Theo Cullinane on Budget 2015
15th October 2014
It’s encouraging that after several years of austerity Budgets, we seem to be turning a corner in terms of the measures introduced in Budget 2015. We welcome the news of 4.7% economic growth for this year and the targeting of a reduced budget deficit of 2.7% for next year.
The construction sector has been through an unprecedented period of inactivity, and while there has been some uplift, there are still in excess of 80,000 people out of work within the sector. If Ireland is to truly recover, the construction sector requires various strands of stimulation and it’s somewhat encouraging that Budget 2015 has allocated funding in an attempt to reignite activity.
The Social and Affordable Housing Strategy that will lead to the construction of 2,500 social housing units next year and 6,700 by 2017 should increase employment in the sector and provide much-needed homes across Ireland. The announcement of €300 million for PPP social housing projects is to be welcomed. This, as stated, will not be the land-swap model historically used but will be similar to the model used for the building of schools, under which BAM Group Ireland successfully delivered Schools Bundle 3 over the past two years and is the preferred bidder for Schools Bundle 4.
The Government’s Construction 20:20 Strategy to support construction must continue to be a priority for future investment. The continuation of the Home Renovation Incentive and the extension of the scheme to rental properties will help boost the refurbishment and renovation sector. It’s also positive news that the Living City Initiative is to be extended, which should rejuvenate neglected areas in our city centres. However, transportation and marine infrastructural investment should not be neglected.
The Government’s continuing commitment to FDI investment, particularly in retaining the 12.5% corporation tax rate is encouraging. Ireland needs to compete globally to attract large multinational organisations here and our corporation tax is clearly a key component of our success. While general construction activity remains challenged, there has been an increase in private sector investment particularly in the office sector, driven by FDI demand.
It would have been a positive move if the Minister had implemented a reduced VAT rate for the construction sector, similar to the 9% rate introduced within the hospitality sector which has produced 23,000 jobs.
Overall, Budget 2015 will help assist in stimulating the construction sector and increase employment. The measures taken to boost employment are to be welcomed and BAM has played an active role in recruiting through initiatives such as the Back to Work Masterclass launched by the Tanaiste Joan Burton T.D.. We are also a signatory to the Employment and Youth Activation Charter. BAM managed to redeploy key personnel on international projects during the downturn, some of whom are now returning to work on domestic projects, which is heartening to see.