Robbie Gallagher (Fianna Fail)
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We are all aware of the devastating consequences of the mica situation on homeowners in County Donegal and other affected counties and we know this will cost the taxpayer billions of euro to put right. We also know that the State will and must pursue those responsible where possible. However, the proposed concrete levy punishes many who had no part in this. All concrete manufacturers fully recognise the devastation caused to affected homeowners arising from damage to block work in their homes. However, the overwhelming majority of concrete manufacturers were not directly involved in this issue. Many concrete manufacturing operations fall entirely outside the housing sector yet all concrete manufacturers providing products to all construction sectors will be affected by the proposed new levy.

Two wrongs do not make a right. Apart from the fact that the introduction of a levy on concrete products will lead to further upward pressure on the cost of building houses, potentially to the tune of €3,000 or more per unit, the introduction of a levy could lead to further cost inflation across all sectors of construction in this country, including schools, hospitals, nursing homes, the farming sector, energy facilities, sports venues, transport infrastructure and commercial and industrial developments.

A levy applied to concrete products for export will have a devastating impact on the viability of Irish concrete exporters. Irish pre-cast concrete manufacturers export approximately €150 million worth of product to the UK each year. These Irish exporters are already dealing with the spiralling cost of raw materials, increased labour costs, Brexit-related costs and currency fluctuations. The levy could effectively close the UK market to these Irish exporters with knock-on effects for the workforce. Conversely, concrete products manufactured outside the Republic of Ireland will not be subject to this levy leading to an unfair advantage for imported products.

In Border counties such as Monaghan and Cavan, competitively priced imported products exempted from the levy would replace locally produced concrete products with obvious implications for employment. Jobs will be lost. Local companies compete with other manufacturers north of the Border, the UK, Belgium and the Netherlands. Imposing a 10% levy will effectively result in a competitive disadvantage compared with other imported systems on the market. Concrete manufacturers with contracts in place for 2023 and beyond now face a loss-making scenario with the impact on the viability of many businesses within the supply chain. Local companies with hundreds of employees in the Border counties of Monaghan, Cavan and Meath are frightened by the defective concrete levy and insist they cannot absorb the proposed 10% increase. They see that tight margins mean they have no choice but to pass this on to the consumer in order to remain viable. Local companies that are proud of the reputation they have developed over many years of hard work have been receiving calls from long-standing clients in the UK questioning the integrity and quality of products they manufacture in light of the negative publicity that has surrounded the news of this levy. Companies also face a dilemma with regard to no contract pending and the potential for this levy to make such contracts unviable.

The cost of the mica redress scheme will be enormous. However, this levy as it currently stands is unfair and could do more damage to local industries and create unemployment in the Border region. For that reason, I ask the Minister of State, Deputy Fleming, to facilitate a meeting with the relevant stakeholders and officials from his Department to discuss this issue.

Seán Fleming (Laois-Offaly, Fianna Fail)
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I thank the Senator for raising this issue.He spoke to me before we arrived in the Chamber to discuss the matter, and I appreciate his efforts to highlight the issue.

The Minister for Finance announced the introduction of a levy on pouring concrete, concrete blocks and certain other concrete products used in the construction of buildings in his budget 2023 speech. This follows a Government decision of November 2021 which approved an enhanced redress scheme for householders impacted by the use of defective concrete products in the construction of their homes. The Government decision also agreed to the development of a levy whereby the construction industry would make a contribution to go some way to offset the significant cost of the defective concrete block-mica redress scheme, which is currently estimated at €2.7 billion, or of the order of €15,000 for every household in the country.

The levy will apply at a rate of 10% on concrete blocks, pouring concrete and certain other concrete products. It will apply from 3 April 2023 and will be levied at the point of first supply. It is important to note that the levy will not apply to all concrete products. The levy will be placed on concrete blocks and ready-to-pour concrete; in addition, it will apply to a small number of other concrete products used in the construction of buildings. Further detail of the levy and the specific products it will apply to will be set out in the Finance Bill 2022, when that is published on 20 October.

The Minister for Finance was conscious, when developing the levy, of balancing the need to ensure some of the costs of the redress scheme are met from a source other than the Exchequer with limiting the impact on inflation and the construction sector. The levy would have to be set at a much higher rate to cover all the costs associated with the redress scheme.

The Department of Housing, Local Government and Heritage commissioned a bottom-up scientific analysis carried out by an independent construction economics cost consultant on the potential impacts of the levy. Taking account of variables involved, it is estimated that the impact of the levy on construction costs will be between €800 and €1,600 for a typical three-bed semi-detached house or €700 to €1,100 for a sixth-floor apartment block with basement. For a typical dwelling, this is an increase of approximately 0.4% to 0.9% in cost. Other figures have been quoted by many people but I have been contacted by a person heavily involved in the construction industry who is, as we speak, building houses for the private sector, local authorities and the approved housing body sector. He said it is of the order of €1,500, which tallies with these figures, though much higher figures are being quoted.

I acknowledge the comments by the Senator on contact with the Department of Finance before this matter is finalised and enacted through the Oireachtas. I look forward to the Senator contacting my office to facilitate such a communication process.

While the levy is focused on ensuring industry makes a contribution towards the cost of redress, it is not the only action the Government is taking in this regard. The Department of Housing, Local Government and Heritage is committed to establishing an independent building standards regulator to strengthen the oversight role of the State with the aim of further reducing the risk of building failures and enhancing public confidence in construction-related activity.

Victor Boyhan (Independent)
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I thank the Minister of State for that comprehensive response to Senator Gallagher's Commencement matter. The Senator has one minute.

Robbie Gallagher (Fianna Fail)
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I thank the Minister of State for his comprehensive response and for accepting my request that his Department officials meet with the relevant stakeholders to address this issue. We have a window of approximately two to three weeks before the finance Bill is finalised. That is an opportunity for all to sit down and have a comprehensive discussion on this.

I am here today because I have been approached by a number of businesses in the Border region with serious concerns about the way this has been reported and as to how it will affect their viability. It could result in job losses in the Border region. Doing business at the best of times is difficult and at this time it is extremely difficult. Doing business in the Border area is a further complication.I ask the Minister of the State to take on board the concerns of these employers.

Seán Fleming (Laois-Offaly, Fianna Fail)
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I again thank the Senator for raising this issue. Not only have I listened carefully but I will also ensure that the officials in the Department who are dealing with drawing up the specific details take on board and fully note everything that has been said during our conversation in the House, especially that relating to the Border region.

As I said, the levy is not the only action the Government is taking. I highlighted a review by senior counsel that will take place and the Government is committed to the establishment of an independent building standards regulator. The Remediation of Dwellings Damaged By the Use of Defective Concrete Blocks Act 2022 provides for the State to take over a legal right of claim against the defective blocks in a relevant dwelling against any party, including the insurance company or the original suppliers. This will allow the State to pursue claims against wrongdoers and remove the burden from individual homeowners in respect of this situation.

I thank the Senator for raising this matter, which will be fully taken into consideration by the Department.

Victor Boyhan (Independent)
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I thank the Minister of State for comprehensively covering that issue.