

Let me begin by paying tribute to those Deputies and Senators who sat as members of the joint committee and by complimenting them on their report and, indeed on their hard work in compiling the report. All of us who are interested in the construction industry and concerned for its future development are indebted to the members of the joint committee for their great efforts in preparing this report and its comprehensive list of recommendations.

The report of the joint committee deserves a considered and balanced response and I would be failing in my responsibilities if I delivered anything less. The previous Minister for the Environment has already welcomed the report on behalf of the Government. It represents without doubt an important contribution to a series of recent reports which have their origins in the difficulties experienced by the industry over the past five years and which have as their objective the achievement of a resumption of output and employment growth in the industry. Since I share their aspirations for the future development of the industry, it will come as no surprise then that I support many of the recommendations made in the report. Indeed, some of them are already being implemented. My purpose here today, however, is to present a balanced response to the report and its recommendations rather than merely to concentrate on areas of agreement. To do this it will also be necessary to consider areas of the joint committee's work which I do not fully support.

Given the wide range of issues considered by the joint committee and the number and diversity of their recommendations I must of necessity be selective and concentrate on some particular issues to the exclusion of others. The report itself concentrates on ways of improving construction demand and performance and it pays particular attention to State construction policy, especially the role of the public capital programme and the role of incentives in stimulating private sector investment in construction.

Firstly, it would appear that the joint committee have concentrated their efforts mainly on producing a large number of recommendations aimed at relieving the difficulties being experienced by the industry without giving sufficient attention to the more fundamental factors that are responsible for the current situation. There are many basic issues affecting the construction industry at this point in time. I refer, in particular, to the extent of the State's role in the development of the industry and the change of the structure of demand for the industry's output, and in deciding to produce a list of recommendations dealing with the industry's difficulties to the exclusion of a more in-depth analysis of the factors responsible for creating those difficulties, or of the change in the pattern of demand for the industry's output over the last five years and its effect on the industry, a valuable opportunity to contribute more fully to this debate has been missed.

The report recognises tht the major cause of the industry's difficulties has been the sharp decline in the level of private construction investment in the industrial, agricultural, commercial and retail sectors. Given that there is still a significant over-supply of office accommodation, industrial space and retail units and that downward pressure on rental levels is discouraging new investment, it is generally accepted that the situation will not change until there is a substantial improvement in the overall performance of the economy. There are encouraging signs, however, that just such a significant improvement in the performance of the economy can be expected this year. There are encouraging signs also that the property section of the market is about to pick up again. Indeed, there is clear evidence that the recession in the industry is bottoming out and that the volume of output this year will not decline to any great extent.

There has been some decline in investment in new private housing in recent years. It is generally accepted now that the demand for private housing in the late seventies and early eighties was exceptionally high and unsustainable due to a combination of economic, demographic and structural factors which no longer operate and are unlikely to operate again in the foreseeable future. In recent years the pressure on real disposable incomes, high real interest rates, the unemployment situation, the decline in the rate of household formation and the weakness in the secondhand market have all contributed to the decline in demand for new private housing.

As regards local authority housing, 6,523 houses were completed during 1985. Apart from last year, this is the highest output achieved since 1976 when another Coalition Government built 7,263 houses. Completions in 1984 were 7,002. Returns from local authorities show that when casual vacancies are taken into account, local authorities housed approximately 11,800 households during 1985. Accordingly, for the second year in succession the Government's target for housing 9,000 householders annually has been well exceeded. The £5,000 grant was, of course, a major factor in securing such a high level of casual vacancies in 1985.

Indeed, I know that the matter of vacant houses being vandalised has been raised here. It is a shame that good housing stock is vandalised in this manner. When I joined Dublin Corporation 13 or 14 years ago, housing was a very big problem in the city. Now people can have a house literally on demand although not necessarily where they want it. That is something that I did not think I would see in my lifetime. I am very pleased that there has been such progress in that area. The £5,000 grant has contributed to that. To take Senator Fitzsimons's point about the changing social patterns, possibly as a result of that £5,000 grant, one has to balance things. On balance the grant is right but obviously it has to be kept under review for the reasons the Senator pointed out.

Against the background where the industrial, agricultural and commercial infrastructural needs of the economy are being met, where housing need is being met to a greater extent than previously, despite the decline in output, and where investment in public infrastructure is being maintained at the highest sustainable level, the role of Government policy in seeking to promote the development of the construction industry needs to be clarified. The Government are committed to promoting the resumption of orderly and sustained growth in output and employment. That is the way to go about it. It requires to be ordered in a sustained way. However, this must be subject to the industry meeting the real infrastructural needs of the economy. Otherwise there is a great danger that increased expenditure by the Exchequer, which ignores the underlying economic factors which have depressed demand, will only result in the State financing a larger share of investment than would have taken place in any event. Construction for the sake of construction, irrespective of the cost to the Exchequer and irrespective of need and demand, is not a recipe for sustainable growth in the industry.

I would now like to address myself to the major issues and recommendations dealt with in the report. I note that the first recommendation made by the joint committee urges the establishment of a Construction Industry Development Council as originally recommended by the Sectoral Development Committee and the Sectoral Consultative Committee. I am pleased to inform the House that the Government have agreed to establish a council and proposals for its establishment along the lines recommended are now well advanced. Clearly the council will have a pivotal role to play in guiding the future development of the industry. It will be representative of all interests connected with the industry and the Government intend to ensure a positive role for the council, particularly in relation to the performance of the industry. The council's main function will be directed towards carrying out research into ways of increasing the efficiency and effectiveness of the industry.

The joint committee also addressed itself to the likely level of housing needs and requirements over the coming years. Senators are aware that the Housing (Miscellaneous Provisions) Bill, 1985, is currently at Second Stage in Dáil Éireann. One of the most important aspects of the Bill is that it repeals the legislative basis for the assessment of housing need which was contained in the Housing Act, 1966. This will be replaced with a modern provision which will require local authorities to have regard in their estimates of housing requirements to the needs for housing of different categories of persons including homeless persons and persons living in temporary or moveable accommodation. Section 53 of the 1966 Act was framed primarily in the context of the old local authority housing function of slum clearance and was directed particularly at gauging the levels of unfitness and overcrowding in the housing stock.

When the Bill is enacted local authorities will carry out an estimate of housing requirements. The basic data for this estimate will be the existing housing needs of the area catering for all categories of housing need together with the latest available information on demographic trends and the results of the Census of Population taken last Sunday, 13 April. The Census results and the changes in population and household formation rates in the 1981-86 period will provide the basis for projecting the level of future housing requirements to the early nineties.

The results of the local authority assessments will be analysed and co-ordinated to produce and estimate of national housing requirements. I am sure Senators will agree that it is important that the assessments be carried out on as comprehensive a basis as possible and that the estimate of housing requirements to be carried out by local authorities when the Housing (Miscellaneous Provisions) Bill, 1985, is enacted will deal with the joint committee's anxiety in this regard.

The joint committee has commented on a number of matters relating to mortgage finance and the various lending agencies in this market. The availability of an adequate supply of mortgage finance has been a key factor in facilitating this country's high level of owner-occupation and its continued availability is of course vital to the success of the national housing programme.

It is suggested in the report that building societies might be more innovative in the type of mortgage they provide. As the joint committee notes, most societies now offer endowment mortgages as well as the traditional annuity mortgage and this may prove to be the first step in the right direction. Following the recent study of building societies by an interdepartmental committee, we will be examining the framework within which societies operate and exploring with them means by which the development of their activities could be facilitated in ways that would be of benefit to the housing programme and to the societies' members and customers.

The joint committee also refer to a number of aspects of house purchase transactions. Senators may be aware that my Department in consultation with representatives of the Law Society and of the building societies are examining ways in which the delays and expenses associated with house purchase transactions may be reduced. I believe that there is scope for improvement in this area and I am hopeful that lending agencies will overcome their reluctance to adopt new practices — notably the use of the same solicitor by the borrower and lending agency. I understand that this practice works well in other countries.

I am glad to note the joint committee's praise for the achievements of the Housing Finance Agency. The agency have provided a substantial amount of mortgage finance for borrowers on moderate incomes. The joint committee have suggested that HFA stock be made available to a wider range of institutions in order to give the agency more flexibility. The climate for index-linked stock has not been very favourable recently. However a widening of the availability of stock as suggested by the joint committee is a possibility that will be kept under review, in the light of the continually changing situation in the financial market.

The joint committee referred extensively in their report to conservation of the housing stock. I think that the new improvement grants scheme and in particular the £5,000 grant for necessary repairs and reconstruction to pre-1940 dwellings will have a major impact in the area of conservation. In the case of a pre-1940 dwelling an applicant can now qualify for a maximum grant of £8,600. The House will agree with me that this is extremely generous.

Senators will be aware of the package of taxation measures announced by the Taoiseach on 23 October last, one of which was the enhanced scheme of house improvement grants. Reaction to this new scheme has surpassed all our expectations. It has proved to be an enormous success with over 64,000 applications received to date. That gives a fair indication of the type of demand there is for this home improvement grant. It is estimated that these will generate work to the value of approximately £250 million, a huge sum in any terms and one which is proving to be an enormous boost to the building industry. I estimate that this expenditure will create over 10,000 jobs in the industry. Interest in the scheme is continuing at an exceptionally high rate. All of this clearly illustrates the attractiveness of the scheme both in terms of its broad scope and the levels of grants now available and highlights the Government's ability to tap this particular area of pent-up construction demand and attract much needed private investment.

In order to avoid unreasonable delays in the processing of these applications the number of inspectors working on the scheme has been doubled and measures have been taken to ensure that work is not held up pending prior inspection. While on the housing grants, questions were raised about prior inspections in two areas. First of all, I would like to say that the reason the prior inspections were suspended for a particular section was that they had already made their application in the knowledge that there had to be a pre-inspection. They were locked into a situation there and I think that was right so that work could move ahead quickly. I still think there is a need for some form of prior inspection given that we are talking about the expenditure of public moneys.

What is the position if people do not know what grants they are entitled to?

They know what grants are available in the particular area they are applying for. What they may not know is how much they are getting but they know they will be getting money. If there is a particular hardship situation where there are people in a sort of trap that they cannot go ahead, certainly my Department would facilitate a prior inspection in that case but we would not be encouraging it. We obviously want the work to go ahead but where somebody is afraid or nervous for whatever reason there would be a facility for a prior inspection.

We have that assurance from the Minister.

I am saying that with caution because we want to proceed. I understand that there can be people who are very nervous of moving ahead for fear of committing themselves to a debt that they cannot meet and I accept that.

There can be an inspection — that is what we wanted to know.

Yes, but I do not want to broadcast it. With regard to Senator Lynch's charge that we hijacked the scheme I have to say that that is not correct. I am not taking away from the joint committee's approach to this grant scheme. It is one with vision and I compliment them on it but we have been thinking of it as well in the Department for some time but although you can think of grandiose plans you have to get the money for them. The plans were there and we saw the slackness in the building industry and it was one of the ways of getting an injection of activity into the building industry and that was basically it. Again, I want to compliment the committee on their vision in producing this scheme. Also, as Senator Fitzsimons said, it is no harm for Governments to do this instead of waiting around. If they see something good they should jump in and grab it and run with it and that is the way it should be.

It is perhaps something we should appreciate.

In relation to the joint committee's recommendation that rewiring qualify for grant aid in its own right, I would like to point out that for the first time for a number of years provision has been made in a house improvement grant scheme to cater for certain costs incurred in rewiring a house. It is however linked to other repair works under the scheme. This was decided on in the context of the scope of the scheme — I refer to the fact that the improvement works catered for cover a far broader range than in any scheme heretofore. While the maintenance and improvement of the quality of the housing stock and the creation of legitimate employment were the major considerations in introducing the scheme, regard had also, of course, to be had to the overall cost element. The question as to whether a rewiring grant should be introduced in its own right is a matter that will be considered when the scope of the scheme is being reviewed.

The joint committee also referred to the disabled persons grants scheme. The maximum amount which may be recouped from the Department was increased from £2,000 to £2,500 as part of the new house improvement grants scheme to which I have just referred. In practice the level of recoupment available from my Department to local authorities regulates the amount of grant generally payable in respect of privately owned dwellings. The new maximum level of recoupment is £2,500. This ensures that grants of not less than £5,000 are usually available in such cases. I am satisfied that the level of total grant generally available is continuing to meet two-thirds of the approved cost of the work in most cases as the scheme was intended to do. It is, of course, open to the local authorities to pay a grant of up to two-thirds of the cost in any case without an upper limit.

I can appreciate that raising funds to bridge the difference between the cost of the work and the grant available is seen as a problem in some cases. It is of course possible in this context that applicants are not sufficiently aware of the improvement loans scheme operated by the local authorities. This can cover up to 90 per cent of the nett cost for applicants on lower incomes about whom the committee are concerned. I understand that the local authorities adopt a very sympathetic attitude towards the disabled in relation to loans which is something that could perhaps be highlighted more at local level.

Turning to the operation of "black economy" practices within the construction industry, I am fully aware of the effects of such practices on firms which meet their social and legal obligations in this regard. The Government are committed to dealing with this problem. We recognise the distortions and unfair competitiveness of such practices and we have taken a number of measures to tackle them. Grants under the improvement grants scheme will be paid only in cases where the work has been carried out by registered contractors and this will be extended to the new house grants scheme as soon as possible. I know some people object to this. If you want to tackle the black economy it is the only way you are going to do it. I am not going to dwell on this because we had a debate here before and my views are known. If we are serious about tackling it then like any scheme you bring in or anything you do, it impinges on some other people but you cannot sort out this particular case otherwise and you have to draw this line.

I think it is a major blunder and there are other ways of doing it.

They have not been brought home to me. I know one particular small builder who is a friend of mine who has been building one-off houses over the years and he tells me that he is being slowly forced out of business, not by people building their own houses — they tell you that they are building their own houses but they are not building them: they have all the people around in the black economy building them for them. They are the people who plead that they are being stopped from building their own houses. Small builders in the system who are doing what is right are either being slowly forced out of business or forced into the black economy and what we are doing there is swelling the black economy. I know how Senator Fitzsimons feels about it and I think he knows how I feel about it. We will have to continue to do what we are doing, if we are serious about the black economy.

Other measures taken include the tax clearance certification scheme introduced in 1983 for all public sector supply contracts over a £20,000 threshold. This scheme is being expanded to include construction contracts, including subcontractors. Furthermore, the threshold is being reduced to £10,000. In future, clearance from the Revenue Commissioners will be required before any contractor or subcontractor may be employed on a public construction project. Arrangements designed to ensure closer co-operation at local level between the Office of the Revenue Commissioners and the Department of Social Welfare are being put in place. The special inquiry units of the Office of the Revenue Commissioners and the Department of Social Welfare, which have a good record in countering tax and welfare evasion, are being expanded. Also, my Department have circularised local authorities reminding them of their obligations, powers and responsibilities in this regard. Local authorities have been requested to invoke their right of inspection of records to ensure that contractors pay rates of wages and observe hours of labour and conditions of employment not less favourable than those laid down by the National Joint Industrial Council for the Construction Industry. Local authorities have also been asked to inform contractors, at contract stage, of their obligations regarding payment of PAYE, PRSI and sick pay-pension fund contributions.

I think Senators will agree with me that this is a formidable array of measures taken by this Government to combat black economy operators in the building industry. We will be keeping the matter under continuing review and will take all measures available to us to ensure that this "scourge" as the joint committee so rightly describes it, is minimised as far as possible at least in the public sector.

The joint committee referred to planning matters in their report and made certain recommendations, some of which I would like to comment on. I refer initially to the recommendation set out in paragraph 9.3.1 of the report which suggested the establishment of planning subcommittees of each local authority comprising elected members and officials to which an applicant for planning permission would make an oral or written submission. Such a move would not have public support, I believe, nor would it contribute to the efficiency of the planning system.

The system for the determination of planning applications set up under the 1963 Act and reviewed and amended in subsequent legislation has provided for the implementation of planning control by planning authorities which consist of the manager and the elected members. the granting or refusal of permission is an executive function vested in the manager and the criteria against which all planning applications are assessed are set out in the development plan, the making of which is a function of the elected members. This system has worked reasonably well over the past 20 years and has general acceptance by the public. In addition, most planning authorities operate a system of consultation with the elected members on planning applications.

Given the size of planning authorities and the number, size and nature of planning applications coming before them, different practices and procedures have evolved. It is accepted that the members have a considerable role in assisting the planning process through their knowledge of local conditions and the planning of the development needs of their areas, a role which can have the effect of ironing out problems and difficulties at local level thereby reducing appeals. However, the suggestion that applicants for planning permission should present their case to a sub-committee which would in turn make appropriate recommendations to a full meeting of the council would add a further tier in the planning process and render it more costly, more involved and result in further delays in deciding planning applications. I believe that is one of the things we want to avoid — any further delays.

I would like also to refer to the joint committee's recommendations in relation to planning conditions and development control advice and guidelines. In 1982, my Department issued to planning authorities advice and guidelines on development control. This document dealt in considerable detail with the conditions that could appropriately be attached to planning permissions and in particular the question of compliance with the requirements of other sections of the local authority. In replying to the joint committee's recommendations, I can do no more than quote the relevant extract from the guidelines, which comprehensively covers the point and which speaks for itself:

Conditions requiring matters to be the subject of consultation with, or to be agreed with, a named officer of the planning authority, or with a particular section or branch of the local authority, or with another public authority, should not be attached to a permission or to an approval. Neither should an applicant be required by condition to ascertain and comply with the requirements of a particular officer or section of the local authority or to comply with some general requirements of the authority which are not clearly spelled out in the permission or elsewhere. If the matter in question is of genuine planning concern, it should be dealt with in the decision order, or be made the subject of a further approval or an agreement with the planning authority; if the matter is not proper to planning, it should be omitted entirely from the decision.

While the document was primarily intended to assist planning authorities in dealing efficiently with planning applications, there is nothing to prevent them making it available to planning applicants as part of the consultative process as recommended by the joint committee. Indeed, it would seem quite a good idea to display copies in planning authority offices but this is a matter essentially for decision by each authority.

With regard to the joint committee's recommendations on housing layouts and densities, this question has been the subject of much discussion by the construction sector, professional bodies and research institutes. While good design is always desirable, the matter of densities if far more complex. A key issue is the link between high density and good layout and design. Extravagant claims are made for high density. Contrary to general belief high density does not reduce unit costs. Savings can be secured for a while by a lowering of standards but it must be recognised that high density demands even better standards in finishes, landscaping and in subsequent maintenance. Without these, slum conditions could quickly result and social problems inherent in overcrowding could be exacerbated. The whole question of density is complex and in the guidelines on the preparation of statutory development plans —"Urban Development Plans for the 1980's"— my Department have advised against arbitrary and irrelevant standards and recommend that densities should be related to the "facts on the ground"— for example, local experience, topography and infrastructure. I feel this is good advice and avoids the widespread application of blanket density rules. The aim of planning authorities should be to secure the best use of land together with variety of layout, good design and good construction.

I would like to refer to the joint committee's recommendation that a time limit should be applied to planning appeals and oral hearings granted on request. First, it would appear to me that if the purpose of the exercise in this case, as it would appear to be, is to save time then these recommendations would seem to be contradictory.

A time limit on appeals without a "default" provision, as recommended in the report, is something of a contradiction. One of the reasons for an appeal system is to allow for a review of decisions by planning authorities constrained by the two month time limit. Certain basic procedures must be followed in relation to every appeal whether it be for a major or minor development. Many of the delays which occur are outside the control of An Bord Pleanála — for example, delays by appellants in submitting grounds of appeal, the submission of inadequate documents and so forth. It must also be borne in mind that the board are an appeals body and all parties must be given the opportunity to present their views, fully and fairly. The principles of natural justice must be applied. I am satisfied that the present board since their appointment in March, 1984 have gone about their work with commendable energy. The number of appeals on hands at the end of 1985 was 1,073, the lowest number of appeals on hands at the end of any year since the board were first established in 1977.

I might also mention that some 55 per cent of all appeals determined in January 1986, were dealt with in less than 25 weeks, over 76 per cent in under 30 weeks and over 88 per cent in less than 40 weeks. Also, at the end of that month, the number of appeals on hands for less than three months represented 50 per cent of the total and some 84 per cent of all appeals were less than six months on hands. I think it also appropriate to mention that the percentage of all planning decisions appealed is less than 10 per cent and, therefore, this is not as significant a factor in holding up development as is generally believed.

The provision in regard to oral hearings was reviewed in the 1983 Planning Act and having examined its operation and in particular the length of time taken to reach decisions where oral hearings had to be arranged it was decided that it was not in the interest of the efficient functioning of the system to hold oral hearings in all cases where they were requested. Given the experience of the board I am confident that they are best placed to decide whether an oral hearing will, in any particular case, facilitate the processing of an appeal in a more effective and expeditious manner and I am satisfied that the decision to grant an oral hearing should, therefore, remain with the board.

With regard to the suggestion about development levies, there is a case for introducing greater consistency and equity to the present system of levies and indeed detailed recommendations in this area have been made by the Joint Committee on Building Land in their report published on 12 June, 1985. The joint committee recommended the utilisation of standard levies as much as possible, the notification of any changes in levies well in advance of implementation and that levies should not amount to a tax on development. The Joint Committee on Small Businesses quite clearly identified a similar need for standardisation and my Department are examining the present system of levies with a view to bringing forward any legislative proposals necessary to give effect to a more uniform and equitable basis for the determination of such levies.

Having dealt with some of the joint committee's recommendations I would now like to comment on the industry and on the Government's strategy since they took office. In the past many commentators have called for increased Government financial support as a means of reversing recent trends in the industry. The apparent logic behind these calls seems to be that public funds are a panacea for all ills. This is not true as I have already pointed out. Very often what happens is that the Government end up by financing a greater proportion of investment than would have occurred anyway.

Since this Government took office their strategy in relation to the industry has been twofold. First, its efforts have been geared towards maintaining the levels of public investment in construction activity at the highest sustainable level consistent with the many other conflicting demands on public funds. For example, public capital programme expenditure, expenditure affecting the industry in 1985, showed a 4 per cent increase over 1984 expenditure and the provision for 1986 shows an increase of 3 per cent on 1985. It has been argued that PCP expenditure affecting the industry has dropped appreciably over the last four years. This, as you can see, is just not true for 1985 and 1986. While there were drops in PCP expenditure in 1983 and 1984 this came about mainly because of the completion of certain major projects, particularly in the electricity and telecommunications areas of the industry, and was, therefore, inevitable. A closer examination of the figures will bear me out on this.

The second part of our strategy was directed towards creating the general economic and financial conditions which in turn would create a more favourable climate for private investment. In this context, I would again refer Senators to the generous scheme of employment, taxation and financial incentives announced by the Taoiseach last October. These have been carefully designed to give a significant boost to private investment in construction activity and I am happy to say that all the indications are that they will achieve this result.

I have already referred to the success of the new improvement grants scheme in generating private investment in the industry's output. The £5,000 grant to local authority tenants was also a great boost for the new house industry. I have no doubt that the remainder of the package, particularly that element dealing with special taxation arrangements for development in designated areas of Dublin, Cork, Limerick, Waterford and Galway will have a similar effect. The special taxation arrangements in the designated areas are incorporated in this year's Finance Bill. I would also direct Senators' attention to the favourable trends in the economy, which is proof of the success of the Government's overall economic strategy. I am not talking about the inner city developments or anything like that because as Senator Fitzsimons said we will be bringing the Urban Renewal Bill before the other House next Thursday and it will come before this House shortly after. It will give Senators another opportunity to discuss that more fully.

This Government's commitment to a healthy and dynamic construction industry is not in question. Having inherited an economy which was at the brink and a building industry which had become excessively dependent on the State we are satisfied that the position is now improving. There are definite grounds for optimism in the industry and I believe it can look forward to a brighter future than was possible up to recently.

The report prepared by the joint committee and now laid before this House has provided some valuable insights into the problems facing the industry. Senator Fitzsimons indicated that he did not see any light in the tunnel for the industry. I think that as politicians particularly, not just as regards this industry, we should always see light. We should always see hope. We should always be preaching that message. Given what I have said, there is hope and light. We have created——

I hope the Minister is right.

——the climate particularly in the five cities I mentioned, in the Port and Docks area and by the home improvement grants. They are in my view substantial moves and will give the industry the encouragement to invest and develop in particular areas. That will have further spin-off effects. I see that a positive light in the tunnel. Dropping interest rates — and hopefully they will drop substantially in coming months; with international movements as they are today, one never knows — will have a tremendous effect on the whole construction industry. That is one of the main reasons why we have not got as much movement as we should have — because interest rates are too high. It is important to say that.

While I have commented at length on only some of the report's recommendations, suggestions and general observations, I would like to assure the House that all suggestions made by the joint committee are welcome and will be very carefully considered. I would like to thank the chairman and members of the joint committee for the task they have undertaken and successfully completed. It augurs well for the committee system and for the dedication of Members of both Houses who have given up so much time to this type of committee. We have taken on board many of their suggestions and we are looking at them. That is the way to work in this type of co-operative because we are all working for the same thing, the development of our own country. I am glad to have been afforded the opportunity to come here today to discuss with the Members of this House the work they have put in. Hopefully, they will continue to operate in this and other areas. That co-operation is much appreciated by Government.

Question put and agreed to.

Will the Leader of the House indicate when we will sit again?

It is proposed to sit again on Wednesday, 23 April 1986.

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