Urgent call to invest in construction

THE Government has been called on to act immediately to restore confidence in the construction sector to prevent a massive downturn.

Construction output could be halved in 2009 if capital expenditure is delayed, a new analysis by construction economists DLPKS showed.

Its summer review points to a continuing decline in construction prices with tenders down to 2001 levels. That sharp fall means industry “can deliver real value and much-needed infrastructure to help drive economic recovery”.

The Government needs to restore confidence and stability to the economy and the construction industry by committing itself to an effective public capital programme (PCP) according to Norman Craig, managing partner DLPKS.

He warned that recent NDP cutbacks suggest the Government is risking serious damage to core infrastructure projects vital for economic growth.

On top of the 20% drop in the 2009 PCP, Mr Craig warned further planned cutbacks over the lifetime of the current programme was “the real sting in the tail”.

“The April budget not only reduced the PCP by 20% it also promised even more cuts in 2010 and beyond,” he said.

The PCP faces further cuts of 9.7%, next year and 17% in 2011. Those changes pushed the total amount of cuts in the plan to as much as 40% from 2008-2011.

“At a time when tens of thousands of construction workers are unemployed and value for money has never been better,” he said.

In this depressed environment “cutting investment in education, health and social infrastructure makes no economic sense, never mind common sense”.

He also called on the Government to approve as quickly as possible, the Construction Industry Council’s proposal to use private pension funds to invest €5 billion in infrastructure projects over the next three years.

The Construction Industry Council says 385,000 jobs could be lost in the economy by 2011, including 275,000 in construction from the peak of employment unless the PCP is maintained and the additional pensions fund investment is made.

In the present difficult circumstances setting up the National Assets Management Agency will be “vital” in restoring confidence in the economy, he says.