independent

Wednesday 13 December 2017

There's something very wrong with the building sector but can Leo fix it?

Editorial comment

Our View

New figures just released by the Construction Industry Federation (CIF) paint a very worrying picture about the state of the building sector and the knock on effect this is having on housing and the economy as a whole.

Despite the fact that there is huge demand for housing right across Ireland, the CIF's newly published Construction Information Services report revealed planning applications and building commencements remained static in the first half of 2017 when compared to the same period last year.

In economic terms - given the massive demand for new houses and apartments - this is bizarre and it highlights, in stark terms, just how dysfunctional Ireland's housing sector has become.

For their part the CIF have identified three key issues which, they say, are preventing the building sector from working as it should and responding to demand.

These 'fundamental issues' are the lack of available finance; delays and obstacles in the public procurement process and the planning delays.

These three key issues are, according to the CIF, creating unnecessary delays and preventing the efficient and timely delivery of critical construction projects.

This isn't just limited to housing either, these same issues are also apparently delaying major infrastructure projects that are seen as key to getting the national economy back on track and spreading the 'recovery' outside the capital.

The construction sector is critical to any recovery. The direct and indirect employment this sector has the potential to create will be vital if we are to see the economy return to a period of sustained and sustainable growth.

It's about far more than providing houses, which is obviously hugely important in itself.

If Ireland's economy was as healthy as the Government continues to claim, the construction sector should account for about 12 per cent of the country's GDP. At the moment it accounts for just seven per cent, well below the agreed healthy level.

Clearly something needs to be done but what can Leo Varadkar and his cabinet do to stimulate the sector?

Finance is a key issue but the new lending laws were introduced for a very good reason. They are designed to prevent a return to the disastrous excesses of the boom years. They have worked and they need to be maintained, not eroded.

Where the Government can and should act is on procurement and planning. Processes that are needlessly complicated, long winded and costly and which need to be simplified.

The Government also needs to open its wallet and start spending on housing and major infrastructure projects, a move that would provide a short term jobs boost and long term economic benefits. This needs to happen across the country as the narrow Dublin-centric approach is a proven failure.

There are solutions to our current predicament but they will be costly. What we really need are politicians with the bravery to implement them.

Corkman

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