Oireachtas Joint and Select Committees

Wednesday, 31 January 2024

Committee on Budgetary Oversight

Report on National Development Plan: Economic and Social Research Institute

Dr. Alan Barrett:

I will take a stab at a couple of questions while the colleagues are thinking. The Deputy's first issue is about how we should do this, and he gave the example of the schools. I have a couple of reactions. In terms of things that really need to happen, I would first argue the importance of a stable and predictable funding stream. A lot of the difficulties we are talking about today arose because of the cutback on capital expenditure in the wake of the great financial crisis. Ireland has had this experience. It was exactly the same in the 1990s. In the 1980s we had a terrible time and cut back on capital expenditure. When we had the economic boom of the 1990s there was a recognition that we needed a lot more infrastructure for the growing economy. However, we were trying to build it at a time when there were capacity constraints. We did whatever through the 2000s. We then had the collapse and we cut back on capital expenditure. Some of the figures on housing in this are dramatic as to how output went down. It is almost a kind of rollercoaster. If you look at the picture over a long history this is exactly the difficulty. We do nothing at various stages and then we try to do a huge amount of catch up at a time when the resources are not there. We talk about resources like construction workers, but of course you need lots of resources right through the system. You need the civil servants in the Department of Education to do the planning around the school building programme. Again, there is difficulty there and we know even the civil service is having difficulties recruiting civil servants, such are the challenges. Stable funding is really important.

We have talked about planning already, but this issue comes up continually. I have to say I knew very little about planning. I do not claim to be an expert, but I learned three things in the context of doing this report. A lot of people think about the planning system as stopping bad things happening, like a horrible factory going up next to a beautiful housing estate, or building something really ugly somewhere. I think that is what people think planning is about. However, as Dr. Curtis pointed out earlier, we are now in the situation where our planning is stopping us from doing things we really need to do, be that housing people or decarbonisation projects. We now have a planning system that is working against, let us call them goods, and not just working against bads. Something else pointed out to me is that Ireland does an unusual thing, which a lot of people do not understand. We do both planning and zoning. A lot of countries do one or the other. A place can be zoned residential or industrial. Other countries do not do zoning but focus on planning and talk about the design of specific projects in particular places. We zone and we plan. It seems we have this mix, which further complicates things. My final point on planning is very much from an economist's perspective. Economics and economists always think that life is about tradeoffs. It is about resources, making choices and balancing things. Planning seems to us to be much more definitive in particular directions. The sorts of tradeoffs we think about just do not seem to apply in the planning process, which is one of the reasons we economists have a difficulty.

I will speak briefly to the Deputy's data on rural development and then see if the colleagues wish to come in. As I pointed out in response to Deputy Conway-Walsh, we were quite surprised by the lack of data on something as fundamental as the total spend in an area. They could tell us the number of projects but not the total spend. It seemed strange. However, the ESRI is working with the Department of Rural and Community Development at the moment. That Department spends a lot of money in a lot of places and it is dispersed. One of the things we are working with it on is the notion of on one hand having a much more systematic approach to expenditure but on the other having a much more systematic approach to looking at the outputs of the expenditure, what the expenditure is actually doing. I return to the Deputy's point. You can plan or project ahead ten years and look back and ask what was achieved for X, Y and Z. The worry is always that a huge amount of money is spent, but you cannot identify what was actually achieved for it. It will not be a surprise that a research institute supports the notion of building up the data infrastructure proactively and at the outset of a national development plan. Things have improved a lot. We do an awful lot more of this than we did previously, but I think we need to do a lot more.