Oireachtas Joint and Select Committees
Tuesday, 9 May 2017
Committee on Budgetary Oversight
Capital Investment Plan 2016-2021: Dublin Chamber of Commerce
I welcome the representatives of the Dublin Chamber of Commerce: Mary Rose Burke, chief executive officer; Aebhric McGibney, director of public and international affairs; Fergus Sharpe, senior policy executive. They will discuss the revised capital plan with the committee.
Before we commence, I remind members and witnesses to turn off their mobile telephones as they interfere with both the broadcasting and the recording of the meeting. I also wish to bring it to the attention of the witnesses that they are protected by absolute privilege in respect of the evidence they give to the committee. However, if they are directed by the committee to cease giving evidence relating to a particular matter and they continue to do so they are entitled thereafter only to qualified privilege in respect of their evidence. They are directed that only evidence connected with the subject matter of these hearings is to be given and they are asked to respect the parliamentary practice to the effect that where possible they should not criticise or make charges against any person, persons or entity by name or in such a way as to make him, her or it identifiable. Members are reminded of the long-standing parliamentary practice to the effect that they should not comment on, criticise or make charges against either a person outside the Houses or an official either by name or in such a way as to make him or her identifiable.
I invite Ms Burke to make her opening statement.
Ms Mary Rose Burke:
We appreciate the opportunity to speak to the committee today on the mid-term review of the capital investment plan for 2016 to 2021. Dublin Chamber of Commerce is the voice of business in the Dublin region. It represents 1,300 members who employ over 300,000 people across the greater Dublin area. Our membership is made up of a cross-sectoral base spanning the spectrum from start-ups through to multinationals, so we have a good insight into the infrastructure needs of both businesses and their employees over the coming decades.
Ireland faces an urban future and we believe the Government must plan for this through proper planning and infrastructural investment. Urbanisation is an overwhelming international global trend and the UN estimates that Ireland's population will be 75% urban by 2050. Rather than fighting this the Government should focus on getting urbanisation right, to optimise both social and economic outcomes. The greater Dublin area is currently home to 40% of the population and it is the engine of the Irish economy, accounting for 53% of GDP. It generates 62% of tax revenue in Ireland. For the foreseeable future it will remain the main demographic, economic and cultural hub in the country. In this urban future Ireland's success will depend on the strength of Dublin. The growth of the capital city should be intelligently supported, not frustrated.
Large infrastructural investments in the greater Dublin area are not just for Dublin. They have a national impact. For example, Dublin Airport is not just for Dublin. It is the national airport and eight out of ten air passengers to Ireland come through Dublin Airport. Enhancements to the connectivity of Dublin Airport to the city and the rest of the country have benefits for both the greater Dublin area and the country. The capital investment into Metro North as a key element of that connectivity is, therefore, a priority for Dublin Chamber of Commerce. Likewise, the DART underground is to be seen as national infrastructure. While it would connect the two main rail stations it also provides connectivity for Dundalk to Tralee or Sligo to Rosslare, so while Dublin based infrastructure is important for connectivity in the greater Dublin area it has a national impact as well.
We ask the Government to allocate resources in a way that respects and reflects where Irish people choose to live in their greatest numbers. A first step in this regard would be to allow a proper debate on capital investment choices, informed by clear and up-to-date data on relative costs and benefits for the proposed projects. This information is not publicly available at present. What is in the public domain is out of date, so we ask for that data to be made available so we can properly inform and comment on it. Under-investment in Ireland's biggest population hub has negative economic and social effects. None of these decisions is cost-less. For example, the Department of Transport, Tourism and Sport in a response to a parliamentary question estimates an annual cost to the Irish economy of €350 million caused by congestion in the greater Dublin area. This is projected to cost the Irish economy approximately €2 billion by 2030 if serious investment in infrastructure does not take place. The European Commission has recognised that urban Ireland suffers particularly from shortcomings in infrastructure and that this will be aggravated by rising activity and population growth. The under-investment in infrastructure is costing us on a number of indices, and the World Economic Forum has highlighted the lack of infrastructure as a bigger risk to Ireland's economy than the level of the country's debt.
We believe Ireland must have a new approach to capital expenditure. In the past we have both under-estimated future infrastructure needs and failed to provide for them. Dublin is now ranked as the seventh most congested city in Europe, with public transport usage by commuters at only 21.5%. However, we have seen that where successful infrastructure is built people engage with it. Connecting the centre of the population with the infrastructure means that people will engage with it. We need to move the dial on that 21.5% of commuters on public transport. Our current approach to infrastructure and capital planning is not working. We have one of the most unstable capital expenditure patterns in western Europe and the lowest proportional capital spend in the EU. We ask the Government to embrace long-term planning for infrastructure investment. We should adopt a 20-year capital investment plan that is aligned to other national strategies and supported with long-term fiscal commitments. Other countries have successfully shown the way on this, so we should seek to have a 20-year capital plan.
In the short term, we believe the Government should use the unallocated €2.65 billion to enhance competitiveness in light of geopolitical challenges. The most pressing of these is Brexit, but there are other challenges. Maintaining a focus on competitiveness is the key request. Housing supply, commuting and travel times represent the most practical and quantifiable measures under which the greater Dublin area can improve its international offering in a relatively short timeframe. Investment in housing and transport will also have a huge impact on quality of life for citizens in Dublin as well as supporting further growth and investment.
Metro North and the DART underground should both be prioritised in the capital investment plan. The Metro North is essential connectivity and it is also essential to easing urban congestion. Fingal in north County Dublin has a population of almost 300,000. It is the third most populous county in Ireland and is the fastest growing. Between the census of 2011 and the census of 2016 the population growth in Fingal far outstripped that of the five counties of Connacht. We must put investment where the people choose to live. The DART underground was first mooted in 1971, yet we still do not have it.
Again, there are opportunity costs to that and that has been a drag on the development of the city. Resources must be allocated to enhancing the existing public transport system, reducing commuting times, easing congestion and better delivery of health and environmental outcomes.
We also believe that Dublin Bus services play a hugely important role in the city's transport system and that bus priority and bus only corridors are a highly efficient way of transporting large numbers of people at peak traffic times. There are opportunities to upgrade ticketing and payment systems through allowing the use of contactless cards and phone pay, in addition to the Leap card. Improvements in cycling and walking infrastructure could also be achieved at relatively low cost but with very significant rewards in terms of traffic management and in health and environmental outcomes.
In terms of planning, complementary services such as Dublin Bikes, cycle lanes and bus stops should be located as close as possible to the existing rail stops to enhance commuter convenience and to encourage people to use public transport.
The other key area for capital investment is the Dublin water supply. The threat to water shortages in Dublin has been internationally recognised, with a Stanford University study in 2014 identifying Dublin as one of the most vulnerable cities in the world to water shortages in the future. The eastern and midlands water supply project is vitally important and it must not be delayed. We ask that Government would clarify the implications of the EUROSTAT determination that Irish Water remains on the State's balance sheets, the implications of that for the capital investment plan as a whole and that it commits fully to funding the eastern and midlands water supply project.
That is the summary of our recommendations. We would be delighted to answer any questions and go into each of those points in detail.
I thank Ms Burke, and I thank her for her brevity. I hope the members will be as brief as possible. Deputy Cullinane is first to ask questions. I ask that there be no speeches. I ask members to be brief too and to ask questions as far as possible.
The witnesses are very welcome. I commend their constructive opening contribution which contained many interesting ideas. The starting point for all of us now in terms of capital spend over the next while will be the national planning framework and how that works out. The logic of it is good in the sense that it does not seek to take from Dublin. We need a thriving capital city. There are capacity issues but there is further scope for development in Dublin. However, there is a big demand on the State regarding capital spend. Leaving aside the infrastructural capital projects, some of which Ms Burke highlighted, we also have the need to build the national maternity hospital and the national children's hospital. We have demands in third and fourth level, where there is a dearth of capital investment, health care and so on. We then have the need for transport investment and other investments. That is just in Dublin alone; we have not even gone outside of Dublin. Obviously, there will have to be a prioritising of what is possible.
That leads me to my first question. Ms Burke cited in her opening statement a greater use of public private partnerships, PPPs. A number of organisations and witnesses have come before this committee. Some of them are more supportive of PPPs while some are less supportive. Some economists have question marks over them and some are more supportive. The Comptroller and Auditor General's office has done a good deal of work in this area and it has concerns regarding accountability, a failure to do look-back exercises to see whether we are getting bang for buck. Before we can embark on more PPPs, there is a school of thought that we should have more hard analysis of whether, as taxpayers, we get value for money for them. Can Ms Burke give us examples from her perspective of what did represent value for money in terms of PPPs? How would she respond not just to the Comptroller and Auditor General but also to the many economists on this? Colm McCarthy has been a strong critic of public private partnerships. There is a body of opinion on them.
My second issue concerns capital spend outside Dublin. In her opening statement Ms Burke spoke about the need to examine where population growth is in the State. There is an intention, and it is something that underpins the national planning framework, that we have to build regional cities outside Dublin. That will require capital spending as well. How do we make sure we can do all of that while at the same time making sure we have the capital spend for the Dublin area?
In terms of my final question, when any group makes a demand for increased resources we have a responsibility to ask how we will pay for that. The question to Ms Burke and her organisation is that if it is recommending that we increase spending and capital areas, how will that be paid for? Will it be through cuts in services elsewhere or through increased revenue? If it is through increased revenue, what are those options?
Mr. Aebhric McGibney:
The history of PPPs has evolved in the past 20 years. Ireland has become quite good at using PPPs and they are used as an exemplar for some of the projects in terms of how a good PPP project is worked. The argument used against PPPs generally is that Government financing is cheaper but that misses the point that with regard to private finance, which might have a slightly higher rate, there is a full transfer of risk if it is done correctly. It will then be off balance sheet, which is the possible solution to Ireland's desperate need to invest heavily in capital infrastructure. There is a good deal of public debate about whether projects have worked very well and whether the investment is worth it. There is then scope change and things happen but if we lock down a project and say, "We would like you to build this and the risk and all the challenges are transferred to the private sector", there is a huge benefit to that.
We are very conscious of the work done by the European Investment Bank, EIB. A group involving the EIB and the Government is looking at a range of private finance options and getting the EIB involved in supporting projects here. There is a particular window of opportunity arising from the proposed exit of the United Kingdom from the European Union in that there are many officials with expertise in that area. The EIB, once it comes into a project, would certainly ensure that it was very much above board and of a very high standard. PPPs have improved as projects and the expertise of the EIB in bringing that on board is an opportunity we should not miss.
In terms of value for money, we face a real challenge. I cannot have a meaningful debate with any of the members without value for money or cost benefit analysis of any capital project because any project over €5 million is assessed by the Departments of Finance and Public Expenditure and Reform, given a cost benefit analysis and then the analysis is redacted. We cannot see the cost or the benefit, so we cannot have a meaningful discussion. It is beholden on the Department of Public Expenditure and Reform to produce something more meaningful with which we can engage. There is a challenge regarding commercial issues. If I tell the members I have €100 in my pocket, the risk is that any supplier will try to charge me up to €100. If there is competition in the market among people bidding for projects, one would think it would be less than the €100 in my pocket. Even allowing for that, there must be a way of ranking projects according to benefit. DART underground was given, in one of the less redacted papers, a benefit to cost ratio of 2:4. Could we see an assessment of all the range of projects that come out of the medium-term capital spending review assessed in that fashion? That would be very helpful. If there are better ways we would welcome the Department's expertise in trying to provide a framework where we can have that kind of meaningful discussion about how we can get good value for money from projects.
I think I am covering the points. With regard to the question of financing, it is a critical issue. We certainly believe that there is scope to query the Stability and Growth Pact, the "six pack" and the various rules. Under the latest revision of those rules this year there is an opportunity to invest in productive capital spending if it can be shown to increase the growth rate of the economy on a once-off basis; we are allowed do it once. We believe there is a pressing need to jump start the huge capital deficit the economy faces. That higher growth rate will in turn generate revenues. There are any number of self-sufficient arguments made to the Department of Finance.
Every scheme always pays for itself in some way, but we believe if projects are properly evaluated, and the returns to the Exchequer and the economy are properly assessed, they will provide their own returns. If the Deputy recalls, when we had the big national debt problem in the 1980s, the amount we owed did not fall. It was still £120 billion or £130 million. The economy grew and that is how our debt to GDP ratio fell. Some consideration should be given to this also.
Mr. Aebhric McGibney:
I can say a little on this. The national planning framework speaks about developing urban areas. There is clear evidence internationally, from the European Union and the OECD, that city regions are how businesses and economies will tend to grow in future. We absolutely support the development of other city regions. One of the challenges that came out of the most recent spatial strategy is that it means not everywhere in Ireland can be a locus or focal point for growth. However, we think that with proper planning, regions surrounding urban areas can also benefit if they are linked and connected and plugged into them. This is a solution. Deputies may not be aware that jobs are recorded by where people live. They are not recorded by where they are and when we see growth in jobs in Kildare, it is often because of people commuting on the dual carriageway to get to the M50 to be in a traffic jam. The growth in Dublin is actually supporting jobs outside it, in Kildare, Meath, Wicklow and much further afield.
I welcome the witnesses from Dublin Chamber of Commerce. I believe the comments made by Mr. McGibney on the publication of cost-benefit analysis should apply to the committee. We are supposed to be a budgetary oversight committee but I must confess we do not get this information in any detailed meaningful way. This committee is part of new politics, but very little additional information is provided to it. If it was in order, we should write to the Minister for Public Expenditure and Reform to request we get this information and that organisations such as Dublin Chamber of Commerce, which does a lot of work among businesses in the wider Dublin region, should also be able to obtain data. It is essential. As a body very involved with many employers establishing businesses broadly in the Leinster and Dublin regions, this information is absolutely vital in supporting the decision by a business to make an investment in Ireland or supporting the decision of a local firm which is expanding to continue.
Does the chamber support making Dublin city a living wage city? One of the problems for people working in the city at present and for businesses is that the shortage of housing and the spiral in rents, traditional low-wage jobs, very often in the retail sector which is big in Dublin, mean it is not possible for people to live. The type of contracts people get, where hours are insufficient, means that often they are not in a position to approach banks or, at times, credit unions with a view to get extra mortgages. I know this is not the subject of today's discussion, but it is very important to have quality jobs and decent pay and conditions for people.
With regard to the projects, has the chamber had a discussion with the Government about the break and gag on capital expenditure in Ireland because of the total inflexibility of the fiscal rules? We are a small country. We cannot avail of the Juncker plan because it is only available to larger countries, and it is not even particularly available to countries such as France and Italy because of the debt levels. There is a huge amount of money floating around the EU, and countries such as Ireland, which have good investment prospects in terms of public investment, cannot access it. Would the witnesses agree the European Investment Bank and public private partnerships are, in many ways, a poor substitute for direct state investment if the deficit rules looked at capital investment separately to current investment? There is obviously scope at different times for many styles of investment but, at present, we are strangled as a country and a city in terms of capacity for capital investment.
I want to ask specific questions about public transport in Dublin. One of the cheapest and fastest things that can be done is the electrification of the suburban railway lines from south and north Kildare into Dublin city and their connections on to other large towns and cities. What is the sense of the witnesses of where the Government is at on this? For example, the Maynooth line should have been electrified a long time ago. We could have a DART service on the Maynooth line, which would increase the carrying capacity of the carriages. We also have on the west side of Dublin, into Kildare and west Dublin, which I represent, significant capacity for the additional building of homes in areas where people would like to buy and where we could have social housing. Given Dublin Chamber of Commerce is such a major body in the city, has it had an opportunity to discuss this with the Government?
With regard to the comments made on buses, Dublin Bus in my view has improved its service substantially and all credit to the people who work there and provide the service. However, it is now dangerously overcrowded because there are just not enough buses. The development of the app by Dublin Bus and the real-time information on bus movements at many bus stops have revolutionised Dublin Bus in a positive way. It is a tribute to the public sector that it has done this, but it does not have enough services. When it is off peak, there are definitely not enough services. If we really want to shift people from the car to public transport, the extension of the DART to other suburban rail services, of which there are quite a number in the Dublin area, would be a very fast win, but it would require an amount of investment. Longer term projects such as metro north are very valuable, but today we have seen the statement by one of the leading people associated with the transport sector that it could not even start before 2022. It would be helpful to us as a committee if Dublin Chamber of Commerce could look at the timeline with regard to the projects on the list. I will give an example of a recent Government decision which I completely fail to understand. There is a strategic development zone in Hansfield in west Dublin, which has capacity for 3,000 houses, provided road access is developed. This road access is expensive but not massively so, and when the Government recently announced a small spend of €200 million on access to get housing sites started, it was specifically excluded in a way that simply makes no sense to me. Given that the committee is about budgetary oversight and spending money to get the best return and best value, I am really confused by some of the decisions, or lack of decisions, of the Government.
Ms Mary Rose Burke:
I will take the points the Deputy has made and I will ask Mr. McGibney to comment on some of them in more depth. With specific reference to the living wage, Dublin Chamber of Commerce is not an employer body but we have 1,300 firms which employ more than 300,000 people. We take the view that the living wage is a concept around a weekly income and is not linked to the number of hours worked. The relationship between employer and employee is based on a promise for productivity for a certain rate.
We wish to guard against any confusion between the minimum wage, which is the floor under any employment relationship, and a living wage, which concerns income not related to productivity or the number of hours worked. There is a minimum wage commission so I will not comment any further on that. We support the work of the minimum wage commission.
Ms Mary Rose Burke:
We have repeatedly said we agree with the fiscal rules as they relate to current spending but, with a growing population and an infrastructure deficit going back decades, the fiscal rules do not work. We expect Government to make the case that, given our demographic profile, we need investment in critical infrastructure across health, education, energy and transport. The Juncker plan has not worked for any economy, including the large economies. We work with the alliance of European metropolitan chambers and the Juncker plan has not worked for critical infrastructure in any of the associated cities, with Dublin no different. We ask that it be revisited and we believe there are ways of working through the EIB to progress some of our proposals.
I agree fully with the Deputy that public transport is the way forward to make the city less car dependent. Two things have to be done in tandem but reducing car access, so that the city is not car friendly in the absence of a public transport alternative, would cause chaos. Buses are an immediate stopgap. Metro North is predicted to go ahead in 2021 after the planning and consultation phases are complete, with an earliest possible date of 2026 or 2027 for passenger use. We cannot wait until 2027 for a transport solution to north Dublin and the airport so buses are the only realistic alternative in the short to medium term, but for that we need changes to the quality bus corridors and the moving stock. Increasing buses would be good value for money. Difficult decisions have to be made on certain bus routes because the low-hanging fruit in regard to bus corridors has probably been picked and there are capacity issues on some roads. Electrification and investment in rail services to commuter towns are part of the long-term future but we will be dependent on buses for the next decade.
Mr. Aebhric McGibney:
The population growth in Dublin has consistently been underforecast by the CSO for 20 years. We now use the M2 and F2 figures which use the 2011 census forecast for 2016, produced in 2013, but this was wrong by about 50,000 people. More and more people are moving into urban areas at a faster pace, much of it internal, rather than inward, migration. Transport and land use are the biggest modern-day crisis the city has and we need to join the two issues together in a consistent way. If we had built everything that was proposed under Transport 21 ten years ago, it would be finished by now. There would be a Metro North and an underground DART, as well as other services. There would also be less of a housing problem. The Department of Housing, Planning, Community and Local Government gives figures showing a potential supply of 175,000 sites in the county of Dublin. It lists various categories, what is enabled and what not enabled, what has planning permission and water, roads, etc., but the failure to progress housing supply is lack of infrastructure, including water but also a transport system. If we could manage to integrate the two elements to allow the extra supply to come on board it would be a great help.
The chamber does not have an ideological position on PPPs and the question of public and private finance. We do not believe financing must be private just because we are a business body. In fact, most bundles or packages of finance are public and private finance working together. There is an expertise in regard to the EIB, of which we can avail. Capital spending, as a percentage of GDP, should be up at the level of the OECD and EU average, which is upwards of 4% - twice where we are at now. There should be a bundle of private and public finance on top of that, working together. The most important thing in using private finance is to have a consistent approach. In the past we have developed expertise and ramped up private finance on a range of projects and then walked back down the hill again without delivering the project. If one uses private finance one has to use it consistently.
On the question of a timeline, it is hard to break projects down into their component parts each year and to estimate what will be spent in each year. However, separating larger projects into bundles of smaller projects can allow little pieces to be done that can fit into the overall capital spending plan and can enable projects to be progressed more swiftly.
The danger is that all of us, politicians and the witnesses, have not faced reality. It is all very well saying we could have done this, that and the other four or five years ago but the reality is that the IMF walked into the Department of Finance and took us over. This country was broke and we keep forgetting that. The rebuilding of the economy and other priorities were stopped in their tracks. Nobody would disagree with the need for more capital expenditure but we did not have any money. We need to look at the submissions in the context of reality and to get some perspective. In many respects, however, it is a miracle the country is where it is today, after the terrible setback we had. We must not make the same mistakes again and we have to think outside the norm.
What is the witnesses' opinion on how we might get people living within a normal distance from the city as compared to other capitals? If one lives in London, 20 or 30 miles is nothing yet we are talking about spending vast sums of money to build a vast public transport system from one side of St. Stephen's Green to the other side of the Liffey, when we need to build proper access in the form of roads or rail to areas 30 or 40 miles outside Dublin. There is always going to be a need for access within the city but where people live is the problem. I live in the direction of Killiney and if I was to come in at 8 a.m. in a car or a bus it would take anything between 40 minutes and an hour.
On the other hand, if I have access to a proper public transport, and I am fortunate to have that with the DART, I can get into the city from Drogheda and even Dundalk in that time. When I go to Pearse Station at 5 p.m., the queues of people on the opposite platform travelling north to Dundalk, Drogheda or west to Maynooth are incredible. More people are living outside the city, which is not a bad thing. The rat race which results in people having to take on huge mortgages to buy a three-bedroom terraced house in the area represented by me and Deputy Boyd Barrett is a millstone around people's necks that they will never get rid of. Buying a semi-detached or terraced house out our way for €500,000 is a bargain. We should discuss how we can encourage people in all walks of life to start thinking about where they live and how the statistics relating to where they live are irrelevant in the context of where they work. That is the main problem. We are mixing up where people live and where they work. It is not a question of extending the DART line two or three miles outside the city at an enormous cost when bus lanes and a rail link could be provided to transport people from 20 or 30 miles away. It would take the same time as those commuting from eight miles away.
Ms Mary Rose Burke:
I refer to the Deputy's first point about the miracle that the country has survived at all. It is not a miracle. We had a construction, banking and public finance collapse, catastrophic as it was for the economy. In 2009, the private sector and the real economy corrected, which meant job losses at the time. From that date, it created jobs again and from 2010 onwards we had record year after record year of exports. The real economy recovered, therefore, and it is on the back of the real economy that the public finances recovered. I make that point because it is important to note that the infrastructure to support the real economy is the substance of our report and that is what we are discussing.
When it comes to where people live and where the work and how they get from A to B, distance is important. We know from the 300,000 people working for our members that they do not want to be shipped in from commuter towns. They do not want to spend their time even on efficient public transport. They want to be able to live near where they work, they want a short consistent commute time and they want to be able to live in the city. Dublin is like a doughnut city at the moment because of a failure of housing policy going back decades and multiple Administrations. Other cities in which people enjoy a good quality of life manage to have high quality, high density living in a small nucleus within them. For instance, people in Copenhagen have a good quality of life. The city is not congested with cars but that did not happen overnight. They dealt with congestion and sprawl and they said that was not the way they wanted to live their lives. They had cross-party agreement and 30-year plans to allow for the proper development of the city. We would like a housing policy that would encourage high density, high quality living in Dublin. Rathmines is a village in the city, which is an example of working high density. It is an attractive place to live. Our experience of what we think is high density such as the towers in Ballymun was not high density at all. They were medium rise, low density towers and they were a failure of social policy.
Ms Mary Rose Burke:
We would like to see high rise, high density, high quality housing in designated areas in the city centre and not sprawled around the city. That would provide for short commute times between work and play. That will not suffice as housing for everybody but there is a large transient population in Dublin driven by the success of our business model and their needs have to be met. Equally, other cities successfully provide high rise living for families. In Dublin, we are lucky that we have a parks and green space structure that would support a high quality of living if we could overcome our ideological objections to high rise, well designed properties.
I thank Ms Burke for attending and for her presentation. What are her members saying to her about the impact of the shortage of housing for their employees on their businesses? With regard to commuting times, how does Dublin compare to London? When I lived in London, anywhere within an hour of the city was considered a good commute and I travelled for approximately one hour door to door. That was normal. What does Ms Burke consider to be a short commute and to be reasonable? I very much agree with Deputy Barrett that we need to realise that people cannot live in the city centre next door to their workplace. It is acceptable and reasonable to think that in a city that will expand that people should live further outside and commute using good public transport links.
I agree with Ms Burke's comments on quality of life. She said that population growth in Fingal between the 2011 and 2016 censuses outstripped that of the five Connacht counties. As somebody who lives in Connacht, I take a different view. The lack of investment in our region has led people to migrate to Dublin who do not want to be there. My constituents do not want to spend two miserable hours each way in their cars travelling from Lucan to the city centre to work long hours with poor services. They would like to live elsewhere in the country if services, including proper transportation links, were provided. There is a balance to be struck. I understand Ms Burke's representations come from Dublin city and surrounding areas but we have a country to look after and capital investment needs to be levelled at all areas in the country. Part of the reason Dublin is experiencing such huge problems is we are forcing people to migrate to the city and we are not providing opportunities for them to work and live in other parts of the country. There are no jobs in those areas and they do not have the infrastructure to attract investment. With regard to the lack of infrastructure in the north west, Ms Burke would be shocked by the low level of investment in the region and how difficult it is to attract investment and create jobs for our people. It is something to think about. We are dealing with this issue as representatives of the entire country.
Issues such as the overheating of the housing market, high rents, traffic congestion and water supply shortages are the result of forcing people to live in Dublin. The chamber wants to push them into the city centre and expects that the current infrastructure will support that or can be built on and layered up to the point where people can live on top of each other. That is no life. Older blocks have much larger apartments but people are expected to live in little boxes in modern apartment blocks. It was reported earlier than 42 properties in a development in Clonskeagh sold out within one day ranging in price from €400,000 to €770,000. I am sure the €400,000 properties had no more than two bedrooms. We are telling people to live in tiny accommodation, like little shoe boxes, that is not fit for family growth. If transport links were extended to other parts of the country to allow people to live in bigger and better housing units that can accommodate families, we would do much better in assisting the Dublin area and reducing the overheating in the market. Those are my comments as someone who lives on the other side of the country where we see the issues a little differently.
Ms Mary Rose Burke:
Unusually, when we ask businesses what are the biggest challenges facing them, housing is number one. Many of our companies find it difficult to fill vacancies. We are operating in a tight labour market in Dublin at the moment and where companies can attract somebody to a take a job, they find he or she cannot take it because he or she cannot get suitable housing. Housing would not normally be an employer or a business issue but because of the failure in the market, it is the number one issue for our businesses.
We would not see an overheating of the property market in the sense of oversupply. Prices are going up because there is insufficient supply to meet the demand. That demand is driven by people who choose to come to live and work in Dublin and we need to meet that demand.
Ms Mary Rose Burke:
They are making a choice and are looking for housing here. We feel that Government policy should respect and reflect the choices that people make to come and live in Dublin. High density and high quality are part of the solution. We also see the need to develop other large urban centres around the country and a city region-led development plan makes up the basis of our submission to the national planning framework.
Mr. Aebhric McGibney:
I would like to add a couple of points. If we do not get growth in the economy and raise living standards, the national planning framework and how we grow the economy will be a failure. Spending is set in the context of where the national planning framework is going to evolve. The national spatial strategy, which tried to prioritise 22 towns and several other ancillary towns, did not work at a time when public spending was not really constrained. We spent a lot of money. Was it sustainable in terms of the economic activity and the lifestyles it supported? Transport is a big issue. We do not have the cost-benefit analysis as we discussed. Higher density does not automatically mean height. In many other cities, there are between three and six storeys. It does not have to be 20 storey mega towers. People need to live closer together. This is a challenge for the whole of Ireland. If there is more one-off housing, if people move out, the service costs for health, education and transport are higher than when people are clumped together in towns and cities. Perversely, recent incentives are to get people into towns having let them build a house a couple of miles outside the town.
It is not the case that Dublin has received more capital spending than anywhere else in the country. It is at the bottom of the list. Edgar Morgenroth at the Economic and Social Research Institute, ESRI, produced figures for spending per capitawhich show that for Dublin it is two thirds of the national average. Every other region gets more capital spending than Dublin. My only caveat is that the data goes up to 2009. No more recent data can be prepared because the data is not produced in order to make the analysis. We need more data from the Central Statistics Office, CSO, on national income accounting figures and we need more information from the Department of Housing, Planning, Community and Local Government. That data is getting out of date but if we had the extra data from the Department, Edgar Morgenroth and the ESRI could produce it.
Mr. Aebhric McGibney:
I am simply making the point and not trying to be overtly critical of any one policy but, on the one hand, we have allowed for a dispersed population and now, on the other, we are trying to encourage people to get back into towns. Maybe we should have everything pointing in the same direction and encourage people to live in towns and villages to get that agglomeration that would provide for better services. There are incentives coming up to bring businesses back into the town centres. We need to think about getting more people in. What drives a business is footfall outside its door.
Mr. Aebhric McGibney:
I do not have the figure in front of me but there has been a successful redevelopment of the city core. Dublin City Council has put many good plans in place but they are not complete. More people have moved back into the city in the past 20 years so the population has increased.
I take the points Mr. McGibney is making and I want to see a vibrant capital city. That is vitally important for the entire country but there has to be balance between the regions. I do not think, in the interests of fairness, we can rely on the figure of two thirds of spending per capitain Dublin going back to 2008. There is a figure I am sure we would be eager to ascertain at some point. I do see the usefulness of that. I know Dublin Chamber of Commerce is in favour of high density living and while I am not totally against that, I am against shoebox apartments and forcing people to live in them. That is what we are doing. It is almost as though we are in such a crisis now that we do not give a damn what kind of accommodation standards we have. We have restricted the size of apartments and want people to live in tiny accommodation with no prospect of ever getting out of it because they have such massive loans around their necks. I am totally against that. It is a very short-term view. I think, however, that it is quite restrictive for the city to have such a small cap on the number of storeys the buildings can have and would be in favour of reviewing that policy.
Ms Mary Rose Burke:
We would be in violent agreement. We do not want anybody living in poor quality housing. This is part of the problem we are trying to highlight, that we need proper planning, proper standards, proper quality and high density. Equally, this is not a question of forcing people to live anywhere but of respecting and reflecting the choices people are making. This is not just in Dublin. Cities all over the world are dealing with this global trend towards urbanisation. People are choosing to live in cities because of their quality of life and social and cultural aspects. Instead of fighting a trend, we need to recognise the trend and build to support it.
Our visitors are very welcome. This is my first opportunity to question the chamber. I have attended several of its functions and meetings with Mr. McGibney and Mr. Sharpe and others, where we have been questioned so it is nice to have the shoe on the other foot or to make some comments.
I have family connections with Dingle, which is a very successful tourist town. Someone from there told me recently that they have an accommodation issue for people who come to work there, particularly seasonal workers. It would be regarded as an average size town. It is not just a Dublin issue.
We have tabled a Private Members' motion for tomorrow evening on traffic congestion in Dublin. It is interesting to see the feedback on that. Part of the aim of the motion is to get the heads of people in Dublin and the commuter counties around the fact that there is no silver or magic bullet. It will be at least 2027 before the major infrastructural projects we are talking about will be in place, if we are lucky, yet the witnesses know that the answer to a question I tabled to the Minister on the cost of congestion to the city, according to the CSO, the National Transport Authority, NTA, and modelling systems, was €350 million per annum. That is estimated to rise to €2 billion per annum by 2033. The amount of infrastructure that could be built with €2 billion per annum is substantial.
I have not heard the phrase "real economy" used for a while. I am hoping Ms Burke used it unconsciously. I really dislike it because it implies that nobody else is doing anything economically meaningful unless they own a business that employs people and produces or manufactures something. I would argue that teachers educate the people who populate her "real economy". Doctors and nurses care for them and make them well so that they can turn up for work in her "real economy" and public servants keep the whole machinery of the "real economy" moving. The real economy is everybody. It is not just business and everybody played some kind of part in the recovery.
I am aware that business took the biggest hit in employment numbers and profits, suffered much damage and has recovered. I am also aware that tourism, which is very much an understated asset in this country, probably proved to be the most resilient product that Dublin had to offer during that time, and withstood many pressures that came from the crash. In spite of that we invest very little in research and development on it as a State, compared to cities elsewhere, and I would like to hear what the chamber thinks of that.
On high-density development, the witnesses know that there used to be double-decker or triple-decker houses in the United States. The suburbs can offer potential for sustainable high-density development, but people have to be led. People like Mr. Dermot Bannon, the architect, are critical in that because they are trusted figures in the public eye. It feels like they are late to the debate because it is a matter that I had considered a long time ago as a politician, but their entry to the debate is important because people trust them. Mr. Dermot Bannon recently repeated what the witnesses were saying, that Dublin is not just like a doughnut, but like a saucer, where the density gets higher the farther out one goes. I think the witnesses from the Dublin Chamber of Commerce mentioned Copenhagen. We have 25% of the density within the boundary of the M50 that Copenhagen would fit in that space. That is good news too because it means we have much capacity there.
Rathmines is full of derelict bedsits too. That is the only downside of it. The reaction to two previous Governments trying to improve standards in bedsits was that the whole thing shut down. I take the witnesses' point about densities, but there is much dereliction there and much unused accommodation. Several Governments and city councils have tried to incentivise the re-use of those, and it has been really difficult to do that.
Major infrastructural projects are a decade away and the Minister, the Government and the NTA have told us that, without ever asking us or consulting with the public; we do not have a choice now but to accept that public transport is the only way to alleviate future traffic gridlock. What steps do the witnesses envisage may be necessary during that decade in traffic demand management and in entry and access to the city from the commuter belt? Some 70% of employees in Wicklow come to the city. Some 40% of Kildare working people come to Dublin. That will keep growing. I imagine some serious thinking will need to be done in a proactive way, or we are going to have to react in a crisis at some stage down the road.
Five of the top eight tech companies are based here in the city and I met one of the lead people from one of them. I am always fascinated that this company's major selling point is that it manages data. It has a huge amount of expertise in the data management area. We have a huge amount of expertise in university faculties. The State has invested hundreds of millions of euro in this over the years, in transport, climate change and other areas. Does anyone ever ask these bodies to get involved in designing solutions for Dublin? Have any of the tech companies ever been approached, whether by Dublin City Council or the NTA, to see if they have something to offer with regard to providing solutions and managing data, at which these companies are experts? Do the witnesses have a view on that?
Ms Mary Rose Burke:
On the matter of the ten-year wait before we have some of the key infrastructure that we hope will progress and come online in 2026 and 2027, there are some short-term solutions that will have to be put in place just to manage in the interim. I mentioned some earlier, such as making the city walkable and cycleable, and making sure that we use the current network to its full capacity. Buses have to be a very large part of that solution. Equally, we need to look at things like enhanced broadband and flexibility for people to work from home. All of this will continue while the population of Dublin is growing. There are many moving parts with no simple solution. It is going to be a multifaceted approach, but there is also a difference between interim solutions when it is known that key infrastructure is coming online and a solution that does not have an end if we do not progress with the planning of key elements that we spoke about earlier.
I ask Mr. McGibney to address data provision and analytics.
Mr. Aebhric McGibney:
We have involved a number of tech companies. They see the challenge and try to promote public transport use and cycling use. The demographic of their workforce tends to be such that one is old if he or she is 35 in some of those sectors. This relates to an earlier point. If we have greater mobility in the housing market, people can move accommodation according to their needs. One of the biggest reasons that Fingal's population is growing is that household size is increasing. That is because kids are staying at home with mum and dad and have not moved out. People of a certain age may want to live closer to town and all the action, then they want to move out as they develop a family.
Tech companies have got involved with some of those transport solutions to provide for themselves and have talked to us about wider demands. It relates to the shoebox point. If we plan transport and land use properly, since we can predict demographics in advance, we see that most of the economists looking at housing need forecast say we do not need tonnes more four-bed, semi-detached houses with picket fences. We need more two-bed accommodation. The aging population and rising younger population means we have a shortage of accommodation for those with middle-sized needs. Then we need to allow people to move from those two-bed apartments into bigger houses as their needs require.
The Deputy mentioned tourism. I do not know how to expand more correctly on that. There is a vision exercise that we have worked on for a number of years. Dublin is a great proposition as a region. It has mountains and it has sea. From a tourism perspective, the greatest development we have seen from Fáilte Ireland's promotion of Dublin as a region through A Breath of Fresh Air is making it a regional offering. The joining of destinations such as the Wicklow Mountains and Howth make them more of a coherent proposition as part of the Ancient East.
The witnesses do not have to answer this, but I am trying to be provocative about thinking and policy. When I talk about the tech companies, I am asking if it has ever emerged that the NTA has gone to them and said that it has a pile of data and has analysed it, and has asked if the tech companies can analyse it since they are experts at data management. It could ask what they would do with the data and how they would make it work better for Dublin. We have a colossal amount of data. Some of that data is collected by the four individual Dublin local authorities. When I was a member of South Dublin County Council, the registration plates coming in to and leaving South Dublin County were read. I could only say so much because some of that was going into Dún Laoghaire, or it was going into the city or to Fingal or wherever.
That is the kind of data harnessing I am talking about. There are people with a really high level of expertise that could do something with data that we cannot, and who could help solve those problems. It is not going to be a silver bullet but it is something that could contribute to it. If we have five of those companies based here, they have a phenomenal amount of information about people, including Dublin people, their movements, their habits and trends. We are not using any of it. That is what my question is about.
Mr. Aebhric McGibney:
The Deputy is correct that if the data is produced and then made available publicly, that would be a great help. I mentioned the 2009 estimate on capital spending per head. That is no longer able to be updated because the data is not produced to allow the analysis. We have evidence of the city making more of its data freely available to applications and to companies to analyse, and that is a good example. It is a commercial choice for Dublin City Council and the other local authorities, because they can sell the data.
The real data problem we are facing here from a transport and land-use perspective is that we are working off the 2011 census. The 2016 census is out but the data on where people live, where they go to work and how long it takes them will not be out until next year. If we could progress that - if it is a matter of resources available - we should, if open data could solve that problem. There are huge sensitivities in census data and such, but there may be a way to progress that which we should consider.
We need those data urgently to know where people live, where they go to work and how long it takes them to get there in order to find that solution. It is the real and critical problem we face. The Deputy referred to the point about the congestion cost in Dublin. It is worth recording that this was an analysis produced by the NTA. The last published analysis by its predecessor in 1999 indicated a congestion cost in Dublin of £500 million in punts, or over €1 billion in current terms. It is quite a conservative estimate. If it is going from €350 million now to €2 billion in 2030, it is still a very conservative estimate of the cost of what we call "congestion". The long-run future for the evolution of any city will be more to do with public transport, better planning of transport and housing and ensuring public transport is viable by having the density to support it.
I apologise for being outside for a few minutes. I was asking the Minister for Communications, Climate Action and Environment a related question on the lack of cost-benefit analysis from the republic's system of climate projects, but it related to infrastructure also. I start by disagreeing, with every respect, with Deputy Barrett. The IMF had nothing to do with us not building the metro. The metro was included in the four-year plan and funded. We had a €500 million loan from the EIB.
If I could just make the point, it was a critical project we had spent ten to 12 years planning and preparing. We would have got it for half nothing in the middle of the recession and it would be opening now. It was the Department of Public Expenditure and Reform that killed the project through a supplicant and unfortunate Minister with responsibility for transport, who was one of the Deputy's own colleagues. That is who killed it at the very time we should have built it. We would have got funding. It was the perfect countercyclical infrastructure investment project.
I also must disagree with the Deputy who said it would be great if we all travelled long distances in. I could not agree more with Ms Mary Rose Burke from the Dublin Chamber of Commerce. I was in London at the weekend. One should look at what our competitor cities are doing. I was near Bermondsey, an area that was empty 15 years ago but which is now packed and within walking distance of the City of London. That is what we should be aiming for and it is what we are competing against. Do we want to go to Bermondsey or some other area? The Government published a website recently which sets out the massive extent of public land available to us which is close to the centre but which we are under-utilising. That is what we need to develop.
Having made that general case, I have some further points. I am glad Ms Burke mentioned the need for investment in cycling infrastructure, albeit it is not listed among the chamber's priority. I would place it as the first priority in Dublin because in terms of immediate responses, we have six projects which are ready to go. The Liffey cycle route currently has approximately 1,000 cyclists and a similar number of motorists. If we get the same 50% increase in cycling capacity there that we did on the Grand Canal, it will be the most immediate capacity response to adopt. That is what London, Paris and New York are doing. It is what our competing cities are doing. It is not just the Liffey cycle route, it is the College Green project which was announced yesterday and the Sutton-to-Sandycove project which would make a very nice cycle from Dún Laoghaire into town. It is the Dodder greenway, the Santry greenway and the Tolka greenway. These are projects we have been planning for decades and which are close to being ready to go but which have no funding and, I must say, not enough political support. When the Liffey cycle route was before the council last week, we saw that there was insufficient political support. That is a real problem. They are not necessarily cheap. To do the Sutton-to-Sandycove route properly would require a fair bit of funding. Cycling is not just the tail end of spending, but should be 10% of our transport budget. In Dublin, those are the six arterial congestion solving, capacity improving, lifestyle enhancing projects which should be the No. 1 priority ahead of all the other projects the witnesses mentioned. Either we do them now or we give up on trying to make Dublin a safe cycling city. Having spent 25 years trying to achieve that, the Dublin cycling campaign deserves the support of the Chamber of Commerce in relation to those projects.
I disagree fundamentally with the Chamber of Commerce on the need for an outer orbital or eastern bypass. One cannot say on the one hand that we need to invest in public transport and then on the other hand dangle the prospect of massive new road projects. We are already doing that with the widening of the N7 which should not be coming ahead of public transport projects. There is no demand of any scale to justify the multi-billion cost of an eastern bypass for people to get from Stillorgan and its environs to the airport. If we are going to build a metro to the airport, let that take them there. There is no demand for that road. In any of the modelling I have seen from the Dublin transportation office or elsewhere, there is no crowd of people looking to get from the southside of Dublin to Whitehall or Balbriggan or any point in between. If there is, they should be using the DART and the metro. We do not need an eastern bypass and even less do we need an outer orbital. The outer orbital simply fits into the mad IBEC policy presented to us here regarding 1,500 km of motorways nationally as if climate change did not exist and as if we had learned nothing in terms of sprawl and the doughnutting of our cities which has gone on in the last 20 or 30 years. The Chamber of Commerce has said on the one hand it wants to stop the doughnut effect but on the other it has included the outer orbital in its submissions, which is to build another ring around the doughnut. That does not make sense.
Ms Mary Rose Burke:
Our preference is for a smart, liveable, walkable and cycleable city and that depends on a certain public policy ethos to support such a goal with high density living to some extent in the city centre and reduced commute times. From the work we have done, it appears that an acceptable commute is of the order of about 30 minutes. That would put us on a par with other competitive cities. I take Deputy Ryan's point about the orbital ring road. It is included in our policies because if we do not get DART underground and metro north, we will have no alternative because the city will grind to a halt. Our focus is on ensuring the city continues to be able to function as a competitive one and in that regard we have choices to make. One is to make a full commitment to public transport on a long-term basis - and I mentioned a 20-year capital investment plan earlier - because we cannot have this stop-go, stop-go approach. In the absence of that commitment, we will need an orbital ring-road because the M50 will be a car park.
Ms Mary Rose Burke:
We support the city advancing as a cycle city. However, while cycling is a solution for a large number of people, not everybody can do it. It is not accessible to everyone. It is part of the solution but it is not one or the other. We need public transport, including bus lanes, the DART and a metro, and we need cycling lanes. However, the last will not provide the solution in and of itself. Some of the proposals the Deputy mentioned would have our support, but things like the Trinity plaza have to be done in a joined-up way. It cannot be piecemeal. We have to ask what cycling there means for car access and the businesses which are impacted. It has to be a comprehensive and coherent plan which looks at all of the elements. Doing it piecemeal will discredit some of the initiatives and it will not work.
I agree fully that we should not do it piecemeal. As will happen now, we should not be retrofitting the pedestrian and cycling facilities 18 months after we finish the Luas tracks. The Luas project is long enough in the making to have allowed us to do the two at the same time. The same problem exists with the Liffey cycle route which we should be introducing at the same time the Luas starts to cross the river near O'Connell Bridge. The reason we are not doing it is a lack of vision and political will. While the Dublin Chamber of Commerce has come around to the right way of thinking in terms of the nature of the city's development, that has to mean standing up for the difficult decisions we need to take and the investment we need to make. The Minister for Transport, Tourism and Sport, Deputy Shane Ross, has not the slightest interest in this approach. I cannot understand why and I cannot understand how he fails to see the logic of developing the city in the way the chamber sees it. In the absence of that political direction at ministerial level and, I have to say, local authority level, Dublin Chamber of Commerce must step up and say "Let us build the College Green plaza and a cycle route along the Liffey quays". It is not happening because we lack joined-up thinking and political support.
There is no funding for that in the capital budget, which is our responsibility. It is our job to get the funding for that. We should have €100 million for those projects next year. They have to go in next year because if they do not, we will get none of the joined-up thinking and will have to wait another two or three years with the Luas tracks in place but none of the ancillary infrastructure which makes the city a public realm we can be proud of and which works. That is what makes cities successful. Cities know that now but our Minister for Transport, Tourism and Sport does not.
I thank the Dublin Chamber of Commerce for its input at the committee today. There is a great deal to talk about in all of this but I will try to touch on a few things.
I welcome the emphasis on joined-up integrated planning, public transport infrastructure and the critical importance of investing. I agree with Deputy Eamon Ryan that such matters are critical. It is possible to provide more quality bus lanes and buses quickly, but we are going in the opposite direction by cutting orbital bus routes or by privatising them, which will amount to the same thing in many cases. I do not know whether the chamber is speaking out about this. There has been a pattern of slashing subsidies to public transport. They have increased slightly in the last year, but they are well below what they were before the crash in 2008. I do not know whether the witnesses agree with my view that if we are serious about affordable public transport, a much higher level of public subsidy needs to be provided not only for the development of public transport infrastructure but also for the affordability of public transport to make it an attractive option. Subsidies are needed. Our public transport subsidies are well below the rest of Europe. I ask the witnesses to comment on that.
I welcome the witnesses' emphasis on the critical urgency of providing housing to accommodate the people who need it. Investment in this city will stall if we do not have enough affordable housing. I agree that we need to increase densities, but I do not agree that this necessarily involves massive heights on the scale alluded to by the witnesses. Would they agree with me that we could start looking at all the derelict sites that could potentially be developed? I can think of three such sites off the top of my head - The huge site at Apollo House, which was occupied recently, is just sitting there. The motor tax office behind the Four Courts has been derelict for last six or seven years. The Ormond Hotel on the quays is also derelict. I am sure we could think of many more. I have mentioned three examples off the top of my head. We know there are 55,000 empty units in Dublin, which is shocking. We do not know how many of them are under the control of NAMA. God knows what was going on there. The number of empty units is larger than the number of people on the housing list. There are 44,000 people on the housing list in Dublin. We could start by doing something about the empty units. There is also a need to build some more units.
The witnesses seem to be nodding as they listen to many of my ideas. I think there is broad agreement on many of these issues. I am glad everybody agrees there is a need to bust through the self-defeating fiscal rules. I take it from their presentation that the witnesses agree that this is needed. Similarly, the state aid rules are far too restrictive. I think the state aid rules are a major problem for our capacity to make the necessary strategic decisions about strategic industries or strategic infrastructure. This is also of relevance to rural areas that will be affected by Brexit. If we are going to diversify our economy to deal with things like Brexit, the State needs to be able to make strategic decisions to invest in key areas without being hampered by rules that are somewhat irrational.
I have a bone to pick with the witnesses regarding their emphasis on PPPs. I do not see the rationale for such arrangements. Could the witnesses explain what it is? Many PPPs in the housing area collapsed in recent years. Mr. McGibney referred to the idea that all the risk is transferred to the private sector, but that is not what happens in a PPP. The private sector gets the gains if it goes well and we take the hit if it does not go well. We pay and we still take the risk. If it goes well, the private investor runs off with the profit. This applies to PPPs in areas like toll bridges, toll roads and housing. Deputy Barrett will be interested to know that I recently discussed the need for student accommodation with officials from Dún Laoghaire Institute of Art, Design and Technology, IADT. They have been told by the Government that no money is available for capital investment in student accommodation. I was shocked to hear that no money is available for such accommodation in the teeth of a massive housing crisis. Student accommodation is part of the housing crisis. The provision of such accommodation would take pressure off other areas of the rental market. The IADT personnel were told that no money is available for infrastructure of this kind and that even if it were possible, it would have to be a PPP. I do not see the rationale for that. If student accommodation is built 100% by the institution, funded by the State, the rental revenue will come back to the college. If it is a PPP, the rental revenue will go to somebody else and not go back into education. If the private company goes bust, we will still end up picking up the tab. I do not see why we support these PPPs. They do not have a good record. They tend to cost more. Money is put in by the public sector and, if any gains are derived as a result, money goes out to the private sector. Most of the companies involved in PPPs are big investors rather than the small and medium-sized businesses that the chamber mostly represents.
I would like to conclude by asking about the big corporates with which the chamber engages. Do the witnesses agree that we need to start making the case that these should start paying a bit more tax? They benefit from and need some of the infrastructure about which we are talking. I think our educated workforce is one of the biggest reasons the American multinationals are here. In fact, the representatives of the IADT confirmed this to me when I met them the other day. They said the big IT firms contact them all the time looking for the IADT's graduates because they are of such a high quality. This tells me that investment in education and in people has all sorts of positive spin-offs. However, these companies do not want to contribute towards investment in such infrastructure. Equally, their employees need affordable places to live, but they do not want to pay the taxes needed to fund the kind of affordable housing infrastructure that could accommodate those employees.
Ms Mary Rose Burke:
I thank the Deputy. I will try to address some of the points he has made. Bus routes will be sustainable if the areas they serve have sufficient population density to ensure the buses on those routes operate at capacity. I take the point that a lot of key transport infrastructure will always need an element of subsidy. It is quite difficult to make orbital routes, in particular, operate on a fully commercial basis. For that reason, they will need long-term subsidies.
I agree that a large part of the solution to the housing crisis can be found by looking at derelict sites and buildings and brownfield and infill sites in the city. New-builds are also needed as part of a multifaceted approach.
Investment in infrastructure is required as part of the solution to the challenge the country faces in the context of Brexit. We need to be competitive in response to the various external challenges, including Brexit, we are facing as a small open economy. That is why much of our focus is on transport infrastructure.
If the State had unlimited wealth, of course it would fund these projects from its own resources rather than through PPPs, but that is not the reality. PPPs are part of the solution where the State needs to address critical bottlenecks in infrastructure investment. While they are slightly more expensive than the rate at which the Government can borrow money, it is worth noting that there are constraints on how much money the State can borrow.
That brings us back to the rules. We have long argued that the fiscal rules are absolutely appropriate when it comes to current expenditure. We need some kind of deviation or derogation from the fiscal rules when it comes to capital investment in support of a growing population that is contrary to the European trajectory on populations in other cities. We support the rules for current expenditure, but we would like to see much more ambition in respect of capital expenditure.
The other issue with PPPs is that in the absence of public, private or joint funding, that bit of the kit does not get built at all.
That is not a costless decision because it costs us in terms of the €350 million, projected to €2 billion in 2030, for congestion. There are many other opportunity costs if we do not build the infrastructure in the first place.
When it comes to corporate taxation, we are clear that part of the offer which makes Ireland and Dublin attractive for foreign direct investment is a suite of products such as stable Government, a stable and pro-business policy environment, a good education system and a stable tax environment. What corporates need is stability and to be able to project. They do not want a stop-go on, say, education. Instead, they want key infrastructure and for it to be attractive for their people to live and work here. They also need a stable tax policy. The totality and the talent is a large part of that. Tax is not the only reason they come here. It is an important part of our offering. In light of many of the changes happening elsewhere, I would caution against policy changes which would remove that confidence in a consistent policy environment.
I obviously talk much about the corporate tax regime. One point evident from it is that small and medium-sized enterprises, SMEs, pay the 12.5% rate but any reasonable observer can see a small number of companies are not paying it. Instead, they are paying about 6%, 7% and maybe 8% tops. Sometimes, they are paying a lot less. This is unfair on SMEs here. If the full rate was paid, it could be invested in infrastructure from which we would all benefit, including them. All of us need to say-----
It is not if we are talking about increasing capital investment because there are only two ways it can be done. One way is through the fiscal rules, on which there is a consensus that we should do something about it vis-à-viscapital investment. There is another mechanism to increase capital investment, namely, to get the big capitalists to pay a bit more tax, to put it bluntly.
If we are all singing from the same hymn sheet in agitating for a change in policy around the fiscal rules, we can just as easily agitate and in my opinion we should and I invite the Dublin Chamber of Commerce-----
Ms Mary Rose Burke:
We would support any challenge to the fiscal rules when it comes to capital investment. However, we feel the importance of having a long-term stable tax policy is vastly more important than changing it and causing a level of insecurity for all businesses, indigenous as well as multinationals. Stable and fixed tax policy is important as is stable and fixed educational policy. We would support changes to the fiscal rules for capital investment.
No, I would say he has flummoxed the Government guys. Ireland being part of and a leading figure in the race to the bottom on corporate tax has now spurred a response from both the Tories in Britain and from Trump who are now engaging in this tax competition. Any advantage we think we may have got from operating a low corporate tax regime could easily be taken from us. To my mind, it begs the question if we are talking long term and sustainability whether we need to seriously shift tack.
Mr. Aebhric McGibney:
If I could make a general point to address the question put to us by Deputy Boyd Barrett.
One needs to have the budgetary analysis. We are good at doing distributional analysis. The ESRI has its SWITCH, simulating welfare and income tax changes, model. Every time a budget comes out, it provides an analysis by decile of how many people benefit and how many lose. There is no real framework to engage in terms of what happens if one increases or cuts taxes, however. I would argue if one increases taxes, one gets less of an activity. Sometimes things do not happen that one might want and one gets less revenue, perversely. At other times, maybe one gets more revenue. I have no framework, however, to engage on that because there is no analysis from the Department of Finance that is published that allows us to discuss this.
The biggest issue for many SMEs is not corporation tax but capital gains tax. It is about financing. It is not about them making the money but how somebody can invest and take a risk in their business. The UK has a 10% entrepreneur relief while there is much more limited scheme being developed here. We noted when capital gains tax was reduced a decade ago, we got much more revenue. We might disagree or not about policy but I do not have a framework to engage on what happens when one increases taxes on capital gains or income tax. I would welcome any kind of discussion which would allow us to engage on that and see what would happen to Exchequer returns.