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Positive impact of housing and infrastructure measures will be dampened if system isn’t overhauled
Director General Tom Parlon
The €10 billion announced in capital investment and circa €5billion in the Department of Housing’s budget for housing could insulate the economy from the worst of the cost of living with Covid. With a parched economy with many sectors placed in induced comas, this state needs the construction industry to translate these figures into much needed housing and productive infrastructure.
Our Government has heeded the IMF’s advice and increased investment into the public infrastructure by €1.6 billion to over €10billion for next year. Analysis shows that every €1 billion invested this year in infrastructure will generate another €1.85billion output, support 1200 jobs and circulate €680million 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. This is why its critical that our industry, which has a proven track record in terms of containing Covid-19 over the past 8 months, can remain operational if the country moves to level 4.
The Government’s commitment to an affordable homes scheme is also welcome. We understand that €110million has been allocated to a scheme that will be similar in operation to the UK’s shared equity scheme. The CIF’s Irish Homebuilder Association showed that a couple needed a joint income of over €94,000 to secure a mortgage for an average priced home. A shared equity scheme, where the Government takes a significant share (20-30%) of each new home could drop that income level to €70,000 allowing thousands of couple to secure mortgages. This should increase the level of development finance banks are willing to lend to homebuilders.
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. However, this annual uncertainty about the HTB’s future is unhelpful and it should be extended out to 2025 or until output meets the recommend level of 35,000 per annum. Finally, the increase in the Rebuilding Ireland home loan again and that will benefit supply.
This Government appear to ‘get’ the connection between infrastructure and housing with many measures designed to put the enabling infrastructure in place to allow housing bloom across the country. Their commitment to increase the ambition in the National Development Plan is welcome. Most impressive is the commitment to accelerate strategic projects across the regions. I would hope that this will, at last, see urban centres like Waterford, Cork, Limerick lead strong regional economies that provide opportunity to people to live and work in their local area.
We’re awaiting more detail on budget allocations for Irish Water but the commitment to provide €44million for the rest of 2020 is positive. Our view is that the legacy challenges are so vast, that Irish Water requires an additional €1billion per annum.
The CIF welcomes the Government’s commitment to put the national retrofit scheme on a more sustainable footing. The training places on retrofitting are a good step towards ensuring the industry has capacity to deliver on the ambition of retrofitting over 500,000 homes.
Underpinning all this potential, is the need for 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.
I reiterate our 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.”