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National Development Plan 2007-2013
By Finfacts
Team Update Jan 23, 2007:
http://www.finfacts.com/irelandbusinessnews/publish/article_10008761.shtml
The
Government will launch a 184 billion National Development Plan (NDP) for the
period 2007-2013 on Tuesday.
The 2007-2013 NDP will cost more than three
times the third NDP and will provide for several programmes agreed with the
social partners in the Towards 2016 talks last year.
This fourth National
Development Plan will be the first one that will not be partially funded by
German and Dutch taxpayers.
Funding from Public-Private Partnerships will
top up 150 billion input from taxpayers.
The key assumption in the plan
is that the economy will grow at 4% plus each year. With the Exchequer tax
receipts from the property sector amounting to 17% of revenues in 2006 and the
property dependent sector providing another big chunk of revenues, a contraction
of the housing market will inevitably turn some items on the NDP agenda, into
aspirations.
Up to 50 billion in social spending programmes will be included
in the NDP. A social inclusion fund to be spent over the next seven years is
geared to reduce poverty, increase protection for workers, and raise the quality
of care for older people. A further 25 billion will be spent on social
infrastructure - hospitals, social housing, garda stations and a criminal courts
complex for Dublin.
The NDP will incorporate spending and investment
plans already announced by the Government in 2006, Including the 3.8 billion
national science and technology strategy and the 34 billion Transport 21 plan,
which includes the expansion of Luas and new metro lines.
The plan will
include a motorway-standard road along the western seaboard from Cork through
Limerick and Galway to Sligo, in rough parallel with a proposed western rail
corridor.
Up to 4.6bn of the 18.5bn of taxpayers' money that will be
spent on new main roads over the next decade will go into the pockets of
landowners. Fred Barry, chief executive of the National Roads Authority is
reported as saying that the increases in the cost of land for major roads
projects as "disturbing".
Land acquisition accounts for 23% of the
cost of roads projects in Ireland, but just 12% in England, 10% in Denmark, 9.4%
in Greece and 1% in Iceland. A further 2% of the 18.5bn provided in the
Government's Transport 21 for road building over the next decade will go to
archaeologists.
ESRI Ex-ante Evaluation
The editors of the
Economic and Social Research Institute (ESRI) ex-ante evaluation report of the
investment priorities for the National Development Plan (2007-2013), Professor
John FitzGerald and Dr. Edgar Morgenroth, said last October that taxes will have
to be raised by as much as 7 billion to pay for the 70 billion to be spent on
key infrastructural schemes to be delivered over the next seven
years.
"We could deliver the infrastructure, but would have to raise
taxes. They cannot be delivered with the current economic conditions," Professor
John FitzGerald said.
The Institute also criticised the Government for
failing to carry out a cost-benefit analysis of major projects carried out to
date.
Minister of Finance Brian Cowen
According to its estimates, an
extra 50,000 primary school places will be needed by the end of the second NDP.
However, this had not been adequately reflected in its plans for school
construction.
"It's not rocket science to find out where schools are
needed, but we don't seem to have a system to do that," Dr. Edgar Morgenroth
said.
The Institute focuses on the construction industry, fearing it will
not be able to cope with the number of projects being promised.
The ESRI
says to get better value for money and avoid waste, the average annual
infrastructure spending in the new plan should be cut to 8.4 billion from the
10 billion the Government intends to spend per year over the next plan, due to
run from 2007 to 2013.
Professor John FitzGerald said the economy was not
ready for significant increases in capital spending.
Strong activity in
the construction sector in particular was responsible for higher wages and
prices in the economy, he added. "The problem is that the construction sector
now dominates the economy and it is crowding out those who live in the real
world," he said.
The Institute wants investment in transport to remain a
priority, but targeted spending in this category should still be reduced to 3.4
billion from 4 billion.
Dr. Morgenroth said that value for money
measures were needed to justify any increase in capital spending. "All projects
and this is very important, should be properly evaluated and that evaluation
should be transparent . . . Most evaluations have been carried out by the
sponsoring agency and that is hardly a good way to go about it," he said on
Monday.
The ESRI said that new resources should be given to the
Department of Finance so that proposed projects could be
scrutinised.
Compared to about 70 billion due to be spent on the next
NDP, proper evaluation would cost just a few hundred thousand euro, Dr.
Morgenroth said.
He also criticised the lack of integrated ticketing for
public transport services in Dublin.
The Institute said if the Government
cut back spending to the levels it recommended in its report, the economic
returns would be high. It added that "more space" could be made for higher
spending if tax incentives for private sector construction were curtailed and
planned spending of 1 billion on buildings necessitated by decentralisation was
forgone, as this would free up private sector construction firms to work on
infrastructural projects.
The ESRI also directed criticism at spending on
recreational facilities, such as swimming pools, which needed to be spread more
widely to be consistent with the National Spatial Strategy.
The ESRI says
that the economic backdrop for this study is different from that of the study
undertaken for the current NDP in 1999. Along with fast growth, a change in the
sectoral composition of the economy is becoming increasingly evident with
services becoming more important. At the same time, with globalisation the level
of international competition in product markets has increased significantly, not
least because of the strong performance of emerging economies. While Ireland has
continued to attract FDI, competition for such investment has also increased
internationally. In this respect the loss of competitiveness that has occurred
has had an increasing impact. Continued net immigration, while expanding the
labour force, has resulted in significantly higher demand for housing and other
infrastructure.
The ESRI says that on the basis of all of the research
undertaken to date, it is clear that the first three NDPs have made an essential
contribution to the transformation of the Irish economy and society over the
last fifteen years. Without the investment under successive NDPs the economy
would have choked from lack of infrastructure, unemployment would still have
been a serious social issue and the environment would be under much more serious
pressure than is currently the case. The current NDP has greatly enhanced the
economic and social infrastructure of the State with major benefits to economic
development throughout all regions. The experience of the last three successful
NDPs holds some important lessons for the future.
Professor John
FitzGerald
While the overall strategy pursued under successive National
Development Plans has been appropriate, with the benefit of hindsight some areas
where improvements could have been made can be identified. Thus, the level of
investment, especially in transport under the second NDP (1994 to 1999), was not
sufficiently ambitious. The level of investment in physical infrastructure in
the current NDP was ramped up too rapidly with significant inflationary
consequences for construction as well as project management difficulties
(although the inflationary consequences have moderated over the period of the
Plan and there have been significant improvements in project management in
recent years). In addition, the recommended supporting measures (e.g. pricing of
access to infrastructure), which were aimed at obtaining best use out of
the new infrastructure, have generally not been implemented. This has reduced
the albeit high rate of return below what might otherwise
have been
obtained.
National Development Plan 1999-2006 was a
"disaster"
Writing in the Irish Times on Saturday Jan 20, Frank McDonald
, Environment Editor and writer on planning issues, said that it is no secret
that one of the key elements of the current National Development Plan (NDP) -
the completion "by 2006" of motorways or dual-carriageways linking Dublin with
Cork, Galway, Limerick, Waterford and the Border, north of Dundalk - has not
been realised.
It is also no secret that these roads will cost a lot more
than the estimate of 5.6 billion given in the NDP when it was launched in
November 1999. In fact, this "rough, ballpark, back-of-the-envelope" figure
- as Seamus Brennan called it later - was a fiction from the start.
The
original figure came from the National Roads Authority (NRA), but it was for
something different altogether. As envisaged by its 1998 National Road Needs
Study, the existing routes were to be upgraded, some to motorway standard, with
bypasses built to relieve towns along the way.
Frank McDonald
McDonald
writes that less than 12 months later, the Cabinet sub-committee on
infrastructure - consisting of Bertie Ahern, Mary Harney, Charlie McCreevy, Noel
Dempsey, Mary O'Rourke and John O'Donoghue - decided to go for a motorway
programme, and the NRA was told to recast its plans.
The cost of building
roads doubled within a few years, fuelling spectacular over-runs - 92.4 per cent
on the Cavan bypass (33 million), 98.6 per cent on the Nenagh bypass (43
million), 117 per cent on the Drogheda bypass (244 million), 306 per cent on
the Youghal bypass (44 million), and so on.
McDonald writes that while
stricter cost controls and better management have delivered more recent road
projects within budget, the real issue is whether the plans currently being
pursued make any sense - especially in terms of promoting the oft-repeated but
elusive goal of "balanced regional development".
He asks how can
this be achieved if all of our major roads converge on Dublin (with the sole
exception of the "Atlantic Corridor" mooted in Transport 21, the Government's
capital investment framework for transport development)? There, they will
feed into the congested M50, which will carry even heavier volumes of traffic
after its 1 billion upgrade is completed in 2010.
"What other country in
Europe would have four motorways - the M1, M2, M3 and proposed Outer Orbital
Ring road (an M50 bypass, in effect) - running virtually parallel within a
corridor just 30km wide? The answer is none, mainly because planning for
motorways is done more rationally elsewhere. The NDP never explicitly stated
that the Government had opted for greenfield motorways, running parallel to the
old national routes; this only emerged later. But had the Cabinet sub-committee
examined a map of Ireland closely, it could have planned a quite different
motorway network," Frank McDonald writes.
McDonald writes that as former
IFA president Joe Rea suggested in 2001, both Limerick and Cork could have been
served by one motorway routed via north Tipperary running northeastwards to
Dublin. Alternatively, a Cork-Dublin motorway could have been routed east to
serve Waterford on the way.
Either of these options would have been much
cheaper, and would have done more to promote regional development by providing a
high-quality route between two of the smaller cities. But nobody who made the
fateful decision to go for a radial motorway network ever thought so
laterally.
"As James Nix and I showed in our book, Chaos at the
Crossroads, ministers had no real evidence on which to base this decision. It
was grounded on the dubious assumption that the best way to grow regional cities
at a faster rate than Dublin is to ensure better access to and from
Dublin.
Radial motorways will simply reinforce Ireland's east
coast-loaded regional imbalance. In Germany, by contrast, road planners have
prevented the development of a "hub and spoke" motorway network because they
realise that its centralising effects would be almost impossible to counter.
Entirely new greenfield motorways, consuming thousands of acres of farmland,
were chosen here because it would have been too controversial to compulsorily
acquire and demolish hundreds of one-off houses strung out along existing
national routes, so that they could be widened," McDonald said
Peter
Clinch, Jean Monnet Professor of European Environmental Policy and Professor of
Regional and Urban Planning at UCD wrote a review of Chaos at the Crossroads for
the Irish Times in January 2006. Clinch is author (with Frank Convery and
Brendan Walsh) of After the Celtic Tiger (O'Brien Press, 2002)
Despite the
rhetoric of some politicians, most of the Celtic Tiger prosperity derived from
external factors such as a sustained US boom, advantageous exchange rates, low
energy prices and EU transfers. However, a select group of politicians and
public servants, including Alan Dukes with his Tallaght Strategy, the IDA, and
those who championed a low-tax environment, deserve credit for creating the
conditions under which we could take advantage of those factors. Reading Frank
McDonald's books and Irish Times articles, one might believe that such
principled public servants are the exception. McDonald has been compared to the
American political commentator and documentary director Michael Moore. Moore
wages a dramatic crusade against alleged corruption in the Republican Party.
Meanwhile, McDonald has vociferously highlighted the flaws in Irish policy
regarding planning, development and the environment. Like Moore, some see him as
extreme. However, he has
provided a necessary counterbalance to the
development lobby and, most importantly, he has made us think about what we are
doing to our environment.
In writing Chaos at the Crossroads, McDonald is
joined by James Nix, who provides ballast in terms of the scope of the book.
Together they take the cause to a new level with a 400-page blistering attack on
what they describe as the "sloppy thinking, political chicanery, bureaucratic
incompetence and pandering to vested interests" that comprises the Irish
approach to planning and development. The purpose is a call to arms for outraged
readers.
The authors quite rightly focus on policies being based on
little or no evidence. "Back of the envelope" opportunist policy-making is
illustrated by a critique of Charlie McCreevy's decentralisation plan and by the
flimsy detail in "Transport 21". Pandering to vested interests is demonstrated
by, among other examples, the plan for the expansion of Dublin airport which
puts the interests of the unions ahead of those of the travelling
public.
The book concentrates on demonstrating the negative effects of
poor decision-making and parish-pump politics rather than examining the system
which makes life difficult even for the most noble of politicians. Multi-seat
constituencies lead to national politicians being obsessed with local issues
when they should actually be governing in the best interests of the nation. In
addition to the "chaos" predicted by McDonald and Nix, this will ultimately
damage the national economy.
The tendency to see environment and economy
as being in competition rather than mutually reinforcing also remains a problem
as exemplified by the Government's mistaken view that a carbon tax must hurt
competitiveness. The decision to shelve such a tax draws just criticism from the
authors.
The opponents of McDonald and Nix will complain the book is
excessively negative - explicit solutions are contained in the last 35 pages of
the 400-page volume. The authors are quick to highlight negative planning
decisions but give less emphasis to where the system has been shown to work,
through appeals to An Bord Pleanαla, for example. It would also be interesting
to read their views on areas of dispute within environmentalism such as
intensifying housing in wealthy suburbs and differing opinions on
incineration.
Nevertheless, this catalogue of poor, and in several cases
highly suspect, decision-making will be of interest to both friends and foes of
the authors. If you are the former, the book will provide plenty of material to
back up your opinions and make you more passionate about the cause. For the
latter, the book presents a series of propositions, opinions and some evidence
that will be infuriating but hard to refute.
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