merrion street

Introduction

Thank you Philip for the introduction, and thank you Tom for your invitation to address your conference here today.

It is the first time I have addressed your organisation since becoming Taoiseach and I believe the time is now opportune to reflect on Ireland’s recovery and the current state of the construction industry.

As you know the Government’s top priority is to get Ireland working again. In the three years leading up to Government taking office 250,000 people lost their job in private sector, many in construction.

This caused an enormous shock to the domestic economy, the ripples of which are still felt today.

One such consequence is the near 80,000 people still on the Live Register who had worked in the construction sector.

Supporting the development of a new construction industry based on the highest international standards in quality, excellence and trust will be an essential part of the Government's drive to further reduce unemployment that we've been seeing over the last 18 months.

Nobody wants to go back to the bad old days of the construction and property boom where scarce capital chased ever increasing house prices. That won’t benefit the country, young families or the sector itself.

It is now firmly accepted that the development of an unsustainable construction sector combined with an appalling lack of building standards by a minority in the industry made worse by a lax enforcement regime by the previous Government was a catastrophe for the industry… and for Ireland.

The spectacular crash in the sector has caused widespread hardship and ruin for many.

The creation of a boom bust property market has left hundreds of thousands of families in negative equity, the consequences of which will be with us for many years to come.

The Need for a Sustainable Construction Sector

But having said that we have to recognise that the construction sector has a fundamental role in supporting economic development and job creation in Ireland.

Today the sector is worth about 6.4% of GNP whereas Forfas estimates the optimum level of output for the sector should be in the region of about 12% of GNP.

The sector now accounts for just over 5% of total employment in Ireland, the lowest in Europe, and under the EU average of 7%. This evidence suggests that the correction in the sector has gone too far.

A sustainable construction sector supports development across the economy, whether it’s providing high quality commercial office space for major FDI companies or building vital economic infrastructure like telecommunications, water and energy networks.

Also a healthy construction sector is also required to maintain the output of quality housing options for young families as Ireland’s population continues to grow and the effects of urbanisation become more acute.

In rebuilding a construction sector based on excellence and quality we have to stand up and confront the major deficiencies in the sector that tolerated poor standards through a weak regulatory and enforcement regime.

During the building boom the interests of a minority of developers were allowed to take precedence over the interests of families.

We will not tolerate any more Priory Hall’s or pyrite housing estates.

A new sustainable construction industry has to represent the highest standards in quality if it is to regain the trust of the people.

Since coming into Government we have worked to hard to undo many of the mistakes of the past and to increase building control standards.

Earlier this year the Government introduced new Building Regulations which will come into effect from 1 March 2014 which set out the minimum requirements that must be achieved in bringing a building to completion.

These new regulations will in future ensure compliance with all planning requirements.

The new approach establishes a clear chain of responsibility for building works. These new Regulations for the first time give consumers clarity, traceability and accountability at all stages of the building process.

This new regime of design, inspection and construction by registered professionals and competent builders will guarantee that Irish consumers are delivered the high quality homes and buildings that they expect and deserve.

This is only the start of our reform programme. The Government, through the Department of Environment, has a great deal more planned to improve our planning process for the better.

Work is underway on the development of a Policy Statement on Planning.

Following the calamity that was the National Spatial Strategy the Government will shortly consider proposals for its consequences, which is expected to be in place by 2015.

We will also deal with a range of other actions in the area of planning including a review of Development Management Guidelines which will commence in the second half of this year.

Regional Planning Guidelines will be replaced by Spatial and Economic Strategies under the local government reform process and integration of the foreshore and planning consent regimes will be completed.

Jobs in the Construction Sector

As a sustainable construction industry emerges we want to promote new responsible levels of job creation.

The Government’s Action Plan for Jobs has put a focus back on the construction sector and its role in the wider economy.

A deliverable under the Action Plan was the commissioning of a report on the sector by Forfas, under Minister Bruton’s Department, and for the Government to develop proposals in response.

Under the leadership of my own Department we organised a stakeholder event in June to discuss the state of the industry and to identify additional measures to support a sustainable recovery.

As a result of these inputs the Government signed off on a policy statement on construction in late July which has been welcomed. It contained a number of new initiatives.

The creation of a new statutory register of builders and contractors will improve transparency within the industry, ensure statutory, regulatory and legal compliance, and contribute significantly to the quality of the built environment.

The Department of the Environment, Community and Local Government has invited the CIF to bring forward proposals for the development of a robust voluntary registration scheme.

I’d like to thank CIF for their ongoing work on this matter.

This will be reviewed within 12 months of operation with a view to ensuring that a robust statutory system is in place by 2015.

The further crackdown on the shadow economy will drive out more reckless contractors from the industry.

The Government won’t tolerate any non tax compliant contractors and neither should the industry itself.

I expect the industry to work with the Revenue Commissioners and the Department of Social Protection and adopt a zero tolerance approach to the shadow economy which harms Irish economic recovery.

And as the Secretary General of the Department of Public Expenditure and Reform discussed earlier a range of Government Departments are now developing new options to help secure new investment through increased private financing.

As you can see the construction sector already has a range of interactions across Government but it is currently uncoordinated.

In response we are in the process of establishing a Construction Sector Consultation and Coordination Group in Government that will comprise of relevant Departments and agencies to coordinate our collective work that impacts on the sector and to engage more strategically with the sector itself.

Details of membership of the group are being finalised and I expect the first meeting will be held shortly.

Another important milestone in rebuilding confidence in the construction sector was the recent passage of the construction sub-contractors Bill through the Oireachtas.

Conclusion

All these actions can help the construction stabilise and begin to recover.

A sustainable recovery is in the interests of country and is vital for economic development.

Already we are seeing the consequences of years of stagnation in the Dublin housing market.

The demand for suitable homes for young families is building.

While we don’t want to see a return to craziness of the past we have to recognise that urban areas, especially Dublin, are continuing to see an increase in population that has to be properly planned for.

Equally, we need to continue to have a suitable supply of quality commercial space available to meet the needs of our strong pipeline for foreign direct investment.

The road to recovery includes the construction industry.

Working together we can build a new, sustainable industry that provides new jobs for the unemployed… allows young families to achieve their dreams… and to ensure the Irish economy continues to grow and prosper once again.