Brian Cowen (Laois-Offaly, Fianna Fail)

The National Development Plan 2000-2006 set out to ensure that Ireland remained competitive in the global marketplace and that the fruits of our economic success would be shared more equally at regional level and throughout our society. The plan was framed after an extensive consultation process that involved social partners and regional interests. It reflected the broad consensus on the future development needs of the country and is a coherent development strategy supported by a multi-annual investment commitment in the key areas of infrastructural development, education and training, the production sector and the promotion of social inclusion.

The size and ambition of the plan signalled unparalleled investment in the future development of the country. It involved an investment of over €57 billion of public, private and EU funds from 2000 to 2006. It has entailed significant investment in infrastructure such as roads, public transport, water and waste services, as well as health services, social housing, education, industry and rural development. Unlike previous plans, approximately 90% of the public funding for this plan is being provided by domestic sources, mainly the Exchequer. Nevertheless, the contribution from the European Union will total €6 billion, with €3.8 billion from the Structural and Cohesion Funds, and €2.2 billion under Common Agricultural Policy rural development funding.

The national development plan identifies investment priorities to be addressed by the regions to enable them to increase their potential. For the BMW region, those investment priorities included increasing the presence of key drivers of sustainable economic growth and improving the quality of the economic and social infrastructure and human resources there. Other investment priorities for the BMW region included promoting rural and urban social inclusion and building on the region's natural resource base, especially in agriculture and tourism, the seafood sector and rural enterprise.

Significant investment evident to all who live and work in the BMW region has taken place there under the national development plan. It will not finish with the current NDP and is part of an ongoing process of investment to improve the region and bring about more balanced regional development, which is a key Government priority. The economic and social investment plan is the largest multi-infrastructural investment programme in the State's history. It provides for total capital investment of €26 billion in key capital investment areas. Of that, some €7 billion was envisaged for the BMW region.

I will highlight the main achievements in economic and social infrastructure in the region, which have produced very significant improvements. Up to December 2005, €1.5 billion had been invested in roads in the BMW region. Major projects have included the M1 Dundalk western bypass, the Kinnegad bypass, the Carrickmacross bypass, the Ballina-Bohola road, the Sligo inner relief road, the M5 Strokestown to Longford road, the Boyle to Carrick-on-Shannon and Ballyshannon to Bundoran roads. Major road projects under construction or due to begin this year include the Kinnegad-Athlone road, the Monaghan bypass, the Castleblayney bypass, the Dromod-Rooskey road, and the Edgeworthstown and Charlestown bypasses. In addition, more than 26,000 km of non-national roads have been improved, restored or maintained, with a total investment of €1.1 billion in the BMW region up to December 2005.

In public transport, more than €283 million has been directly invested in projects in the BMW region, including work on the rail network and resignalling projects. On the Dublin-Galway and the Dublin-Sligo lines, there were consequent reductions in journey times, and by the end of next year, the Ballina and Westport lines will have been resignalled. That means that all rail lines in the BMW region will have been completed. Iarnród Éireann took delivery of 26 new modern diesel railcars, and most have been allocated to the Sligo route. An order for 150 new high-specification intercity railcars has been placed by Iarnród Éireann at a cost of €324.3 million. The diesel railcars are expected to enter service from next year and will operate on the Dublin-Galway, Dublin-Westport and Dublin-Ballina routes.

Almost €2 billion in public funds has been spent in the BMW region since 2000 on housing projects, more than 120% of the amount forecast for the period. Those projects include social, affordable and local authority housing schemes, voluntary housing schemes and Traveller resettlement schemes. Over 208,000 people are benefitting from upgraded group water schemes and small sewerage schemes in the region. Under the BMW regional operational programme, by December 2005, some 395 urban and village renewal projects had been completed. There are plans for a further 189 projects to be completed by the end of this year.

While the question of competitiveness for a small, open economy such as Ireland's is more appropriately dealt with at national level, there must be a cohesive approach at regional level to support those efforts. The plan has a role in developing competitiveness in the region, improved access to markets, better information and communication technology, more effective investment in infrastructure, better training and development and improved adaptability of the labour force, all of which are sub-elements of the national development plan and will contribute to improving competitiveness at local and national level.

In the research and development area, €262 million has been invested in the region, including funding of the gene vector core facility at NUI, Galway, the only such facility in Ireland or the United Kingdom. Furthermore six proposals for new incubation centres at GMIT Galway-Castlebar, Athlone IT, Dundalk IT, Sligo IT and Letterkenny IT have been approved. Such investment has an important role to play in the future development of the region and of the country as a whole by supporting the capacity to provide services to high potential start-up companies and enable campus enterprises to become commercialised.

The drive to transform Ireland into a knowledge-based economy providing sustainable well paid jobs for our more highly educated workforce is being progressed in the NDP and will also be important during the next NDP if Ireland is to remain competitive in the global jobs market of the 21st century.

In this light there has been significant improvement in developing and enabling the local knowledge economy in the region. This has included expenditure of over €7O million on regional broadband infrastructure, with more than 90 towns in the BMW region selected for open access infrastructure under the BMW regional operational programme.

Local enterprise development has been funded through the county enterprise boards in the region, which have assisted in the creation of more than 17,000 jobs in almost 2,230 enterprises and have provided training to over 26,000 people in programmes over the period since 2000. An additional 10,400 child care places have been created in the BMW region and 225 new child care facilities were established and 469 have been upgraded.

These improvements have been important for the region. Yet across the economy, global competition is creating pressure for improvements in efficiency, quality and productivity and a growing need to innovate and add value across all aspects of business. These pressures are going to increase and it is therefore important that the Government draw on the experience of the current NDP in order that we can put in place the investment now needed to maintain our national economic competitiveness in a globalising world.

There have been some difficulties in expenditure under the productive sector operational programme and the BMW operational programme and there are a number of reasons for this. The impact of the slow down in economic activity in 2000-02 — the early years of the operational programmes — and the outbreak of foot and mouth disease meant that businesses were not in a position to put forward investment plans in those early years to avail of funding. Industry in the BMW region did not, in those years, have the capacity to absorb funding of the amount envisaged for research and development projects. Furthermore, research and development projects also usually have long lead-in times between inception and funding requests, meaning expenditure is now only being realised in the latter part of the programme.

Another reason is the relatively low concentration of high value-added industry and limited research and development capacity in the region. While NUI Galway has performed extremely well in obtaining competitive research and development funding, the limited available research and development capacity militates against the BMW region drawing down significant amounts of research funding. However, it should be pointed out that research expenditure increased by 14% nationally in 2005, and by 75% in the BMW region compared with 2004 expenditure levels. Therefore, progress is being made on this issue also.

I am informed by the managing authorities that there were delays in getting state aid clearance from the European Commission resulting in the late start to funding some schemes. An example of this would be the tourism measure under the regional programmes.

With regard to public transport, the main outputs in the plan for the region remain on target. However, the actual expenditure in the region is below profile partly because some major investments, which benefit the entire transport system, are attributable to the southern and eastern region only. For example, the redevelopment work at Heuston Station, providing additional platforms and train paths, contributed to the improvement to services for intercity customers to and from Galway, Westport and Ballina but has been recorded solely as a southern and eastern region project. The renewal of work on tracks and the resignalling of routes across the entire network is yielding quicker journeys, as well as increased comfort and safety.

Transport 21, announced in November by the Government, will be an important element in that significant additional investment in transport in the State will take place in the next ten years. The plan, worth €34 billion over the period, will build upon the investment made in the current NDP. It includes significant investment for the BMW region in developing the Atlantic corridor road network running from Letterkenny through Sligo, Galway, Limerick, Cork and Waterford and the reopening, on a phased basis, of the western rail corridor, the development of Galway commuter rail services, QBC development for Galway and the extension of the rural transport initiative over the life of the investment plan.

The Government has prioritised expenditure under the NDP in the BMW region. In the major operational programme areas of economic and social infrastructure and employment and human resources development, expenditure from public, private and structural funds up to December 2005 was 92% and 94% respectively of profile or €8.9 billion. Furthermore, Exchequer expenditure under the economic and social infrastructure and employment operational programme up to December, 2005 is 113% of profile or €500 million more than planned in the BMW region.

Under the Community Support Framework for Ireland 2000-06, the country was allocated €3.3 billion in Structural Funds for the period. Of that allocation, the BMW region qualified for €1.4 billion, with the balance of €1.9 billion going to the southern and eastern region. Regionalisation has the effect of increasing the level of European funding in the BMW region to 75%, whereas the southern and eastern region only receives EU co-funding of 50%. Under State aid rules, bodies such as Enterprise Ireland, Údarás na Gaeltachta and Shannon Development can give higher rates of grant aid to small and medium enterprises than in the southern and eastern region.

Ireland will draw down its full entitlements under the Structural Funds for each region. This means that investments will continue to take place under the current programme beyond 2006 in both regions. Under the Structural Fund regulations, expenditure on co-funded measures can continue to the end of December 2008 and will be eligible for the drawdown of structural funds from the 2000-06 allocation. This is an important point, often missed by those who commentate on these matters. Reports to the monitoring committees for the period January 2000 to December 2005 indicated that expenditure on co-funded measures for each region is on target.

Not only will the available funding be drawn down but, as attested by independent assessors, the results achieved with the resources form the Structural Funds have been good. Enterprises, employees, parents and children, commuters and others have benefited through, for example, expanded service availability, access to employment and improved transport infrastructure. The update evaluation of the community support framework, completed by the independent consultants, states that an analysis of data on Ireland's relative performance within the EU in the broad infrastructural and socioeconomic areas that are co-financed shows it to be above the EU performance economically. The evaluation also indicates that, while the BMW region has not yet converged with the southern and eastern region in terms of GDP per head, it is converging with the EU average. The BMW region is closing the gap with the south and east in terms of the rate of unemployment, which is low in both regions. At the beginning of this plan unemployment was around 1.6% greater in the BMW region than in the south and east. The difference now, I think is approximately 0.2%.

The BMW region has made huge strides across all areas identified in the NDP since 2000. According to the most recent available information from EUROSTAT, gross domestic product in the region increased dramatically from 74.2% of the EU-25 in 1995 to 92.5% of the EU-25 in 2003, demonstrating the region's continued convergence towards the EU average level of output.

Information from the Central Statistics Office suggests that the income gap between the BMW and the southern and eastern region is closing. The gap was 11.02% in 2002, having narrowed from 12% in 2001 and 13.4% in 2000. Furthermore, differences in the cost of living and housing between the regions would suggest that the gap in living standards between the regions is considerably narrower than the data for disposable incomes indicates.

Convergence between the two regions has also occurred in employment. Data from the CSO quarterly national household survey indicates that between the third quarter of 2000 and the third quarter of 2005 the number employed increased by 20% in the BMW region compared with 13 % in the southern and eastern region; the labour force grew by 19% in the BMW region compared with 14% for the southern and eastern region; and the participation rate grew by 6% in the BMW region compared with 3 % in the southern and eastern region.

In the third quarter of 2000, the unemployment rate in the BMW region was 1.6 percentage points above the rate for the southern and eastern region. The current unemployment rate is 4.7% in the BMW region and 4.3% in the southern and eastern regions, which shows there is a convergence in that respect.

Last August the Government announced its intention to prepare a new national development plan to cover the period 2007 to 2013. It will be the key instrument in bringing our stock of infrastructure up to the required standard. It will also see a sustained investment in a significant pillar which is crucial to our success, namely, education. Investment in infrastructure and education, combined with investment in developing our enterprise and productive sector, will strive to achieve balanced regional development by promoting the implementation of the national spatial strategy. The next plan will also see significant further investment in promoting social inclusion.

The national spatial strategy will be a central theme in the next plan. Without the proactive implementation of it we will not achieve the balanced regional development that we all want. Implementing the national spatial strategy will be particularly relevant to the BMW region. Of the nine gateways identified in the national spatial strategy, five are in the BMW region. These five gateways will be central to the development of the BMW region after 2006. They will serve as a principal focus for public investment and this investment will be complemented by investment in developing the hubs and rural areas, which are also key components of the national spatial strategy. In short, the next national development plan will be an investment strategy across the key areas, which will articulate the vision of where we want to be in 2013.

As regards infrastructure, the centrepiece of the investment will be the roll-out of the Transport 21 framework, to which I referred. A further key area for investment will be the environment. We will build on what we have achieved to date under the current plan to ensure the highest standards for our water quality and to tackle pollution. We must put facilities in place which will have the confidence of an our citizens and service the needs of a successful economy. Our investment in this area will also focus on recycling facilities and an alternative energy sector to ensure that by the end of the next NDP we will have an improved and more sustainable environment.

Spending on education will be a core part of the next plan. This is an area where spending has also risen substantially in recent years. We have implemented a sustained programme to expand and improve provision at every level. This is an investment in our people and their future which is already showing signs of a huge return.

The Government has placed research and development at the heart of its economic development strategy in order to build the skills necessary for a modern knowledge based economy and to strengthen our research base. We are committed to making a quantum leap forward in the area of research and development and to moving Ireland from being an impressive latecomer to an acknowledged leader in this critical area. The next plan will provide investment to enhance that element.

The further development of our knowledge economy has made reform of our third level sector imperative in order to enhance the quality of teaching and the student experience, to increase participation in third level education and meet up-skilling needs and to support research programmes, both basic and applied. I announced in the 2006 budget a strategic innovation fund for higher education over the next five years, which allocated €300 million to that programme. This fund will be a central part of the national development plan investment in higher education.

The all-island dimension will be a key horizontal theme in the next development plan. It will have particular resonance for the BMW region which encompasses the entire Border. Opportunities for cross-Border co-operation will be maximised to the mutual benefit of everyone on the island.

We received some excellent submissions during the consultation process on the plan which is ongoing. The regional assemblies are participating in that process. We have received a submission from both regions and my Department will meet representatives from the assemblies in due course. We have also received a joint submission from all the regional authorities, setting out their view as to how the overall national strategy should be pursued by the plan as well as the particular investment challenges in the three regional authority areas that make up the BMW region. I recently had a constructive and useful meeting with a delegation from the regional authorities and officials from my Department will have further consultations with those authorities shortly. We have also received a comprehensive submission from the Western Development Commission and officials from my Department have had detailed discussion with a delegation from it. AlI these consultations will feed into the overall process of preparation for the publication of plan.

The impressive list of projects delivered in the BMW region, the convergence which the region is achieving vis-À-vis the EU average and the narrowing of the gap with the south east underscores our commitment to approach to development. These achievements have arisen from an investment process that will not stop at the end of the current plan but will lay the foundation for further investments in the next planning period.

The Government will continue to invest substantial sums of money to meet the needs of the people in the BMW region in critical areas of economic and social infrastructure, employment and human resources, which is important if the region is to continue to build and develop an economic environment that is supportive of competitive firms and of more and better jobs in line with the Lisbon strategy. I thank Senators for their attention.