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Construction sector ‘must guarantee value for money’

The state should maintain investment in capital infrastructure programmes despite the economic difficulties caused by Covid-19, but the construction sector must guarantee value for money, according to the Secretary General of the Department of Public Expenditure Reform. 

Addressing the Construction Industry Federation conference earlier today, Robert Watt said there was no imperative to cut back capital spending, particularly as there was a clear need to invest in infrastructure including housing.

He said there were investments in the private sector which were now unlikely to proceed, and argued that the state should step in to pick up that capacity in construction.

However, he cautioned that the biggest issue for the state was not necessarily the funding of projects, but rather the need for assurance from the construction sector that it was driving change, and that value for money was being delivered. 

“If the state can get value for money from construction, I think there’s more of a political appetite and more of an argument for the state to avail of the current circumstances where there is capacity for the state to build more infrastructure,” said Mr Watt. 

He said the overall commitment to invest in the capital programme is probably even stronger than it would have been 12 months ago.

CIF Director General Tom Parlon said it was “fine and dandy” to hear the Taoiseach and others confirming that there would be €9 billion plus in the capital programme – but warned the money needed to be spent next year on new projects. 

He said Mr Watt could challenge the industry, but he in turn challenged the DPER Secretary General and his “vast machine” to “get the finger out” and accelerate decision-making to ensure the €9 billion is spent soon. 

Mr Watt also acknowledged that the state would “correctly”  be engaging in significant borrowing to fund support for the health service, and to maintain incomes and businesses.
However, he said that in the short term, the cost of borrowing is sustainable during the current low-interest rate environment, with no issues in the sovereign debt markets.

He cautioned that a medium term plan would be required in due course to get the state’s finances back into balance – though that would not be an issue this year or next year.

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