Claim that development plan costs will increase by 50%

Major elements of the State's £40.6 billion National Development Plan are likely to increase in cost by more than 50 per cent over the first four years of the plan, an Oireachtas Committee was told last night.

Responding to a presentation from Mr Aidan Dunning, assistant secretary of the Department of Finance, Mr Jim Mitchell (FG) told the Oireachtas Committee on Finance that inflation on major construction projects such as road building and housing has been running at 12.5 per cent per annum. This was accepted by Mr Dunning.

Mr Mitchell challenged officials to deny that housing output would be down by 17 per cent this year, a feature he said was confirmed by the Construction Industry Federation. He added that labour shortages were causing inflation in the industry at about 2-1/2 or three times the national average and predicted massive growth in industrial unrest and a collapse in housing output next year. "Things are not going as they should be" he said and he questioned the ability of the plan to deliver on infrastructural projects given that level of inflation.

Mr Mitchell particularly questioned Mr Dunning on the publication of regulations on development control due to have taken place in April. He asked if these regulations had been published and was told they had not. This, suggested Mr Mitchell, was evidence that "the Department of Finance as implementing body is not even meeting its own deadlines".

He also questioned the level of communication with the Department of Justice in relation to work permits. There was anecdotal evidence he said of foreign workers being sent home.

Mr Derek McDowell (Lab) said "there has been nowhere near value for money" in the amounts spent on public transport. He criticised the Dublin Metro plans as being "only a glimmer in someone's eye" and suggested Luas was two years off after being 10 years in planning, while the Dart to Malahide and Greystones also incurred serious delays.

Mr McDowell also said a quarter of a billion pounds had been switched from the public capital spending projects this year and an equal amount in the previous year.

For the National Roads Authority Mr Michael Egan said the authority was concerned about costs but was determined to get "work on the ground" for its spend. He acknowledged that the Irish labour market could not fulfil the labour requirement of the plan, but said the authority had travelled abroad seeking interest from foreign construction firms and ensuring they had their own workforces.

He said the start to the key strategic road corridors from Dublin to Belfast, Galway, Limerick and Cork had been good and he revealed a motorway would be in place from Dublin to north of Dundalk by 2003.

The national roads to the north west, particularly Sligo would be upgraded, but not to the significant level of roads to other cities, as there was not the traffic demand. To equalise this difference would cost an additional £300 million and result in a time saving of just 10 minutes on a journey from Dublin to Sligo, he said.

On behalf of the inter-departmental committee Mr Dunning acknowledged concern about cost saying "the level of inflation in the construction industry is of particular concern".

He accepted official figures indicate an inflation rate in the sector of 12.5 per cent in 1999 and 2000. While he said he expected a "slightly lower level this year" he added "tender prices in some areas of NDP investment indicate cost increases above the official figures which I have quoted. This scenario has potential implications for the level and pace of output under the NDP infrastructural programme."