Oireachtas Joint and Select Committees
Tuesday, 6 September 2016
Committee on Budgetary Oversight
Economic and Fiscal Position: Nevin Economic Research Institute
1:00 pm
Dr. Tom McDonnell:
It would. Broadband is a topic I have spent a lot of time researching over many years.
Ireland has performed poorly in terms of broadband ever since the onset of the technology. Parts of Canada had broadband in the late 1990s but parts of Ireland still do not have broadband.
One of the areas on which we have not focused is the labour market, which includes the issue of regional employment trends. One of my findings was that, while it may be appropriate to let the market do its thing in areas with a high population density such as Dublin, Cork and Limerick, it is less likely that the market will provide it in rural areas. It is unlikely it will find there is a commercial return because of the very expensive network infrastructure associated with broadband. In this scenario, those rural areas fall even further behind. One of the policy measures that can be pursued to open up regional employment opportunities is high-speed broadband infrastructure everywhere in the country. That is expensive but it has its advantages. Some of my friends have been able to leave Dublin and go back to the mid-west because broadband has improved and they can do their IT jobs from home. They do not need to be living in Dublin for those jobs. Such examples, if a little bit unusual, show that opportunities can be created. Another obvious point is that local SMEs will find it very difficult to be part of the global market and to sell their goods and services online without broadband.
The Deputy's broader point was about productive infrastructure and much of the infrastructure in this case will be beneficial. There might not be a productivity-enhancing aspect to social housing but there is a competitiveness aspect because more housing means lower rental costs, which improves competitiveness in wage demands vis-à-visother economies. There is an economic dimension to it and it is extremely important for inclusive growth.
The education sector is another area that needs to be looked at. We have regional hubs for many areas of the economy and we need to develop alternatives to Dublin on the west coast, though not to the exclusion of Dublin. We need to prioritise urban hubs on the west coast in Cork, Limerick and Galway and extending to Sligo and Donegal. There needs to be a regional dimension and we need to build up regional powerhouses so that they can become employment hubs which people can reach.
Other areas where productivity could be boosted include public transport, which can reduce the costs of getting to work. The road network reduces costs for business, and investment should increase at least in line with demographics. We are ranked very poorly by the World Economic Forum in terms of our infrastructure and bottlenecks have built up so competitiveness is relevant to this.
I was asked whether there were areas of infrastructure that were not productive. Arguably, there are. Some people would say there are white elephants in, for example, tourism but that does not mean we should not do certain things as they may have non-economic rationales.
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