Joan Burton (Dublin West, Labour)
Link to this: Individually | In context | Oireachtas source

188. To ask the Minister for Finance his plans to tackle overheating in the construction sector, specifically the increase in land prices and the lack of skilled workers in the construction sector; his view of the studies which have been carried out in respect of this, in particular land price increases in the greater Dublin area; and if he will make a statement on the matter. [36963/18]

Paschal Donohoe (Dublin Central, Fine Gael)
Link to this: Individually | In context | Oireachtas source

The Department of Finance continues to monitor developments in the construction sector, including the risk of overheating.  While professional training and skills needs in the industry are the responsibility of the Department of Education and Skills, the Department of Finance also monitors developments in this area.

The key indicators for the construction sector do not suggest overheating. The construction industry accounts for approximately 7.4 per cent of GDP. For comparison, in 2007 it accounted for 18.6 per cent. In terms of labour supply, workers in the construction industry account for 6.3 per cent of all workers. In 2007, they accounted for 10.6 per cent. Overall, the contribution of construction to the economy is expected to grow with the Department forecasting this to rise to 9.7 per cent of GDP by 2021. The rise is consistent with delivery of the National Development Plan as well as the much needed increase in housing supply. An increase of this magnitude in the overall contribution of construction to the broader economy is both sustainable and desirable given our investment requirements. I also note the results of the recent Quarterly Labour Force Survey showing that the construction sector gained 17,800 employees over the year to Q2 2018, the largest sectoral increase for the period. While there may be a shortage of labour with specific skill sets there does not appear to be a more generalised labour supply problem in the construction industry.

I am nevertheless aware that specific pressures exist. A report by SOLAS earlier this year entitled “Overview of Construction Sector Skills” identified skill shortages in the sector. It also outlined the Agency’s response, which includes a very significant increase in apprenticeships.

Separately, the issue of land price inflation is another matter that my Department continues to monitor. While there are no official data on residential development land prices, reports on construction costs, including land prices, have been published by the Department of Housing, Planning and Local Government as well as by the Society of Chartered Surveyors Ireland. The Department of Housing, Planning and Local Government report specifically looks at the drivers of land price inflation.

To help tackle land price inflation - and housing inflation more generally - the Government introduced the Vacant Site Levy. The levy aims to encourage land owners to either develop their sites or sell them to those who will. The Vacant Site Levy presents a strong disincentive to land hoarding. In addition, in Budget 2018 I increased the rate of stamp duty on non-residential property from 2 per cent to 6 per cent with a view to refocusing construction activity. Finally, the Department of Housing, Planning and Local Government is finalising proposals around the new State land management agency, which will maximise the use of State land as well enter partnerships with private land owners to ensure strategically important land banks are used efficiently.