Business

Monday 26 June 2017

CIF calls for Government to spend 4pc of GDP on infrastructure to avoid 'crisis'

(Stock photo)
(Stock photo)

Sean Duffy

The construction industry federation has called on the Government to boost infrastructure spending to around 4 to 5pc of GDP if the country is to avoid a serious " infrastructure crisis"

The CIF told the Oireachtas Committee on Budgetary Oversight that the time was right for the Government to request greater freedom on infrastructure spending from the EU, saying that the lack of investment was a “threat to Ireland’s social and economic progress.”

 

Former CIF President Phillip Crampton told the Committee that infrastructure spending in Ireland was “dangerously low”.

 

The CIF said the Irish civil engineering sector in Ireland had turned to negative territory this year and was likely to remain as such until the end of 2018. This was because the pipeline of new projects “is drying up”.

 

The CIF called on the European Commission to ease restrictions on the Irish Government’s use of the fiscal space, because the Commission “erroneously thinks the Irish economy is overheating.”

 

The CIF also called for the Government to tap the European Investment Bank more aggressively.

 

A cross-departmental committee to ensure implementation of infrastructure was also mooted.

tom parlon.jpg
CIF Director General Tom Parlon

 

Director General Tom Parlon said that the fact that the EIB had set up offices in Ireland could be seen as a positive for Ireland. He said there was evidence that “funding increased substantially” in countries where the body set up offices.

 

Mr Parlon said that the 13.5pc vat rate on housing was serving to drive up house prices, but stated that Department of Finance officials tend to “go bonkers” whenever altering the VAT rate is mentioned.

 

Infrastructure spending was vital to ensuring that pressure on the capital was eased and that there were adequate connectors between the country’s industrial sector.

 

Director Hubert Fitzpatrick said that the figure of 15,000 house completions for last year was an accurate indication of where the construction sector in Ireland was at.

 

“A lot of those developments would have been half built development that were moth-balled during the recession but were completed last year.”

 

He added that the real housing demand was still in the greater Dublin area and in Cork.

 

Green Party TD Eamon Ryan questioned the Government’s investment plan announced earlier today. He said there was a preoccupation with building roads when the real problem in the country’s cities was gridlock.

 

“Nothing changes. We are just doing the same things we have been doing for the past 30 years. Roads, roads roads,” Mr Ryan said.

 

CIF vice president Pat Lucey added that the Dublin Metro and DART underground  projects should be prioritised in the year ahead by the Government.

 

Tom Parlon said that “before, money was being thrown at projects”, adding that the current environment for securing funding was much more challenging.

 

Deputy Richard Boyd Barrett raised concerns about the prospect of public-private partnerships (PPP) being used to meet the housing crisis. He said PPPs in Ireland had “a scandalous history” of cost overruns that were tendered at one price but inevitably left the State on the hook for more.

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