Project Ireland 2040: Doing Things Differently

31 Jan 2019

A message for the construction industry from Paschal Donohoe, TD, Minister for Finance and Public Expenditure & Reform.

As the latest data confirms, our economy continues to grow. GDP is forecast to increase by 7.5% this year and 4.2% in 2019. But to quote economist and Nobel Prize winner for Economic Science, Simon Kuznets, ‘The welfare of a nation can scarcely be inferred from a measurement of national income as defined by the GDP’.

In concrete terms, more people are now working in the economy than ever before (2.273 million), employment rates are the lowest they have been in a decade (5.5%) and job creation can now be described as truly national, with employment growth recorded in seven out of the eight regions reported by the CSO over the past year.

What’s driving this growth? Domestic demand, rising household incomes and higher employment levels, which in turn support sustained increases in consumer spending. We will see more construction with house completions expected to rise from around 18,500 units in 2018 to an annual average of around 38,000 units between 2020 and 2023.

But of course, risks remain. Brexit, global trade tensions, or changes in other jurisdictions that affect the competitiveness of Ireland’s corporate tax regime all have the potential to adversely impact on Irish growth and living standards. That is why we are delivering competitiveness-oriented policies and building up buffers – such as the Rainy Day Fund – in the public finances.

 

PROJECT IRELAND 2040

Since the launch of the Project Ireland 2040* back in February 2018, infrastructure investment has been prioritised and increased.

We’ve delivered major projects including the Luas Cross City and the M17 and are continuing important investment programmes in schools, primary care centres and housing.

Budget 2019 included a €1.4bn (24%) increase in public capital expenditure this year when it will reach 3.5% of national income (GNI) compared to an EU average in recent years of 2.7% (GDP). This funding ensures a well-planned, phased pipeline of vital infrastructure projects. We will also see additional non-exchequer investment from Semi-State companies, such as the second parallel runway at Dublin Airport.

We are absolutely committed to this and have put new structures in place to ensure the efficient, coordinated and timely implementation of Project Ireland 2040:

  • A high-level Project Ireland 2040 Delivery Board made up of the Secretaries-General of the key infrastructure departments has been established in order to drive implementation and performance.
  • An Investment Projects and Programmes Office (IPPO) has been established in the Department of Public Expenditure and Reform (DPER) to embed value-for-money reforms in relation to areas such as project appraisal and selection.
  • The Land Development Agency has been established by the Minister for Housing, Planning and Local Government, Eoghan Murphy TD, to coordinate the use of appropriate State-owned lands for regeneration and development – primarily for new housing.
  • A new and improved Investment Tracker has now been published on the DPER website capturing the investments detailed in the National Development Plan 2018-2027 (NDP). It contains over 270 projects and programmes and details estimated costs, project status, commencement dates and completion dates. The Tracker represents a sea-change in terms of transparency. It is publicly accessible, interactive and user-friendly, allowing the construction industry to future-proof based on hard evidence.
  • The four NDP funds, which will focus on the implementation of the central NDP objectives, were launched during the summer. The first round of projects to be funded have been announced.

 

CONSTRUCTION SECTOR GROUP

Building on this progress, we recognise that a sustainable and innovative construction sector is crucial for the efficient delivery of Project Ireland 2040. To help foster the development of the sector and ensure a regular and open dialogue between the industry and Government, we have set up the Construction Sector Group. The Group has met regularly and agreed a highlevel work programme for 2019. Parallel to this process, the IPPO has been meeting with individual stakeholders in order to get a sense of issues on the ground. One common ask was for an updated Investment Tracker which, as mentioned, has since been published. The Construction Sector Group will be consulted on the continued development and improvements in this space.

There has been good progress to date on implementing the NDP, but we can’t be complacent. We have identified risks and are tackling them head-on.

Perhaps chief among these is the potential for construction sector inflation. The coming year will see the Construction Sector Group tackling the important challenges of productivity, technology adoption and skills gaps. This can help ensure that we can maximise the value of our investment.

MANAGING RISK

While the scale of our ambition is clear, there is an imperative to manage risk and strive for maximum value for money. Measures to improve productivity, attract talent home from overseas and keep the pipeline of investment moving will all be important in this regard.

We also need to ensure that, unlike in the past, homes are built in the right places for those who need them. Three-quarters of new growth between now and 2040 will be outside Dublin, with 50% of the projected population growth planned for our towns, villages and rural areas and 50% for our cities. The development of the new Regional Spatial and Economic Strategies (RSESs), in a process monitored by the Delivery Board, will see that City and County Development Plans and Local Area Plans are consistent with national and regional policy.

Project Ireland 2040 is about doing things differently. We have changed how we invest in public infrastructure in Ireland, moving away from the approach of the past which saw public investment spread too thinly and investment decisions which didn’t align with a clearly thought out and defined strategy. Project Ireland 2040 is a clear, responsive, needs-based strategy. Investment is being boosted to meet those needs and activity in the construction sector is gearing up accordingly. While risks exist for the sector as well as the economy as a whole, the Government is cognisant of these and is undertaking proactive measures to mitigate them. In this way, we will create a sustainable construction sector within a sustainable economy that is well equipped to meet society’s needs.

 

* Project Ireland 2040 comprises the National Planning Framework to 2040 and the National Development Plan 2018-2027.

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