CIOB Ireland responds to Budget 2024

[edit] CIOB responds to Ireland’s Budget 2024 package announced on October 10, 2023.

The Budget package for Budget 2024 is €6.4 billion, comprising of a little over €1.1 billion for taxation measures and core expenditure of just over €5.2 billion.

As was the case for Budget 2023, the elevated inflationary environment and the ongoing cost of living crisis remains the overarching fiscal context for this budget. Nevertheless, because of the strong growth and resilience of the multinational sector and attendant corporate windfall taxes, which now stand at between €10 and €12 billion, the Government is projecting a general surplus of €8.8 billion, or 3 per cent of national income this year, and €8.4 billion or 2.7 per cent next year.

[edit] Incentivise retrofit demand as well as programmes

The built environment sector accounts for 37% of Ireland’s carbon emissions, so the CIOB welcomes the announcement of €388 million to DECC for retrofitting programmes, and €380 million for SEAI residential and community energy upgrades schemes. However, given the discrepancy between the Climate Action Plan's targets and the actual uptake of residential retrofit, rather than continuing to simply allocate more money, we urge the government to grapple directly with consumer sentiment and implement additional measures to incentivise consumer demand, such as the CIOB’s proposal to a defer of stamp duty on residential retrofit. Our recent paper presents a policy proposal to defer stamp duty on properties that have been purchased with the sole purpose of refurbishment. The aim of the proposal is to tap into the non-household segment of the market by incentivising a 'green flipping' business model, thereby creating an additional source of retrofit.

[edit] Longer term vision for increased housing spend

We welcome the capital allocation of almost €3.9 billion for the Department of Housing, an increase of €354 million from the 2023 allocation, but we are concerned that a lot of the spending will continue to be channelled to inflationary demand side measures such as the extension of Help to Buy, which tend to be capitalised directly into higher house prices. As the construction sector’s biggest client, the Government can play a direct role in arresting the cyclicality that has plagued housebuilding in Ireland by smoothing out spending on publicly delivered housing projects. Investing in a clear, long-term pipeline of construction projects in the local authority delivered housing sector will create this pipeline. We urge the Government to ensure that the significant financial outlay delivers a counter cyclical pipeline of housing projects that will give the construction sector the certainty on which it thrives.

[edit] Infrastructure, Climate and Nature Fund

In terms of providing a clear pipeline of activity for the construction sector, we commend the creation of the Infrastructure, Climate and Nature Fund, for which €14 billion will be put aside by 2030. This fund will preserve the financial integrity of Ireland’s long term infrastructure and climate planning and gives a clear signal to the construction sector that there will be reliable public investment which businesses can plan around. However, to deliver on this planned investment in the built environment, and the new Planning and Development (Amendment) Bill 2023, significant resourcing plans need to be put in place to equip relevant government agencies and local planning authorities to carry out their expanded roles. This budget would have been the ideal opportunity to address these public sector resourcing deficits directly.

[edit] Comments

Joseph Kilroy, Policy and Public Affairs Manager for Ireland, Scotland & Wales said

'The CIOB frequently emphasises the importance of a clear pipeline of projects to encourage the growth of the construction sector, to attract new entrants, and to mitigate the sector's economic cyclicality. Government, as a client, can subdue volatility in the construction sector by smoothing out public spending on construction projects. We are therefore encouraged by the creation of the Infrastructure, Climate and Nature Fund which will ensure continued funding for big ticket infrastructure projects such as Metrolink, Bus

Connects, and Dart+. We urge the Government to extend this ambitious public delivery mechanism into housing, which would greatly benefit from additional supply side measures to complement budget 2024’s measures to incentivise demand’.

‘We regret that the opportunity was not taken in this budget to provide a clear long term resourcing strategy for local planning authorities, whose roles and responsibilities will expand significantly both on the basis of the new Infrastructure, Climate and Nature Fund, and the new Planning Bill’.

This article appears on the CIOB news and blog site as "CIOB Ireland responds to Budget 2024" dated October 10, 2023.

--CIOB

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