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The announcement of the National Planning Framework and National Development Plan is a potential game-changer for the Irish economy and society. The ambition of both documents is to be lauded. Ireland has, for a decade, neglected infrastructure investment and this investment will see us move from the bottom of the table in the EU.
The strategic approach of embedding the public capital programme within a legislatively backed National Planning Framework up to 2040 may insulate investment from the vagaries of Ireland’s political system. The NPF’s ambition coupled with the significant increase in financial commitment in the capital programme can be a powerful springboard for Ireland’s economy.
The construction industry will be front and centre in delivery. However, news from the front is mixed. Construction companies will face significant challenges in translating ambition into the much-needed housing, world-class infrastructure and the sorts of specialist buildings that underpin Ireland’s attractiveness for FDI.
For example, in 2016, EY/DKM consultants and SOLAS predicted that the industry would need 112,000 additional employees up to 2020 to meet the demands of Government strategies in housing and infrastructure. Since then the ESRI’s estimate of the level of housing output required has increased by 30 per cent to 35,000 new houses per year. Even before today’s announcement, the public capital programme had increased in size from €40 billion to €50 billion approximately.
The NPF’s ambition must be matched by investment in our education and training systems so they can produce the employees that will deliver this construction activity. The quantum of investment announced by the Government means there will be ample work available for young people to build careers in a modern construction industry. Failure to attract people into the industry, both onsite and offsite, will see labour costs increase and eat away in the available capital for investment in vital infrastructure. So, a key priority for industry and Government must be to reinvigorate the apprenticeship system and communicate to school-goers, parents, and career guidance counsellors the benefits of a career in construction.
Even more pressing is the need to upgrade the public-sector procurement system. To ensure maximum return on investment, the Government should invest to ensure there is sufficient capacity and expertise to deliver quality infrastructure for the citizen whilst ensuring value for money for the taxpayer. Adopting best practice from the Dutch or German models could achieve this and break the “lowest price” approach that often leads to project delays, overruns, and adversarial unproductive relationships between players in the supply chain and the public sector. Otherwise, too much of the €116 billion investment in the NDP will leak away in delays and disputes.
Nearly 20 years ago, the then taoiseach Bertie Ahern launched the National Spatial Strategy to great fanfare and optimism. It was to be a “20-year strategy designed to enable every place in the country to reach its potential, no matter what its size or location. It is about making regions competitive according to their strengths and not against one another. It is about ensuring a high-quality urban environment, as well as vibrant rural areas.”
Poignantly, he stated that “all other government policies must and will be consistent with the National Spatial Strategy, whether it is transport, health, education or housing”.
That vision of a strategic political alignment and cross-departmental collaboration never transpired. There is more optimism that lessons have been learned and that this strategy will be more successful. The Taoiseach and Ministers Paschal Donohoe and Eoghan Murphy are acutely aware of the potential for a lack of “joined-up implementation” across government departments and local authorities to scupper their plans.
The past few weeks of wrangling show exactly how contentious and politically fraught project selection in infrastructural investment is. The Construction Industry Federation has long sought the establishment of robust cost-benefit analysis and econometric modelling to select optimum combination of infrastructure projects from the hundreds of overlapping proposals by Government Departments. An independent infrastructure commission that makes these calls on objective criteria could negate the “one-for-everyone-in-the-audience” approach of the political system.
On a positive note, the Government appears to have heeded our calls for more effective monitoring of the delivery of infrastructure investment. An inter-departmental taskforce will oversee infrastructure delivery so hopefully, the industry and the Oireachtas will be able to monitor more accurately the infrastructure projects that are shelved, stalled or over-budget so red-flags can be raised. The CIF believes that a centralised database of all capital projects being undertaken by the exchequer and by semi-State bodies is essential as it would provide greater certainty and clarity about ongoing and future work.
The final note for optimism is the establishment of the Construction Sector Group within the National Development Plan. This group will help address the challenges to the delivery of the ambitious vision behind the National Planning Framework whilst also modernising the construction industry over the next 20 years and avoiding the damaging volatility experienced at regular intervals. Building Ireland 2040 will also generate thousands of quality careers, world-class companies, increase exports dramatically and potentially establish Ireland as a leader in construction innovation globally.
Tom Parlon, Director General, CIF