Tuesday, 11 June 2019
National Development Plan: Motion [Private Members]
It is worthwhile reflecting on the journey public infrastructure investment has made in recent times. The International Monetary Fund, IMF, public investment management assessment, PIMA, mission to Ireland in 2017 found that while Ireland had a reasonable stock of public capital assets, there were signs of infrastructure needs. Consequently, the Government has significantly accelerated public capital investment in line with national and international analysis, which concurs that Ireland's public capital infrastructure needs to be substantially strengthened in order to build the resilience of the economy in response to risks such as Brexit. As stated in the national development plan, public capital investment will increase to about 4% of modified gross national income, GNI*, and will be maintained at that level for the duration of the plan.
The Department of Public Expenditure and Reform recently completed an analysis of how Exchequer capital funding has been allocated and spent in the past 15 years. Gross capital expenditure increased by over 53% between the years 2005 and 2008, peaking at €9 billion. Significant cuts were applied to capital expenditure between 2009 and 2013 as public financial constraints took hold. Capital allocations were reduced by 62%, falling to a total capital allocation of €3.4 billion in 2013. Allocations have steadily increased since the low point in 2013. The overall 2019 capital provision of €7.3 billion is over double that allocated in 2013. Capital spend exceeded 5% of GNI* from 2008 to 2010. However, this was a result of the general economy contracting rather than capital spend increasing. The proportion of national income devoted to public capital fell to 2.3% in 2015. In 2019, at 3.5%, public investment is still below the level that obtained between 2005 and 2007. Clearly, however, the recovery of spend must match the capacity of the construction sector to deliver.
Exchequer capital allocations cover a wide range of expenditure items, including infrastructure projects, infrastructure programmes and investment programmes. Capital expenditure is varied and can include items such as: the purchase of IT equipment and software for Government administration; the purchase, construction and management of buildings; the roads programme; the school building programme; the housing programme; the purchase of vehicles and grants to industry delivered through the enterprise agencies; and forestry premia. The multi-annual Exchequer capital allocations agreed under the national development plan underpin each Department's capital planning process for a five-year period, initially from 2018 to 2022. Capital spend is concentrated in four sectors, which account for over 70% of total spend over the whole period. These are the Departments of Transport, Tourism and Sport; Housing, Planning and Local Government; Education and Skills; and Health. With the exception of transport, all the main sectors received their highest ever nominal allocations in 2019. As the overall level of capital funding is approaching an all-time high, with a commitment to further increases over the lifetime of the national development plan, the focus needs to be on efficient application of this funding and ensuring the capacity of the construction sector to deliver in respect of the increased demand.
In that regard, an important element of the progress that has been made in the past year relates to the work being undertaken to increase the capacity of the construction sector to deliver the investments under Project Ireland 2040. The Government and the construction sector group are actively working on increasing growth and productivity in the construction sector, and a number of actions have been included as part of Future Jobs Ireland. Modernising the sector through greater use of technology presents an opportunity to alleviate some of these pressures. The Office of Government Procurement has produced a strategy to increase the use of digital technology in public works projects. Building information modelling is now the norm in the private sector, particularly for foreign direct investments relating to data centres or complex manufacturing facilities. We are now focused on bringing this to the public sector. For example, the upcoming Dunkettle interchange in Cork will be delivered with building information modelling. Furthermore, the Office of Government Procurement has recently commenced the review of the capital works management framework. This has the potential to produce greater efficiencies and value for money for the taxpayer and for the industry. During the past year, engagement between the construction industry and Government assessed sectoral issues such as costs, labour supply, productivity and waste management. The group is working to secure the sustainability and vitality of the construction industry.
Various initiatives are under way to promote the capacity of the construction sector. The Government's expert group on future skills needs is working to assess demand in the sector and to come up with some new actions. Furthermore, the industry members of the construction sector group are working on a campaign to improve the attractiveness of construction sector careers, including selling the sector as modern, technology-centric and environmentally sustainable. In addition, we continue to drive growth in apprenticeships and changes to the work permit regime. The Department of Public Expenditure and Reform is leading an extensive analysis of construction sector productivity and the development of a strategy to drive improvement. This is likely to have implications for Departments and agencies as well as industry. This will also take forward actions on the development of a construction centre of excellence.
These actions are being undertaken to help to ensure that the construction sector has the capacity to deliver on the ambitions of Project Ireland 2040 in a sustainable, timely and cost-effective manner.
Many Deputies referred to different projects throughout the country. Many of those projects are progressing well. The Government published nine regional updates demonstrating progress across the island of Ireland. There is also an interactive map of 500 projects available at www.gov.ie/2040 and I encourage people to look at it. The overall message from the first year of Project Ireland 2040 is a positive picture of increased investment in infrastructure that will improve the quality of life for all citizens. That is why we make the investments to which I have referred.