Irish Budget 2008 – Let’s try National Development Plan B

It was very much a case of National Development Plan B, when Irish Finance Minister Brian Lenehan TD unveiled his economy jump-start budget, which may result in some construction job activity in the education, housing renovation and infrastructure sectors.

The Irish Construction Industry Federation was quick to welcome the budget because Minister Lenehan did not go as far as expected in making cuts in the National Development Plan. But concern remains about how quickly the Government can get future infrastructure developments on site.

Transport 21
A quick look at the revised Transport 21 Plan shows that because many projects were at such an advanced stage of planning they could not be cut back. So, plans for Luas extensions and the Metro projects will proceed, despite misgivings from some quarters. Likewise the interurban route remains on track for completion by 2010. After that, smaller, but not necessarily small roads projects, will feel the pinch. With a capital budget of €900m Minister for Transport Noel Dempsey has listed six road projects that have been deferred for at least a year. These include the Arklow to Rathnew road in Co Wicklow (back to 2010) and the Atlantic Corridor with the rescheduling of the N18 Oranmore to Gort section a cause for concern regarding access between Galway and Shannon Airport. If these projects are delayed for too long, the big worry here is that the Government will return to a stop/start piecemeal roads programme associated with the 80s. And with fixed price contracts now in place and an Irish civils industry geared up to deliver, it would make sense for the Government to get some mechanism in place to deliver the necessary roads network and complete these smaller but vital regional urban links.

Education
In the weeks leading up to the budget, Minister for Education Batt O’Keefe granted approval for 25 new school building projects to proceed to the tender and construction phases: a clever political move? Minister O’Keefe has been one government minister who has been lauded for his openness in presenting the effects of the budget on his Department’s spending plans. And while he faces great criticism on class sizes and student grants cuts, the fall in the price of land and the deficit of school buildings in the country means that much will be expected from his department in the next 18 months. Minister O’Keefe has a capital allocation for next year of €889 million – an increase of €79 million, or almost 10%, on 2008 spending.

Commercial development
The reduction of stamp duty on commercial property from nine to six percent could be enough to renew activity in the commercial property market. According to a number of real estate agencies there is growing interest in European property from foreign speculators and the three-percentage point cut makes the Irish commercial market a very attractive option for anyone looking to expand their European property portfolio. However, whether this proves the case is dependent on more money being available on the market.

Housing
A revised housing loans scheme and increase in mortgage interest relief for first time buyers has also been welcomed by the construction industry. However this may take some time to work its way through the system. However the €15m allocation to the Home energy Saving Scheme, while well short of the originally planned allocation is good news for those in the housing renovation sector and should create job opportunities for those working with energy efficacy products such as BER assessors, insulation installers, window installers and in indeed renewable energy products.

Construction job opportunities
Those looking for construction jobs in school building and housing renovation should be particularly happy with the budget. While those looking for construction jobs in road and rail development may have to wait and see how quickly future projects can be rolled out.

Job opportunities in Education roll-out

One building sub sector that struggled to keep up during the property boom of the past few years was the Education. Listening to Ministerial announcements you might have believed that year on year there was a massive roll out of new schools. But disproportionate fund allocation, poorly planned infrastructure in Rapid Population Growth areas and inflated land prices combined to hinder those charged with delivering schools in achieving their goals.
With the slowdown in Irish residential output this year and probably next year, the Department of Education and Science (DES) Planning and Building Unit has been afforded the opportunity to catch up.

In 2008 €600m of Exchequer funding will be spent on school development, with 200 projects ranging from new school buildings to roof repairs planned for completion before year's end. Another 350 projects are scheduled to start between now and early next year. The works will be carried out primarily in the Eastern Region of Ireland (Dublin, Kildare, Meath, Wicklow and Louth) in areas of Rapid Population Growth, where it will take at least two to three years to meet the school requirements for the current level of new housing stock. Parts of Cork, Galway and Limerick have also been highlighted as areas that will experience large-scale Education infrastructure development in the next 18 months.

In 2005 the Irish Government announced a plan to provide 23 new post-primary schools and four primary schools as bundle projects through Public Private Partnership from 2006 to 2009. Plans are now at an advanced stage on three of these bundles. The first – a bundle of four schools (Two in Laois, two in Offaly) – will be built by the Macquarie Partnership for Ireland (MPFI), a consortium that includes Pierse Contracting. Work is expected to start on these in early summer. Another scheme is scheduled to begin later this year with the other penciled in for early 2009. Further projects are planned for 2009.

From a construction jobs perspective, this is all good news. School building presents an opportunity for those looking to migrate from residential development to a sector that requires similar skills.

The DES Planning and Building Unit says that the slowdown in housing has had the effect of making tenders and land prices more cost effective. In this scenario, once funding can be maintained, Education roll out should provide sustainable construction job opportunities for a wide variety of construction trades people and construction professionals in the coming years.