Tony Killeen (Clare, Fianna Fail)

I welcome the opportunity to open this debate. The focus of these statements is on progress in the Border, midlands and west region rather than on the wider, excellent progress being achieved nationally under the national development plan. Therefore, I will concentrate on the BMW region.

It is essential that we do not forget the economic strides the country as a whole has made in recent years or the transformation that can be seen in employment and the infrastructure of the State. The BMW region has shared, and is sharing, in this progress. A thriving economic climate has been created in Ireland over the past decade and we have recorded one of the best economic performances in the world. From 1997 to 2003, Irish gross domestic product, GDP, grew by an average of over 7.5% compared with an average of just over 2% in the European Union. The fruits of this economic success have been put to good use and have benefited people throughout the country.

The unprecedented growth rates of the past decade could not have been maintained indefinitely. We are now moving toward a more sustainable level of annual growth of 4% to 5%, more than twice the EU average. We must manage the transition to these lower rates of growth and tailor our expectations accordingly. This is of key importance in the context of this debate.

I am in no doubt that arguments will be made for higher levels of investment in the BMW region. However, when considering this, Deputies should reflect on two issues. First, if economic progress is to be sustained, we must remain competitive. We must focus on competitiveness and enhance our capacity to grow in the medium term, both nationally and regionally. In particular we must keep our labour costs competitive. This has implications not just for the level of pay increases but also for the level of payroll taxes which can be levied. Second, we must maintain public finances on a sound footing. Ireland faces many demands for improvements in public services while, at the same time, lower growth rates mean lower tax revenue growth. Our low debt to GDP ratio must be maintained and we must be vigilant to ensure that we continue to enjoy stable public finances.

These realities require us to continue to pursue prudent economic policies. We must be able to create the resources at national level for investment throughout the country. We also need to prioritise investment where the best economic return can be gained while taking account of overall Government policy objectives. The key point is that investment in the BMW region or elsewhere cannot take place in a vacuum. It must be built on the foundations of solid and stable national economic and fiscal policies.

The National Development Plan 2000-2006 built on the regionalisation approach adopted by the Government in the Agenda 2000 negotiations. It set out an unprecedented level of national investment —€51 billion in 1999 prices — in key economic and social areas. A particular focus of the NDP was a major enhancement of the economic and social infrastructure of the country, involving an investment of €22 billion over the period, of which €6 billion related to the BMW region. This constituted a massive step up in investment in the region over previous levels in key areas such as transport, social and affordable housing, environmental services, education and health.

The Government viewed the initial allocations in the NDP published in November 1999 as indicative in nature and this was clearly stated at the time of publication. Deputies will appreciate the difficulties in setting out precisely seven years in advance the yearly outturns for the many different areas of investment in the NDP.

By reference to the initial investment profile, investment in the BMW region at mid 2004 in the key area of economic and social infrastructure was around €660 million behind the target set out in the plan, although Exchequer funded investment in infrastructure in the region was just €240 million below profile.

I assure the House that it is the objective of the Government to see a significant increase in investment in economic and social infrastructure in the BMW region in the next two years. I would like to give some examples of what has already been achieved in the area of infrastructure of the BMW region.

In transport infrastructure, almost €2 billion has been spent in the BMW region since 2000. Projects completed or continuing are leading to major improvements to key road routes in the region such as the M1 Dundalk western bypass, N2 Carrickmacross bypass, N4 Sligo inner relief road and N5 Strokestown-Longford road. The key rail lines into the region were completely upgraded by 2003 and significant assistance has been given to the regional airports in the region. More than €749 million has been invested to date in non-national roads projects in the BMW region contributing to the improvement of almost 20,000 km of non-national roads.

The second and third phase of the broadband metropolitan area networks, MAN, is being rolled out and this will cover all towns with populations of 1,500 and over in the region by the end of 2006. This is an important initiative in the context of the future economic development of the region. Almost 8,000 child care places have been created, with significant further investment planned before the end of 2006.

In the area of environmental services, much progress has been made with expenditure to date of €634 million in the economic and social infrastructure operational programme. Expenditure on the rural water measure in the BMW regional operational programme is more than €100 million and 103,000 people in the region benefit from improved group water supplies.

These examples of major outputs arising from capital investment are replicated in other key areas such as housing, health and education. The Exchequer also heavily subsidises the operation of certain services in the region. For example, there is significant subvention of passenger rail and air services into the region.

Progress has been made at a macro-economic level in the BMW region since 2000. Employment has grown by 33% in the past six years, an average annual growth rate of 5%. In early 2004, 120,000 more people were employed and living in the region compared with the beginning of 1998. By any standard that is a phenomenal rate of employment growth and is well ahead of the national employment growth rate. Unemployment in the region is about 4.5%, which is close to full employment. Output per capita, measured in terms of GDP, was 88.5% of the EU-15 average in 2001, the latest date of published data, compared with 79.3% in 1998. I have no doubt that the region has since converged with the EU average. The BMW region is now the second wealthiest Objective One region in the European Union.

Representatives in the region have been critical of the pace of investment in transport in particular when compared with the south and east region. It is important, however, to point out that the BMW region benefits from investment in transport, especially investment in roads in other parts of the country. An example of this relates to having good and efficient transport links to key ports, all of which are located in the south and east region. These are the ports that businesses in the BMW region use to route their products to the UK, Europe and beyond. Transport costs are a key cost determinant in improving competitiveness.

Both the Ministers for Finance and Transport have indicated their objective is to see increased levels of investment in infrastructure in the BMW region for the remainder of the NDP and beyond. Public investment in infrastructure is now governed by the five-year capital envelopes programme launched in the budget for 2004 and rolled over for another five years in the most recent budget. When account is taken of the provisions in the capital envelopes for 2005 and 2006, Exchequer resources for infrastructure will be well in excess of those originally planned for under the NDP. Accordingly, there is scope for investment in the BMW region in these years in excess of that initially projected.

As Deputies will realise, it is Ministers and Departments who make decisions on projects under delegated sanction from the Minister for Finance and in a manner consistent with Government priorities. Ministers are acutely aware of the need to increase the level of investment in the BMW region between now and the end of 2006. As the recent announcement of the National Roads Authority 2005 national roads programme shows, a concerted focus can be seen on the BMW region. Four of the ten major projects completed in 2004 and eight of the 19 projects due to start in 2005 are either fully or partially in the BMW region.

The Government has made no decision yet whether there will be a successor to the current NDP and, if there is, what it should encompass. A medium-term capital investment envelope is in place which sets the financial framework and programme prioritisation out to 2009. As Deputies are aware, the Minister for Finance announced in the budget for 2005 agreement in principle for a for a ten-year capital envelope for transport. Proposals in this respect are expected to be submitted by the Minister for Transport for Government consideration soon.

Deputies will also be aware of the Government's commitment to maintaining the current high levels of capital investment at approximately twice the EU average for the next five years and perhaps for a number of years beyond this. It will consider if and how this commitment needs to be given greater expression through the articulation of sectoral policy priorities going forward through, for example, a new national development plan.

Whatever the post-2006 scenario, the BMW region will lay claim to significant investment in infrastructure in the coming years. However, investment proposals must be characterised by two key necessities — an economic return for the programme or project and prioritisation within programmes and between projects. Given the demand for improved public services nationally, there will never be sufficient resources to satisfy all needs. Ministers and the Government must prioritise by reference to what yields the best economic and social returns. For example, they must avoid wasteful investment on the same routes across all transport modes unless there is a strong economic case for such duplication.

I refer to the issue of balanced regional development. Over the period of the current NDP, the BMW region made rapid economic strides but there has been little progress on narrowing the gap between it and the other region, as that region has also benefited from the prosperity of the country. It must, however, be borne in mind that the southern and eastern region contains significant areas of deprivation, including in the larger urban centres. Simple comparisons between the two regions do not tell the entire story.

The major new factor in balanced regional development is the template provided by the national spatial strategy. The NSS does not focus on a two region approach and it has designated a number of new gateway towns and development hubs through which to drive greater balance in regional development. Four of these gateway towns-centres are in the BMW region. The NSS has a 20 year horizon to beyond 2020. It will be important for the future, especially post-2006, that investment choices at national and regional level take full account of the NSS framework.

The country and the BMW region have benefited significantly under the current NDP. The BMW region has made strong economic progress across many headings while the infrastructure needs of the region mean it has legitimate claims to increased investment over the medium term. The national spatial strategy provides the template for promoting better balance in regional development in all parts of the country. I look forward to hearing the contributions of Members.

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