Ossian Smyth (Dún Laoghaire, Green Party) | Oireachtas source

The risk is that we increase capital expenditure beyond where we are now and get nothing in return. If we are in a position of full employment, where there is nobody available to do the work, and we increase the investment into a sector, we may receive back the same quantity of output - in other words, the same number of houses and hospital are built - but prices, wages or costs are pushed up and, therefore, add to inflation. That is why the ESRI report is being done. It is why the review is being carried out. The ESRI has identified capacity constraints, given the place we are in the economic cycle. Referring back to previous ESRI work from 2006, it seems likely that additional demand would lead to construction wage inflation. Issues such as construction wage inflation need to be borne in mind. The expansion of the capital plan may risk higher levels of inflation and labour shortages in the construction sector. However, one thing that is coming out of the ESRI report is to note that in the medium term, successful delivery of NDP projects, including housing, should lead to a reduction in inflationary pressures.

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