The CIF has welcomed housing and infrastructure measures in Budget 2021 but warned that embedded inefficiencies in the State’s planning and procurement systems could dampen positive economic benefits and delay delivery. The increased investment in infrastructure to €10.1bn is a hugely positive step.
The Government’s commitment to delivering affordable housing through a range of measures is also welcomed and a mooted shared equity scheme could lead to thousands of additional homes if deployed correctly.
Director General Tom Parlon stated: “The IMF has recently advised countries to increasing investment in infrastructure to drive economic recovery. Our Government has heeded this advice and increased investment into the public infrastructure by €1.6bn to over €10bn. This will have huge positive impacts in the short term and the long-term. Every €1bn invested this year in infrastructure will generate another €1.85bn output, support 1,200 jobs and circulate €680m in wages and profits around the economy. In the longer-term, this investment will see housing input increase towards 35,000 per annum, the delivery of hundreds of thousands of retrofits, and generate the balanced regional development envisaged in Project Ireland 2040. Adopting this pro-investment approach, means we will hand over a fully functioning, competitive and climate friendly economy to the next generation rather than simply a large debt arising from COVID-19.”
The Government’s commitment to an affordable homes scheme is welcome and we hope to see a shared equity scheme in place in the coming months. The details of how this scheme will be implemented will be critical and it will mean thousands of houses that our sector cannot currently build will be built. This would take thousands of couples out of the affordability trap.
The CIF’s Irish Homebuilder Association identified the fact that a couple needed to have a joint income of over €94,000 to secure a mortgage for an averagely priced home. A shared equity scheme, in conjunction with the Help to Buy Scheme, will ensure that couples with joint incomes of €70,000 can secure mortgages. This should increase the level of development finance banks are willing to lend to homebuilders. The CIF believes that the ‘Shared Equity Scheme’ needs to see the Government take at least a 30% stake in new homes to ensure housing output meets our population’s requirements.
The CIF also welcomes the extension of the Help to Buy Scheme out to 2021 as it has proven to be a critical component of increasing the supply of new homes. Without the HTB, the positive impact of any shared equity scheme will be greatly reduced so we believe it should be extended out to 2025 or until output meets the recommended level of 35,000 per annum. This will encourage investment by the sector and the banking system into homebuilding and increase supply in the medium term. In addition, the increase in the Rebuilding Ireland home loan again and that will benefit supply.
The CIF welcome the State’s commitment to housing providing a budget of €5.2bn to the Department of Housing in 2021. The CIF and its members are ready to deliver social, affordable and private residential. Real engagement between the industry and the Land Development Agency will be essential to ensure the correct mix of housing over the next two decades.
The CIF has also warned that the Government’s investment must focus on developing strong regional economies that compliment Dublin as a global economic engine.
Tom Parlon said: “The CIF welcomes the commitment to increase the ambition in the National Development Plan. This Government has now a unique opportunity to finally address regional imbalances in our economy. We have seen how a lack of opportunity for people to live and work in their own region has fomented political upheaval in the US, UK and across the EU. Ireland’s economy overall will benefit from strong dynamic regional economies that support FDI led sectors outside the capital. We have called on the Government to divert at least an additional €3bn of this year’s public sector investment into acceleration of strategic projects across the regions and welcome their commitment to invest €10bn in this regard. The upcoming review of the National Development Plan our last chance to get this right or we will miss the vision outlined in Project Ireland 2040. It’s time for cities like Waterford, Cork, Limerick, Galway and Sligo to lead regional growth around a dynamic and thriving Atlantic Corridor.
“Underpinning any of the recommendations made, the CIF has highlighted the need to grasp the nettle and properly resource Irish Water. The challenges of the legacy of water in this country are so vast, that Irish Water requires an additional €1bn per annum simply to keep up with increasing demand. The announcement of an immediate additional €44m to Irish Water is welcome for 2021 but will not be sufficient in the longer term. No substantive increase in infrastructure and housing will be possible unless Irish Water can put in place water infrastructure to meet increased capacity. The CIF is working with Irish Water to improve collaboration between its members and the body to ensure optimum results for the citizens over the next 20 years.
“The CIF welcomes the Government’s commitment to put the national retrofit scheme on a more sustainable footing. The construction industry will be to the forefront on our national effort to recalibrate our economy to decarbonise our economy. The retrofit scheme means that our contractors can now invest in the technology, techniques and training required to address this exciting market opportunity. The Government needs to increase support for companies in upskilling in retrofit to ensure the industry has capacity to deliver on the ambition of retrofitting over 500,000 homes. The training places on retrofitting in this regard will be a good step in this direction.
“The CIF is disappointed about the general low level of investment in innovation in construction across the Government and third-level sector. The industry is working with the Construction Sector Group to increase innovation, technology utilisation and process improvements across the sector to improve productivity. These efforts need to be matched by increased investment to promote RDI, particularly amongst the sector’s thousands of SMEs.
“The construction industry is one of the only sectors able to continue operating at full capacity and safely in the face of this pandemic. Construction companies have been assiduous in adopting new safety protocols whilst maintaining productivity levels. As a result, the Government is dependent on construction to be the mainspring for economic renewal over the coming three to five years.
“From our perspective, for the industry to do so, we need the Government to streamline the bureaucracies and process that very often delay deliver and increase its costs. If we can do this, I believe we can bring the economy back to pre-COVID economic in 2021, months ahead of estimates whilst transforming our society and solving the housing crisis.
“The CIF reiterates its call on the Government to remove any uncertainty about the ability of the industry to remain open if we move to Level 4. This is necessary to ensure that the industry can translate the commitments announced today into homes, roads, schools, hospitals etc rapidly and the economy can start to see positive multipliers.”