Pearse Doherty (Donegal, Sinn Fein)
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136. To ask the Minister for Finance the tax incentives or expenditures which exist with respect to modern methods of construction within the construction sector; and if he will make a statement on the matter. [15909/23]

Michael McGrath (Cork South Central, Fianna Fail)
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Profits arising from construction trade activities are taxed in the same manner as other trades. Income tax or corporation tax (as the case may be) is charged under Schedule D Case I for each year of assessment on the annual profits or gains of the construction trade carried on by a person. Relief for certain capital expenditure is given by way of capital allowances. Expenditure which is incurred wholly and exclusively for the purposes of the trade is deductible in computing profits.

There are currently no tax incentives specifically aimed at assisting modern methods of construction, but there are a number of general tax reliefs which, depending on the circumstances, may be available to those engaged in such activities. These include:

- Capital allowances on capital expenditure incurred on certain types of business assets and business premises.

- Accelerated capital allowances for qualifying expenditure on certain energy efficient equipment.

- A Research & Development tax credit for companies who undertake qualifying research and development (R&D) activities. The development of modern construction methods, rather than the use of such methods, may qualify as R&D activities.

- The Living City Initiative tax incentive scheme aimed at the regeneration of certain areas in the historic centres of Cork, Dublin, Galway, Kilkenny, Limerick and Waterford.

I am informed by the Department of Enterprise Trade and Employment (DETE) that, as part of the Government’s Housing for All plan, DETE are working to promote construction sector innovation and productivity, including through the adoption of Modern Methods of Construction (MMC) to help in the faster delivery of high-quality, compliant, environmentally sustainable, and more-affordable housing.

Examples of key Housing for All actions that DETE has already delivered to promote the wider adoption of innovative construction methods are:

- On 9 December 2022, the Department (with Enterprise Ireland) launched Construct Innovate, a construction specific and industry-led research and development centre, which represents the latest addition to the joint Enterprise Ireland and IDA Technology Centre Programme that has been operating for over 12 years. To ensure that it delivers for housing, Construct Innovate will be focused on key industry challenges and innovation in residential construction in its first three years of operation. Construct Innovate has initial funding of €5m over 5 years, and is a consortium hosted by University of Galway that also includes Trinity College Dublin, University College Dublin, University College Cork, and the Irish Green Building Council. Through the Housing for All Implementation Fund, DETE secured an additional €0.5m in funding for Construct Innovate for 2023.

- The expansion of the remit of Enterprise Ireland to work with the domestic housebuilding sector for the first time. As part of its ‘Built to Innovate’ programme, Enterprise Ireland is focused on driving productivity and innovation in housebuilding, including increased use of MMC, and has opened up lean and digital grants and funding for research and innovation projects in the domestic residential construction sector (previously these were only made available to exporting firms).

To develop further policy supports for MMC and ensure the integration of these supports into the existing Government offering, DETE has established and chairs a cross-Departmental and cross-Agency MMC Leadership and Integration Group. The Group brings together policymakers relevant to the success of the construction sector including on innovation, public procurement, sustainability, housing and the education and skills agenda.

The Group is currently developing an incremental roadmap (with targets) for MMC adoption in publicly procured residential construction. The Group is also overseeing the implementation of several further MMC actions included in the updated Housing for All Action Plan 2022. These include:

- The launch of the first phase of the National Demonstration Park for MMC

- Training interventions for public procurers, and Building Control authorities, on MMC

- Training interventions for relevant construction professional bodies on MMC - Skills forecasting for MMC through the Expert Group on Future Skills Needs

- Enhancing Ireland’s Agrément system (an NSAI scheme for certification of innovative construction products or systems) for MMC

- Developing a dashboard of MMC metrics to benchmark adoption and track progress - Identifying and responding to gaps in leadership training for the residential construction sector in the areas of company leadership, change management, and financial management.