Vol. 554 No. 5
1436 Mr. O'Connor asked the Minister for the Environment and Local Government if the scale of infrastructural development under the National Development Plan 2000-2006 has led to capacity constraints in the construction industry; if this has resulted in inflationary pressure on development projects which may impact on the delivery of these projects; and if he will make a statement on the matter. [17321/02]
In the current year, new construction investment under the National Development Plan 2000-2006 accounts about a quarter of total construction demand. The balance is mainly made up by new investment by the private sector and repair, maintenance and improvement work.
The combined effect of public and private investment put a strain on the capacity of the domestic construction industry, during the initial phase of implementation of the NDP. However, the capacity constraint has now been considerably eased for two principal reasons.
First, the Action Plan to Expand the Capacity of the Construction Industry published by my Department in June 2001 launched a package of more than 50 measures to expand construction industry capacity. The Forum for the Construction Industry published a review-progress report on the action plan in July 2002, which concluded that an excellent start has been made in implementing the action plan; construction supply is more in balance with demand; and the momentum for further construction capacity increases should be maintained, so that future demands can be met. Copies of both documents are available in the Library.
Second, the demands on construction capacity have eased due primarily to the cooling of the level of new construction investment by the private sector. The net result has been the substantial reduction in construction price inflation – from a peak of 12% per annum over the period 1998 to 2000, to 9% in 2001 and a projected 5% in 2002. This inflation is expected to reduce further in 2003 and to allow the continued roll out of the NDP under conditions which will deliver greater value for money.
