From environmental and housing issues to the very fabric of how infrastructure serves the nation’s citizens, the construction industry has never been as important to Ireland’s economy. In its budget submission for 2023, the CIF considers the key drivers around sustainability, residential supply, people, infrastructure and regional development:
The Construction Industry Federation has made its budget submission for 2023 to the Department of Finance. The Government will announce next year’s budget on September 27.
The Federation’s submission, titled ‘Delivering the Built Environment’ recommends a set of budgetary measures under the four pillars of sustainability, residential supply, infrastructure and regional development, and people. These themes seek to ensure the industry can continue to be effective in developing high quality housing and infrastructure to support a sustainable quality of life for citizens.
The construction sector has never been as important to the Irish economy as it currently is, given its central role in delivering the substantial State-backed investment plans to address Ireland’s housing crisis and infrastructure needs, climate change targets, and the challenge of accommodating the extra one million people expected to be living in Ireland by 2040.
Recommendations made under each pillar include:
Sustainability
- There is a need to build on the momentum generated with the establishment of the Construction Technology Centre by allowing tax credits for research and development and innovation, to support companies that are actively pursuing modern methods of construction.
- Tax credits or allowances should be introduced for contractors that decarbonise their business and invest in lowering carbon emissions.
- Mechanisms to increase retrofit activity levels mentioned in the Climate Action Plan should be brought forward to encourage the retrofit. Retrofitting or regeneration of buildings should be exempt from the planning process, provided decarbonising technologies are used to renovate and refurbish existing old public buildings to a BER B2 energy rating.
- Sustainable development initiatives for city and village centre regeneration should be. For example, a tax incentive scheme to encourage restoration of unused buildings for residential purposes.
Residential Supply
- The Help to Buy scheme should be extended for purchasers of new homes as a critical measure to address the affordability gap. The extension of the scheme, in conjunction with the First Homes scheme, would maximise owner occupation for first-time buyers.
- Where development contributions are not replaced by a more equitable Local Property Tax, a rebate of contributions paid should be provided to first-time buyers over a defined period and banks should factor this into the mortgage repayment model.
- To address the exodus of small-scale landlords from the private rented sector, their rental income should be treated as a separate class of tax, with tax on rental income paid at the standard income tax rate.
- The new European Union VAT Directive {2022/542} should be examined to investigate if housing could be deemed to fall within the scope of application of the super reduced rate of VAT of between zero per cent and five per cent.
Infrastructure and Regional Development
- It is critically important that a range of projects are at a ‘ready to go’ phase so that if one is delayed for any reason, another similar project can be procured. A portion of capital carried over in the Public Capital Programme could be reassigned for the purpose of undertaking design and planning of infrastructure projects up front.
- The Government must increase the capacity of the State to manage design, planning and procurement processes by ensuring extra resources are allocated to delivery agencies such as An Bord Pleanála, the office of Government Procurement and the planning and housing departments in local authorities.
- The public works contract should be brought into line with international norms such as the NEC form.
- A dedicated fund should be created within Irish Water for ‘local network reinforcement’, which would be administered jointly with Local Authorities to enable it to accelerate essential water infrastructure projects for residential and non-residential development.
People
- Investment in reskilling and upskilling should be increased alongside increasing the capacity for training apprentices in the construction industry by investing in the Educational and Training Board and the National Construction Centre in Mount
- A media campaign should be rolled out to attract young people to the construction sector and a national careers campaign to promote
- opportunities and diversity.
- The development of skills to enable digital transformation and the adoption of modern methods of construction should be supported.
- The Apprenticeship Incentivisation Scheme should be reinstated to support SMEs and micro businesses to recruit apprentices.
There have been significant underspends of public capital investment of around €1.7billion in the last three years, which means that some public building and infrastructure projects are not progressing as quickly as expected.
Budget 2023 provides an opportunity to revisit the capital investment planned for next year and beyond. It is critically important that momentum is not lost regarding project delivery in the NDP on time and within budget.
The construction industry has shown great resilience in how it has dealt with the unprecedented challenges presented by Covid-19. The exceptional period in our history we now face has also brought about challenges to our supply chains and the cost of materials.
We welcome the opportunity to engage with the Departments of Finance and Public Expenditure and Reform on the status of the construction industry, as we strive to deliver a sustainable built environment to support Ireland’s growth trajectory over the next decade and beyond.
To read the Construction Industry Federation’s Budget Submission 2023 visit www.cif.ie/budgetsubmission
