Construction Industry Federation calls for increased capital investment budget

23 May 2016

Construction Industry Federation calls for increased capital investment budget to fast-track essential road, flood defence and water treatment projects.

The Construction Industry Federation has called on the new Government to significantly increase the public capital programme to begin to fast-track essential transport, water and flood defence projects that have stalled.   An analysis carried out by Construction Information Services into the top 100 infrastructure projects in the transport, water treatment and flood defences.

CIF Director General, Tom Parlon, stated:

“This analysis shows how capital investment has been ravaged by the recession.  These projects are essential to economic growth and job creation in the regions and nationally.  In the coming months, we’re hoping to engage with Government to develop alternative sources of funding for infrastructure.   We hope to set out with Government a strategy outlining how our civil engineering, contractors and house-building members can contribute to addressing Ireland’s infrastructure deficit in an ambitious programme. 

This analysis shows how pressing this issue is to our economy and people’s everyday lives.  On average CIS analysis shows these projects have been delayed for 3-4 years.  The projects range from national infrastructure like Dublin Airport to waterworks and roadwork improvements.  Other projects analysed are essential flood defences for towns along the Shannon that should begin immediately.

About 60% of the cohort of projects are costed and amount to €6billion alone.  This is a significant proportion of the Government’s €27 billion Public Capital Programme.  Considering that there is only a €10 billion allocation for transport, the CIF believes that a number of these essential projects are at risk of being delayed indefinitely.  The negative impacts on job creation, balanced regional development and the attraction of FDI to Cork, Limerick and Waterford will transform the two tier recovery into a permanent two tier economy. 

Transport infrastructure is critically important for spatial planning and economic development but suffers key weaknesses. A major expansion of the road network occurred during the 1990s and 2000s, in particular in terms of motorways. The completion of the regional network connecting urban centres like Waterford, Cork, Limerick, Galway and Sligo must happen.

The Government also have ambitious plans to increase housing supply up to 25,000 houses each year by 2020.  However, without a concomitant increase in capital investment in infrastructure, there is a risk that these houses will not be adequately serviced by road, rail, water and broadband.  We risk creating unsustainable ghost communities in the regions.  Unfortunately, reallocating investment from capital projects like national roads, rail and air transport, to housing related infrastructure will only exacerbate this issue.”
The CIF wants to make the case for Government to increase its investment in infrastructure.  Ireland is 2nd last in the EU and 23 out of 25 in OECD for infrastructure spend; currently investing only 2% of GDP.  The CIF has been calling for Government to increase spend in this area to 6-8% over the next decade. 
As ever, infrastructure investment drops during recession as politicians facing elections shift expenditure towards current spending.  In 2010-2013, capital expenditure averaged only 4.8pc of the total, less than half the long term average during 1995-2008.  General government spending on infrastructure averaged €3.8bn between 2013-2015. However, the annual depreciation of the government capital stock amounts to about €3bn.  The EU Commission recently identified significant infrastructural deficiencies in transport, water and housing arising from this ongoing decline in investment.

The Construction Information Services analysis covers the following areas:
– Roads, Road Improvement and Upgrades Schemes, Bridges & Metro North
Transport Facilities:   
– Runways, Railway Stations, Airport Facilities & Port Terminals
– Water & Wastewater Treatment Plants, Sewerage Networks, Water Mains Rehabilitation & Drainage Networks
Flood Relief:                   
– Sea Protection & River Works

CIS estimates that the entire top 119 projects in this cohort could amount to €12 billion covering transport, flood defences and utility schemes.  There are many smaller schemes in each of these sectors outlined above.  The analysis does not include capital projects in the education, enterprise, health, justice and communications (broadband) areas.  This indicates that the Government’s €27 billion Public Capital Programme will fall short of Ireland’s requirements. 

Parlon continued:

“Infrastructure investment is now, by omission, profoundly shaping Irish society. In everyday terms, this manifests itself in housing shortages, decrepit road networks, unsafe water infrastructure, and a lack of broadband, particularly in the regions. The regions feel this deficit most, resulting in reduced economic activity and opportunity. Young people are voting with their feet and moving to Dublin and other urban centres. Currently, Dublin generates 40pc of Irish GDP and has 25pc of the population. London generates 20pc of the UK’s GDP and this is considered unhealthy. Employment growth is outstripping that in the regions and Ireland’s economy is imbalance.  We welcome the Government’s upcoming National Planning Framework consultation as this is a perfect opportunity to set out how the construction industry can facilitate Irish economic growth and shape society over the coming decades.”

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