Tuesday, 14 December 2021
Ceisteanna ó Cheannairí - Leaders' Questions
I thank Deputy Michael Healy-Rae, for whom I am standing in today. He has asked me to raise this issue. Contractors are finding it increasingly difficult to stand over tendered prices for periods of up to two years, which many projects run to, because of the rising cost of materials. In the past year, construction material prices have increased every month, by 26.7% on last year, which is a shocking amount. That is according to the Central Statistics Office's most recent wholesale price index; they are not my words. This represents a truly staggering statistic.
The materials shortages have started to ease but the rising cost of materials will probably continue well into 2022. The price of rough timber, meanwhile, has increased by more than 80%, the cost of plaster has increased by 20% and the cost of steel has doubled. Several local authorities have highlighted the effect this has had on housebuilding. Construction costs inflation is impacting on tender prices and contractors are finding it increasingly difficult to price and even to procure prices themselves from suppliers for that length of period. If somebody gets a price today, whether for a house, a house extension or whatever, the building suppliers will give him or her only three days or maybe one week at most. It is not that they want to blackguard people but that the prices are increasing weekly.
The crisis in this sector is jeopardising major initiatives such as homebuilding and national infrastructure projects. It is completely untenable for the construction industry to take on all the risks for the exceptional price inflation under current State building contracts. This impacts on all contractors, and on subcontractors down the line. A builder may find out, whether in the case of a school project or whatever, that he or she cannot complete the project within the tender price because the material is old. It could be a year and a half, because of delays with the Department and everything else, from tender time to getting the job. Builders then end up in crisis and cannot complete the job, despite their efforts and despite being good builders, and cannot pay their subcontractors, with the knock-on effect they cannot pay their suppliers.
This is a huge issue and it impacts on the construction economy as well. Rising material and labour costs could hurt competition going forward and will have a significant impact on our post-pandemic recovery. The materials crisis means there is an urgent need to overhaul how the industry procures and manages supply itself, yet the Government will not look at that. It has promised to do so, but the construction industry has not seen any cogent plans offered nor anything changed.
Higher energy costs and prices, whether for gas, coal or diesel, along with carbon tax have had a considerable impact on site clearances and on industrial machinery and lorries hauling cement, gravel and other aggregates to sites. Costs are spiralling. These are good builders who work as duine amháin, maybe with duine eile, and small builders who work with ten, 20 or 50 people. They cannot survive because of the cost of labour, insurance and materials.
What is the Taoiseach's Government going to do to alleviate the pressure on this worthwhile sector that needs to be respected?