Mairead Farrell (Galway West, Sinn Fein) | Oireachtas source

Before I begin on the Appropriation Bill, I note that this might be the Minister's last occasion to address the Dáil as Minister for Public Expenditure and Reform.I thank him for being very constructive throughout his term and I wish him all the best for the future.

The purpose of the Appropriation Bill is to give statutory authority for the amounts voted by the Dáil during the year. The appropriation of sums voted for supply services this year is just over €75 billion. The Bill also provides for the definitive capital carryover facility from 2022 to 2023. Generally, money that is not spent goes back to the Exchequer, but due to changes in the Finance Act 2004 we have a facility to carry over unspent capital into the next year. This year we will be carrying over about €687 million. Capital expenditure has been rising in recent years as set out in the national development plan. This is to try to address our infrastructural crisis. The IMF, OECD and EU have all pointed out the weakness of our public infrastructure vis-à-vis our EU peers. They have pointed out that it is harming Ireland's competitiveness. It is also creating terrible socioeconomic problems, particularly in housing.

Of course, none of this will be new to the Minister. Earlier we debated a confidence motion arising from in no-confidence motion in the Minister for Housing, Local Government and Heritage, Deputy Darragh O'Brien, as a result of his failure to get to grips with the crisis. In many ways the Appropriation Bill or rather the capital carryover facility highlights the weaknesses of the Government's approach. It has failed to address the capacity constraints facing the construction sector. As capital expenditure has risen, so too has the capital carried over each year. In 2020, €710 million was carried over. In 2021 this rose to €820 million. I recognise that the figure is lower this year but I think other factors like the use of the inflation co-operation framework have played a role here.

I also want to be constructive. The Minister is departing for the Department of Finance and some of what I mention might have more relevance for his successor but some are measures he could enact in his next role. There has not been enough effort to redirect the construction workforce towards residential construction. As has been pointed out this evening, in 2000 our construction sector workforce was 138,000 strong and in that year just under 50,000 new homes were delivered. Now in 2022 the size of the construction workforce is now 168,000. That is 30,000 more workers and yet we might not even turn out 25,000 new homes this year. Something has clearly gone wrong. While I would normally recognise that changes to the tax system are not in his remit, he is soon, of course, to become Minister for Finance and will have the power to use the tax system to redirect the workforce. From the perspective of the public finances, failing to do so is totally self-defeating.

Let me give a concrete example. In 2011 total public expenditure on the various housing supports like housing assistance payment, HAP, rental accommodation scheme, RAS, homeless supports, the capital loans and subsidy scheme etc. was €627 million. In 2020, nine years later, the latest year for which I could get data, that had increased to €3.6 billion, a 480% increase which is hardly a prudent use of scarce resources. If the workforce had been directed towards building more homes the Government would not need to be spending so much on these subsidies. I know the Department of Public Expenditure and Reform first began examining how to promote modern methods of construction for which it deserves credit. I note that the Department of Enterprise, Trade and Employment has also taken up that mantle, presumably more in terms of wider industrial strategy. The Tánaiste's new White Paper outlines a desire to drastically increase the productivity of indigenous firms such as those engaged in construction.

Those are obviously laudable aims but are they credible?

The White Paper is remarkably scant on details of how to do many of the things that it is proposing. It talks about using the public procurement process to support innovative SMEs but this State has no history of using public procurement for strategic purposes. The focus here for the contract award criterion has traditionally been lowest price and I am not aware of any changes being outlined for new procurement legislation that is in the pipeline.

I do not want the Minister to misunderstand me as I would obviously welcome such a thing, were it forthcoming but I have seen very little progress in this regard. I have been engaging with multiple local authorities across the State to assess how many modern methods are being used and am aware that Dublin City Council has made some good efforts but it is the exception rather than the rule. Without some new plan for the public procurement system, whereby we can create the demand for these kinds of services, then this will remain an aspiration rather than a real plan for transformation.

Only recently the Construction Industry Federation pointed out that less than a third of SMEs win public work contracts. One can think of the innovative SMEs doing modern methods of construction using things like off-site manufacturing, modular and prefabricate build, using the likes of building information modelling, and things like precast concrete; and they are really struggling to win public contracts. There are only 100 of these kinds of SMEs in the State but only a quarter deliver full housing solutions. That is because we have not used the State as the largest spender within the economy to create that kind of a demand. Many of those SMEs engaged in modern methods have now turned instead towards building data centres, which seems completely on its head.

Unless the Minister or his successor uses the public procurement system to really promote modern methods of construction, it will take years before it reaches widespread adoption and we will continue to struggle with capacity issues. If we use the procurement system to create the demand; contractors will then seek to supply that demand.

I would like to give a concrete example. Building information modelling is mandatory in all public works contracts in Denmark, France, Germany, the Netherlands, Austria and many more countries. The use of building information modelling is therefore widespread in these countries. It is not mandatory in public works contracts here, even for large projects, for example, of over €100 million and that is something that could be done immediately with ease. This would speed up the pre-construction phase of development.

Data I received recently on the average amount of time local authorities spent on the pre-construction phase of development were astounding. Cork City Council spent an average of 155 weeks in the pre-construction phase of development and that is not far off three years which, of course, is absolutely bonkers.

The Minister could bring in an amendment tomorrow to make building information modelling mandatory above a certain level and I thought of doing so myself but, as we had this discussion in the past week, I have had difficulties in having my Bills progressed due to the money message provision.

We are also failing on the apprenticeships front. While I recognise that the Minister’s Department is not responsible for that, his Department has taken the lead in promoting modern methods of construction. I recently submitted a parliamentary question to the Department of Further and Higher Education, Research, Innovation and Science which was on the back of a report which it had carried out itself on the kind of new apprenticeship places we need to develop. Thus far there are no apprenticeship places in modern methods of construction. There are no college or university places offering training in this regard. Often, it seems to me, that when it comes to this Government, the left hand does not seem to know what the right hand is doing.

How can we really improve construction sector capacity through modern methods of construction when the education and training places simply do not exist? I know that there has been much detail in my contribution there but, in fairness, a great deal of work needs to be done. If all of these measures were enacted it would not be revolutionary but rather, moderately evolutionary. I still believe that more radical action is again required. I will be bringing forward in the new year a very substantial piece of policy work that I have been working on over the past eight months. President Higgins recently stated that the key to solving the housing crisis was for the State to build public homes on public land, and he is dead right on that. The Government seems to have tried every conceivable market-based solution and in the new year I will be bringing forward my own proposal, including much of what I have outlined there this evening.

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