1. CIF Presentation to the Budgetary Oversight Committee
Low infrastructure investment: a road to recession

2. Construction: Ireland’s most significant sector
Economic Contribution
 Construction Output (2016):
€15.5bn
Projected Construction Output in 2020 ( Constant 2015 prices)
€20bn
New Residential Construction Output (2015)
€3bn
 New Non-residential Construction Output (2015)
 New Civil Engineering Output (2015)
 All Renovation Output (2015)
€4bn
Output % of GDP/GNP (2016):
5.6/7.1%
Gross Value-added (2016, constant 2015 prices)  
€6bn
Exports (2014 construction products only)
€1.6bn

3. Largest source of employment
Employment Profile
Current Employment Level (Q4, 2016)
139,000
Peak level (Q2 2007)
276,200
Lowest level (Q1, 2013)
97,200
Forecast of direct employment: (2020)
213,000
% of new jobs created in construction since Q1, 2013
23%
Enterprises (2014) (98% <10 employees)
47,349
Combined Direct and Indirect Employment (Q4 2016)
195,000
Self-employed
46,000
Skilled Craftspersons in Industry
63,800
Largest apprenticeships (2015)
4,400

4. Infrastructure investment dangerously low
Eurostat: General Government Fixed Investment (% of GDP, 2015)

5. Negative Impact on competitiveness
Investment as % of GDP is lowest in EU28 (Eurostat, 2015)
World Economic Forum Exec Survey: 26% cite infrastructure quality as problematic
WEF: Irish infrastructure Ireland ranked 29/138 regarding the quality of its overall infrastructure
IMD Competitiveness Report 2016 ranks Ireland 40/41 in infrastructure
Taoiseach, European Commission, EIB, IFAC, NCC, ESRI, ICTU, IBEC, IDA, Chambers and most attendees at this committee all sounding the alarm bell
Significant members of the FDI community cite infrastructure as a threat
Exchequer capital investment has fallen from 5.6% of GNP in 2008 to an estimated 1.9% in 2016
Civil Engineering facing crisis: no growth in 2017 and 2018
Increasing proportion of investment on maintenance: from 20% in 2006 to 35%- 40% since 2010

6. Civil Engineering: Early warning signs
Activity in CE declined for 4th month in a row in Feb’2017
All semi-state bodies reporting lack of project pipeline
Without growth in civil engineering investment, housing, non-residential, FDI and competitiveness is undermined
Warning: current status means major projects delayed until 2019
Potential damage to the economy is lower GDP growth than would otherwise be

7. Fiscal Space: What can Government do?
Commission Methodology: reassess position of economy – should Convergence Margin be applied?
Golden Rule: you borrow only to invest and expand the productive potential of the economy
Structural Reform Clause: explore if SRC can be applied for capital investment (up to 0.5% of GDP)
Rainy Day Fund: consider postponing from 2019 start date

8. Do we actually want to solve this problem?
There are existing solutions we are not exploring:
Pursue EU for relaxation of fiscal space constraints for infrastructure
EIB funding: Ireland is currently in the lowest quartile for draw down
EFSI/(Junker Plan): low uptake in infrastructure – 13th in EU
Irish ‘PPP’ usage is low by historic and international comparisons
Procurement processes requires updating
Capital Receipts (e.g. National Lottery proceeds towards Children’s Hospital)

9. Our main recommendations
Exchequer Investment in public infrastructure has to increase to 4% GDP
Government to secure recalculation of Irish fiscal space by EC
Public procurement process modernisation must be adequately resourced
Mid-term Review of Capital Plan has to address depreciation and address bottlenecks
More transparency on upcoming projects to allow for planning
DPER to investigate scope for ‘Rainy Day’ Fund and Structural Reform Clause
National target and infrastructure delivery unit
Construction Sector Group should be reactivated to monitor and address industry capacity issues