Investment in capital vital, construction group says
THE ECONOMY will deteriorate further unless the Government balances cutbacks with continued investment in capital projects, Construction Industry Federation director general Tom Parlon said yesterday.
Following an emergency meeting of industry-wide groups yesterday, Mr Parlon said the construction industry was already in freefall. He said the industry would be bringing forward a plan to fund development projects “off-balance sheet” through utilising the 80 per cent of pension funds currently being invested outside the State.
And he said Ireland would ruin its credibility internationally if the Dublin Metro project did not go ahead.
The meeting, held in Dublin, included all the major employers in the industry as well as suppliers, subcontractors, architects, engineers and surveyors. It was convened to discuss the presentation of a plan to Government in advance of its mini-budget in April.
Some 190,000 people were still employed in the industry, Mr Parlon said, but firms all around the country had signalled once their current projects were completed, there was nothing else in the pipeline and staff would have to be let go.
“Continued investment in our infrastructure and in the NDP is absolutely essential if we are to try and maintain the jobs that are there,” Mr Parlon said.
“We are going to have to have cutbacks, but unless we balance that with maintaining economic activity and continuing to invest in capital projects, we are going to see a further spiralling down.”
He said for every €100 million invested in infrastructure, 1,000 jobs are created and the exchequer saves €30 million a year in social welfare. Projects including schools, water and waste water schemes and the 240 primary care centres planned around the country were all needed and should go ahead.
The group also recommended a temporary abolition of stamp duty and the introduction of a first-time buyers’ grant for a limited time. Labour-intensive NDP projects should go ahead, the group said.
Mr Parlon also said he would very strongly support the Dublin Metro North project, which was a public-private partnership.
“Very little Government money will go into the metro and we have some of the best engineering and financial consortia in the world involved,” he said.
“In terms of our national or international credibility, if anything is pulled on the metro at the moment, we can throw our hat at trying to attract those kinds of players to invest here in the future.”
Tom Costello, managing director of construction company Sisk and the federation’s representative on the Construction Industry Council, an umbrella group for the entire industry, said the council would complete its proposals for the Government by the end of this week.
He said funding could be found for projects through utilising the more than 80 per cent of Irish pension funds that go outside the State.
“At a time when we sorely need every euro to be retained in the economy, it makes a huge lot of sense that the pension fund would be invested in infrastructure,” he said.
The proposal was not yet fully refined, but they had engaged with private pension funds and the scheme would likely see a 6-7 per cent guaranteed return on investment. The guarantee would be underwritten by the private sector and would be “off balance sheet” for the Government, and so would not add to the country’s debt.
Mr Parlon said that he would be meeting the Government in the next few days to bring forward the recommendations.
Mr Costello said the council’s report would be complete by the end of the week and would be presented to Government in the next couple of weeks.