ESRI report says government's housing targets are 'too low' to meet population growth

Economic Social Research Institute in Dublin which has published a report examining the National Development Plan

IRELAND’S NATIONAL DEVELOPMENT Plan may have “underestimated what is needed” to deal with challenges around housing, health and climate change.

The current National Development Plan (NPD) was launched in 2018 and set out a programme for public investment.

This plan was renewed in 2021 and incorporates an investment package of €165 billion for health, education, transport, climate change mitigation measures, and housing up to 2030.

However, in a report published today by the Economic & Social Research Institute (ESRI) examining the NDP, it is warned that the “earlier level of ambition” of the NDP “may have underestimated what is needed”.

In terms of housing, the ESRI report states that population growth is exceeding expectations, “partly as a result of the inflow of Ukrainian refugees”.

In 2022, the growth of the population exceeded that of the housing stock.

A key policy target in the government’s Housing For All policy is the completion of 33,000 units per year until 2030.

However, the ESRI warns that this figure “is too low and will likely be revised upwards” given the “increase in inward migration, particularly associated with the war in the Ukraine”.

Other constraints in terms of housing is the labour supply in the construction sector and the increase in input costs due to inflationary pressures.

There is currently a low unemployment rate in Ireland and that ESRI remarks: “With a fixed amount of labour available, this may be a constraint on increasing housing completions, given that people can only work on so many projects in a given time.”

One possible solution offered by the ESRI is directing construction activity towards housing and away from other activities such as office space, hotels and car parks.

The ESRI report added that the “shift towards hybrid working models and more flexible arrangements will likely have an adverse impact on the demand for office space in the future”, which “presents an opportunity for shifting labour resources away from office construction to the residential side of the sector”.

The report also suggests that “certain construction skills be added to the Critical Skills Employment Permit (CSEP) to facilitate certain types of inward migration”.

The ESRI said it is “clear that the State will have to continue to commit significant funds towards the provision of social and affordable housing over the medium term.

Its report also noted that there are close to 84,000 vacant homes across the country according to Geodirectory’s Q4 report in 2022.

“A large proportion of these vacant homes may represent units that could be added to the housing stock quickly, with a lower requirement of labour and materials,” said the ESRI report.

The ESRI report also notes that despite “significant increases in both current and capital healthcare expenditure in recent years, capacity issues within the healthcare system remain”.

A “key concern” noted in the report is “whether there are sufficient healthcare professionals in place for the delivery of healthcare”.

The report also highlighted “considerable variation in healthcare infrastructure across regional health authorities (RHA).”

Recent analysis showed that the number of patients on waiting lists per ambulatory beds available varied from 36 patients waiting per bed in one RHA to 12 in another.

Meanwhile, there were 8.4 X-rays machines per 100,000 population in the best served RHA compared to 5.5 in the worst served RHA.

Elsewhere, a “particular area of concern” is the supply of long-term residential care facilities.

Demand for such facilities were estimated to increase by 63% in the period between 2019 and 2025.

The ESRI suggested that “increasing physical resources and infrastructure is essential to address existing capacity constraints and future healthcare needs”.

It added that “equally important is having the appropriate workforce in place”.

The report noted that there may be a need to “consider working conditions, including pay, in particular for lower paid staff categories including those providing social care within the community and long-term residential care facilities”.

Climate and energy

Ireland has committed to reducing its greenhouse gas emissions by 51% by 2030 when compared to 2018 levels.

The ESRI remarked that the State’s “legally binding emission reduction targets need to be considered in all aspects of policy-making” and noted that even if the actions in the 2023 Climate Action Plan are enacted, this does not guarantee the targets will be met.

The ESRI also noted plans for 80% of electricity to be generated using renewable energy by 2030.

In order to meet these goals, the ESRI advises that “an unprecedented reprioritisation of construction sector resources or a considerable increase in the size of the sector” related to renewable electricity is needed.

Its report states that close to 24,000 employees will be needed to achieve renewable energy and energy efficiency targets, across items such as onshore and offshore wind projects and energy efficiency installations.

The Climate Action Plan also targets there being 945,000 Electric Vehicles on the road by the end of the decade.

Currently, there are around 70,000 EVs in Ireland, representing 3% of total vehicles.

And while a record number of EVs were purchased in 2022, it still only accounted for 20% of passenger vehicles sold.

In any case, the ESRI warned that the EV policy is “car-centric and ignores other externalities associated with a car dependent system, such as congestion”.

The report added: “EV grants incentivise electric vehicle deployment and are not necessarily complementary with ambitions to encourage mode switching to either public transport or active modes.

“EV grants encourage car-based rather than sustainable transport options.”

The report advised that “further investment in network infrastructure (e.g. public charging) or public shared services (e.g. shared bicycles, electric bicycles, electric cargo bicycles and scooters) may represent a better and more equitable use of public funds”.

‘Dilemma’

Commenting on the report, ESRI director Alan Barrett remarked that the “government faces a dilemma”.

“On the one hand, there is a clear need for investment in public infrastructure as our population and economy grow and our climate targets remain challenging.

“However, on the other hand, the economy is operating at full employment so the resources needed to accelerate the NDP are not readily available.”

He said the report suggests that the government “revisits the analyses undertaken for capital projects and re-assesses the sequencing of projects to account for the demands they will place on resources”.

Barrett added: “This re-assessment should also consider the potential of projects to ease inflationary pressures.

“While decisions must ultimately be made by those who have been elected, the use of quantitative metrics can aid decision-making”.