The Construction Industry Council has made a series of recommendations to Government. DERRY SCULLY explains.
The Construction Industry Council (CIC) has launched a new report entitled ‘Building Our Future Together’, which sets out a series of recommendations for Government to restore the construction sector to sustainable levels of output, as well as creating employment.
The Irish construction industry has endured much criticism in the context of its role in our economic difficulties; the over-supply of certain types of buildings in some areas is often highlighted as the consequence of a sector that outgrew the economy in which it was based. However, we are now at a point whereby the value of construction activity will fall to 6% of GNP this year, and fall further to 5.6% of GNP next year – less than half the ‘normal’ level for an economy the size of Ireland. Furthermore, the output of the industry is expected to be €7.5 billion in 2012, down from €8.7 billion in 2011 and from €39 billion at the peak of the boom. The CIC represents all the leading organisations involved in the construction sector in Ireland, including: the Society of Chartered Surveyors Ireland; Engineers Ireland; the Royal Institute of the Architects of Ireland; the Construction Industry Federation; the Association of Consulting Engineers; and, the Building Materials Federation.
The Council’s recommendations are:
Address the public infrastructure deficit through full allocation of Public Capital Programme (PCP) funds
Infrastructure expenditure is currently 14% behind projected spend and the full allocation would help to address the current public infrastructure deficit in terms of education, health, enterprise and environment.
Source alternative funding for infrastructure from pension funds
This was first recommended in the CIC report in 2009. These measures would provide the necessary finance to invest in important long-term infrastructure for the benefit of the public and, together with the full allocation of the PCP, has the potential to create approximately 70,000 jobs in the construction sector.
We note the recent Society of Chartered Surveyors Ireland/DKM report, which suggested that employment in construction and allied industries is now at 150,000, a dramatic fall from the 380,000 employed at the peak. The CIC wants to ensure that employment levels in the sector are brought back to sustainable levels.
The CIC recommends that the Government’s Expert Group, which has been researching alternative funding solutions, urgently completes its task, and that the Government implements a funding solution for Irish infrastructure without delay.
Appointment of a Construction Adviser to Government
This person would take on overall responsibility for the strategic direction for the construction sector and to lead it back to stability. In the UK, the Chief Construction Adviser to Government oversees procurement and capital investment to ensure value and efficiencies for the taxpayer. The CIC would like to see a similar position created in Ireland.
Identification of export opportunities for the construction sector
The CIC believes that opportunities exist to develop a global construction services centre of excellence in Ireland for the design, finance, construction and management of projects. This could create a hub for the construction sector akin to what the IFSC achieved for the financial services sector.
In many European countries, up to 50% of total construction turnover is accounted for by exports, and we have key competitive advantages in the design, financing, management and construction of complex projects in Ireland.
The unsustainable construction boom has left Ireland with an oversupply of the wrong type of buildings in the wrong locations, but its sudden collapse creates a potential undersupply of the right type of buildings and infrastructure in growth areas.
Without good governance and a clear path to recovery, the construction industry may be unable to meet the challenges of providing buildings and infrastructure in those areas.
The construction sector believes that with clear policy direction from the Government, and a set of performance indicators to properly measure activity levels, the construction sector can return to sustainable activity, and provide a dynamic, diverse and directional industry, which can deliver economic growth, jobs and improved quality of life for the people of Ireland.
The full report is available from www.constructionindustry.ie.