Construction BUSINESS

Minister for Public Expenditure, NDP Delivery, and Reform, Paschal Donohoe T.D., expressed his appreciation today for the release of the ESRI’s report titled ‘The National Development Plan in 2023: priorities and capacity,’ dated January 12, 2024.

Minister Donohoe, commenting on the ESRI’s report, stated, “I am pleased with this extensive examination of the limitations and capabilities of key sectors in achieving the National Development Plan’s crucial objectives.”

“In early 2023, I presented a substantial package of measures to the Government aimed at enhancing NDP delivery. One of these measures included an independent assessment of investment priorities and capacities within the NDP. The focus was on delivering current government priorities, utilizing sectoral capital allocations, and estimating the NDP’s impact on key economic indicators.”

“I extend my gratitude to Alan Barrett, John Curtis, and the ESRI team for their research and drafting of this report. It will play a crucial role in evaluating sectoral capital allocations under the NDP, outlining the competing demands for capital expenditure in various sectors and highlighting the risks associated with exceeding the economy’s capacity to deliver projects in a supply-constrained and fully employed economic environment.”

The report provides valuable insights into constraints and capacities in key sectors such as housing, energy, transport, health, and education. It also delves into cross-cutting themes affecting NDP priorities, including climate commitments, planning, and balanced regional development. The ESRI examines constraints in the construction sector and inflationary pressures.

The ESRI warns of risks associated with further increasing capital spending, which may inadvertently contribute to inflationary pressures. This concern revolves around the economy’s ability to absorb and respond to additional capital expenditure when operating at peak capacity in a tight labor market. However, the ESRI acknowledges justifiable demand in specific sectors, particularly housing and health, driven by demographic growth and aging. The government will consider additional expenditure demands within the overall macroeconomic context and the capacity constraints identified in the report.

Minister Donohoe outlined the next steps, saying, “The ESRI report offers insights and recommendations on the NDP that I will consider when updating NDP ceilings across various sectors in the medium term. Departments will collaborate with my officials in the coming months to ensure funding is allocated for capital projects up to 2026. I am mindful of the ESRI’s guidelines on prioritisation and the government’s potential, through fiscal policy, to direct construction activity toward sectors with the greatest demand.”