I thank Deputy Michael Healy-Rae, for whom I am standing in today. He has asked me to raise this issue. Contractors are finding it increasingly difficult to stand over tendered prices for periods of up to two years, which many projects run to, because of the rising cost of materials. In the past year, construction material prices have increased every month, by 26.7% on last year, which is a shocking amount. That is according to the Central Statistics Office's most recent wholesale price index; they are not my words. This represents a truly staggering statistic.

The materials shortages have started to ease but the rising cost of materials will probably continue well into 2022. The price of rough timber, meanwhile, has increased by more than 80%, the cost of plaster has increased by 20% and the cost of steel has doubled. Several local authorities have highlighted the effect this has had on housebuilding. Construction costs inflation is impacting on tender prices and contractors are finding it increasingly difficult to price and even to procure prices themselves from suppliers for that length of period. If somebody gets a price today, whether for a house, a house extension or whatever, the building suppliers will give him or her only three days or maybe one week at most. It is not that they want to blackguard people but that the prices are increasing weekly.

The crisis in this sector is jeopardising major initiatives such as homebuilding and national infrastructure projects. It is completely untenable for the construction industry to take on all the risks for the exceptional price inflation under current State building contracts. This impacts on all contractors, and on subcontractors down the line. A builder may find out, whether in the case of a school project or whatever, that he or she cannot complete the project within the tender price because the material is old. It could be a year and a half, because of delays with the Department and everything else, from tender time to getting the job. Builders then end up in crisis and cannot complete the job, despite their efforts and despite being good builders, and cannot pay their subcontractors, with the knock-on effect they cannot pay their suppliers.

This is a huge issue and it impacts on the construction economy as well. Rising material and labour costs could hurt competition going forward and will have a significant impact on our post-pandemic recovery. The materials crisis means there is an urgent need to overhaul how the industry procures and manages supply itself, yet the Government will not look at that. It has promised to do so, but the construction industry has not seen any cogent plans offered nor anything changed.

Higher energy costs and prices, whether for gas, coal or diesel, along with carbon tax have had a considerable impact on site clearances and on industrial machinery and lorries hauling cement, gravel and other aggregates to sites. Costs are spiralling. These are good builders who work as duine amháin, maybe with duine eile, and small builders who work with ten, 20 or 50 people. They cannot survive because of the cost of labour, insurance and materials.

What is the Taoiseach's Government going to do to alleviate the pressure on this worthwhile sector that needs to be respected?

First, I want to pay tribute to the sector, which I think has responded very well since we reopened society and sectors of the economy. Since the springtime, the construction sector has really rebounded, to be fair to it. From October to October, we are looking at approximately 31,000 housing commencements, which is a significant piece of work in terms of getting housebuilding back on track to the kinds of levels we need to deal with the housing crisis and the situation facing many people.

The Deputy correctly points to cost inflation in respect of construction, mainly because of global supply chain issues resulting from Covid-19, which have been a big problem across Europe and the globe. Some date it back to the blockage in the Suez Canal, which the Deputy may recall. Then Brexit can be added, which has not been helpful either in terms of some supply chains. There has been inflation and it has affected and impacted public sector contracts. We have had some situations where people who won tenders did not take them up on the basis that the costs have now overreached what they bid and could afford. The Minister for Public Expenditure and Reform is introducing changes and they are being put in place now for new tenders. The fixed-price period is being reduced by six months to 24 months, material price variation can be accommodated, subject to certain limits, and guidance is being issued for current contracts. The Minister acknowledges the issues the Deputy has raised. He brought the matter to the attention of Government some weeks ago. Measures are now being introduced to try to ease the situation and create additional flexibility to accommodate the new realities arising out of the supply chain issues and the increase in costs that have affected the industry.

The view from the ECB and others is that this should not be a long-term issue and that things will come back to an even keel towards the end of the first quarter of 2022, but that remains to be seen. There can never be any certainties in life, particularly in the middle of a pandemic, but we are very conscious of the issues. The Minister has moved on the tender front to recognise the realities of the situation and ensure construction projects that we want to get ahead have the capacity to get ahead, be they schools or housing across the board. There is a significant piece of infrastructural work that we require to be done and we have very large capital programmes. We want value for money and we want to be responsive to the current situation also.

The Taoiseach paints a picture of a perfect storm. We saw this coming over the past 12 months and the Government and its advisers must have seen it too, because it is crippling. There is a huge delay with people working from home in getting the tenders out, getting documents back to schools and builders and all of that. Contractors are tendering in good faith and we need them now to engage the new apprentices we are taking on in Thurles and elsewhere, who are badly needed in the construction industry. If the builders cannot stay above water level, they are in trouble and they will get no mercy from Revenue and less from the banks. We need to deal with this seriously and we are coming late to the table. This storm has been brewing and it is a hurricane now. We have no red alerts about it. People are going to the wall and projects cannot be finished, with knock-on effects on subcontractors and suppliers, all of whom are local. Most of these people spend money locally in their own 25-mile radius. They have track records in supplying, building and delivering the best projects on time. They want to do that again.

I did not catch the figure the Taoiseach cited for the reduction in fixed-price tenders. Are they down to 24 months? That is way too long. Did he say they are down from 30 months to 24 months? We cannot have a fixed tender for 24 months. It cannot be done. It can hardly be done now for eight weeks because the situation is so serious with prices going up by the week.

The time is up, Deputy.

I acknowledge the Deputy's experience in the contracting world and so on. The Minister has responded to the issues. Contracts will now permit mutual cost recovery for material price changes of more than 15%. Therefore, where costs rise by more than 15%, the contractor can recover that. Measures have been taken in response to this issue. The balance always has to be struck between achieving value for money, protecting the taxpayer, getting a fair deal for the taxpayer and - I take this point - ensuring people have a viable situation in terms of tendering, getting work done and getting projects completed. That is clearly important also.

What is the new fixed-price term?

The period is 24 months.

That concludes Leaders' Questions.