The Government’s plan to invest more to address the infrastructure deficits in the Irish economy is a move in the right direction. Shortfalls in housing, water, energy and transport are not only crippling competitiveness but affecting people’s daily lives.
The Government is correct to push ahead with its planning, despite the international uncertainty. A growing economy and a rising population have left recent administrations running to catch up. International investors have been increasingly outspoken about Ireland’s infrastructural shortfalls. All of this needs to be addressed.
And Taoiseach Micheál Martin is correct when he says that State investment spending must be protected no matter what.
However, the plans published yesterday raise of number of important questions. The lack of any detail of the projects to be included in the plan is somewhat puzzling. Everyone knew in the final period of the last government and the opening months of this one that the review was due. So why has no list of projects been completed? Because of this, as Prof Alan Barrett of the Economic and Social Research Institute pointed out, we do not have any of the essential detail on how the projects all fit together.
RM Block
There are, of course, a significant number of projects which we do know about and which will be funded by the money now being put aside. The focus on vital areas such as water, wastewater and energy is important. But with last-minute rows over housing in particular, it is unclear that the Government yet has a convincing plan in this key area. An updated housing plan, due in the autumn, needs to give a clear view .
The Government is also – belatedly – looking seriously at the blockages and delays to project planning. This is welcome but long overdue. These issues have been hiding in plain sight in recent years, leading to extraordinary delays and additional costs in projects large and small. Too much time was lost here by the last government. This one needs to get serious on the issue of the delivery. This will be uncomfortable politically and it remains to be seen if the Government has the stomach for the necessary fights.
The scale of the investment commitments being made are significant. And paying for it will use a lot of the leeway in the national finances and also the cash put aside from the Apple tax payment and the sale of AIB shares. This means a higher level of risk.
To create the required leeway in the national finances – and ensure yet more cash is not pumped into the economy – the increased investment spending must be combined with much tighter control of day-to-day spending. This is the trade off. If this does not happen, then the scale of the financial risks facing the State will increase yet further. And they are already high enough.
