INFRASTRUCTURE – OUR GREATEST COMPETITIVENESS CHALLENGE

The CIF is calling for urgent action on infrastructure in its Budget 2026 submission

The Construction Industry Federation’s Budget 2026 submission includes recommendations across strategic infrastructure delivery, unlocking housing supply, skills and workforce development, along with enabling the green and digital transition. A key recommendation includes infrastructure and housing and specifically, prioritising multi-annual investment in water and wastewater infrastructure, including the Greater Dublin Drainage and water supply projects.

Infrastructure
The delivery of 60,000 housing units per annum is a major challenge; there is not enough water and wastewater infrastructure constructed to support the sustained delivery of the increased housing targets beyond the next two years. The country is running out of zoned land for new houses that is serviced with water and wastewater infrastructure. The inability to build new houses will result in the outward flow of FDI away from Ireland to other competitor jurisdictions.

There is a €15 billion deficit in water/wastewater infrastructure just to bring the country to a status quo, which includes both pipes in the ground and above ground treatment facilities. Uisce Eireann (UE) has not been allocated the necessary capital funding to construct new infrastructure in 2024 and 2025. The extra €1 billion allocated to UE in Budget 2025 has been used for debt restructuring, backfilling their 2024 €170 million funding shortfall and €130 million to fund rebate schemes. 98% of all UE capital is already allocated to existing projects; funding instead must be ringfenced for new infrastructure projects, to enable expansion and allow UE to support unlocking housing delivery through the water and wastewater network.

Furthermore, funding has not increased in line with new capital requirements, inflationary effects and the cost of transitioning from Local Authority operated plants and their employees. While €10.1 billion is being provided to UE to run itself, none of this is for new infrastructure. This money will also be used to fund the UE Transition programme, which is supposed to bring all water/wastewater assets under UE direct control, along with massive increases in operation staff of up to 5,000 people. It is also required to fund new depots, equipment, fleets, plant, office and ICT systems, address compliance issues, biodiversity, sustainability and other matters. Crucially, this funding is not going into new infrastructure to support much needed new housing. UE have also been told to source funding from their own budgets for major projects like Water Supply Project (WSP) and DMD; all other projects and budgets will need to be scrapped, further impacting on housing delivery if this is to happen. To protect and guarantee funding, there must be a distinction in
funding of UE operations and new capital delivery.

In summary, UE is decreasing its delivery of new infrastructure when it should be ramping up. The current preliminary estimate for Greater Dublin Drainage Project (GDD) is €1 billion+; the current preliminary estimate for WSP East and Midland Region (EMR) is €4.6-€5.9 billion. GDD and WSP are fully aligned to UE strategic aims and are longstanding solutions, critical to addressing the needs of the Eastern and Midlands Region for WSP and the Greater Dublin Area (GDA) for both. The resilience of both water and wastewater infrastructure within the GDA region is currently challenged, with both projects key to enabling further growth and development. UE note the 2025 Programme for Government targets to deliver 300,000 new homes by the end of 2030, with 150,000 anticipated to be within the Greater Dublin Area (GDA).

Electrical Infrastructure and its impact on FDI
Ireland’s construction sector has worldwide recognised competence in the construction of data centres as well as pharmaceutical and biotechnology plants, with the skills of Irish companies being highly sought after throughout Europe. A great impediment to the further growth of these sectors in Ireland, particularly data centres, has been an incapacity to supply these companies with the energy they require. This has resulted in major losses both reputationally and financially to Ireland, with these companies choosing other countries throughout Europe at which to target this investment. An example of such a loss was a decision made by Amazon in 2024 to redirect investment in data centre development away from Ireland to other jurisdictions including the UK, Spain and Germany. While the ESB has been putting significant investment into the increased production of electricity, as a matter of urgency this investment needs to be increased. Also, the budget allocation of €176 million investment into the grid between 2023 and 2030 is not sufficient to meet the country’s demands and should be revised. In Eirgrid’s ‘Shaping Our Electrical Future’ strategy document, it outlines the roadmap to 2030 for integrating up to 80% renewables. While this strategy is to be applauded, in the short-term, alternative means of securing electricity certainty at a cost point that is of value to both consumers and businesses is crucial. Currently, the high cost of electricity in Ireland is impacting the country in terms of competitiveness, a view shared by FDI clients. Certainty of electricity supply at competitive rates will strongly impact Ireland’s footprint in terms of retaining and attracting FDI clients.

Drive delivery of transport infrastructure projects
Ensure that capital investment in the NDP (for NTA/TII/Irish Rail) transport infrastructural projects is allocated with the necessary levels of funding to support the roll-out of active travel, rails, metro and bus connects to meet the needs of increased population, Housing for All, Climate Action and FDI investment.

Prioritise a plan-led approach to the delivery of regional infrastructure
A significant deficit in regional infrastructure from water to wastewater services and from roads to rail, is impacting the ability of the regions to grow and become an economic counterbalance to Dublin, as envisaged by the NPF. A modern, dynamic and competitive economy needs a plan-led approach to infrastructure. It is essential to Ireland’s success that energy, water, broadband, public transport, schools, hospitals, ports and roads infrastructure, through effective and efficient planning, are provided in a balanced but targeted regional basis and under-pinned by a delivery model that is built on the principle of putting the necessary infrastructure in first.

Introduce taxation measures to aid apartment viability
Ireland has suffered from a lack of international investment, limiting large scale housing delivery and contributing to limited supply. This is driven by a range of circumstances, including legislative uncertainty (changes to the planning system), viability concerns (high costs due to extensive planning and delivery timelines) and the introduction of strict rental caps in Rent Pressure Zones. To galvanise housing delivery of all types, VAT reduction measures, capital allowances and supports for the delivery of brownfield sites must be introduced to encourage international and domestic investment in the housing sector. This is essential if we are to meet Government’s increased housing targets and reverse the decline in apartment completions; in 2024 we saw a 24.1% drop in such completions.

Reducing the VAT rate on residential property is an action that could have a significant impact on housing delivery, particularly in helping the end purchaser (the high tax rate is ultimately passed on to the end user, in this case, the homeowner). Internationally, countries, including the UK, allow a reduced VAT rate on the construction of apartments. This helps address viability concerns with apartment delivery and would subsequently aid with density and compact growth concerns, as well as delivering a range of housing types. Brownfield and infill sites are some of the costliest and financially challenging sites to develop, due to the cost of remedial and decontamination works and the high level of waste removal. A fiscal strategy must be established to identify measures which can be used to attract private investment back into the construction sector. Engaging with the private sector on this should be done urgently.

Other recommendations
Reform of the Residential Zoned Land Tax (RZLT)
Fiscal measures to galvanise housing supply
Update tax rules for forward fund arrangements
Expand the accelerated delivery programme for housing
Develop frameworks specifically for the 3D volumetric sector
Utilise multi-annual budgets for infrastructure to give certainty across the supply chain and to achieve better value for money
Support regional development and off-site construction
Fund the implementation of the ‘standardisation approaches study’ in relation to housing
Develop a materials testing facility for construction
Capital and financial incentives to support the MMC industry: establish an MMC Innovation Fund via the Ireland Strategic Investment Fund (ISIF)
Support an NSAI Onsite Inspection Scheme
Resource the OGP to make the necessary procurement and contractual changes to enable greater facilitation of Modern Methods of Construction.

Hubert Fitzpatrick, Director General of the CIF, said: “Ireland’s infrastructure gap is the country’s most glaring competitiveness deficit, requiring urgent, plan-led investment in Budget ’26. 62% of the 50 largest construction companies in our membership have reported exporting Irish construction to international markets and this is set to increase. Construction companies want to deliver critical infrastructure here at home, but the projects simply aren’t materialising. Many can no longer rely on Ireland as a stable base for long-term business.

“While workforce capacity is frequently raised in public commentary, this is not a limiting factor. Construction companies have the talent and resources to meet demand. The main barriers lie outside the industry with persistent planning delays, a lack of zoned land and slow delivery of enabling infrastructure like water and electricity, which are essential for housing and for maintaining inward investment to Ireland, and job creation. These consistent roadblocks mean that for many companies, a reliable pipeline of work is not available in Ireland and for housebuilders, continued delays are slowing the pace of home delivery and deepening the housing crisis.”

He added that centralised Government coordination and multiannual infrastructure investment are essential to provide certainty for Irish construction firms. “Accelerated reform of public procurement and construction contracts is also critical to making public projects more commercially attractive. Together, these actions will give construction firms the confidence to expand their workforce and build at scale in Ireland.”

Ireland’s ability to respond to demographic growth, climate targets and economic competitiveness depends on a construction sector that is adequately resourced and enabled. “We urge the Government to respond decisively in Budget ’26 and to unlock the construction sector’s full capacity to deliver housing, infrastructure and climate resilience for the population in the years ahead.”

To read the full Construction Industry Federation Budget 2026 Submission, go to cif.ie

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Michael McDonnell Managing Editor of Irish Construction Industry Magazine & Plan Magazine

Email: michael@irishconstruction.com      WWW.MCDMEDIA.IE