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News : Irish Last Updated: Dec 19th, 2007 - 13:17:15

Government launches €184 billion National Development Plan - Main Points and Analysis
By Finfacts Team
Jan 23, 2007, 16:42

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The Government today launched the new National Development Plan, which will involve total spending of €184 billion that will be dependent on the continuation of economic growth that is strongly dependent on a continued buoyant construction sector. The CSO said last year that the construction sector in Ireland accounted for 23% of GDP in 2005, compared to a 12% EU average.  

Called 'Transforming Ireland - A Better Quality of Life for All', the plan covers the period from 2007 to 2013 and will be funded almost entirely from the Exchequer. The first NDP was largely funded by a multi-billion bonanza from the European Union. 

The Government says it is focused at addressing economic weaknesses which include significant infrastructural deficits, unbalanced regional development, disadvantaged areas, housing affordability, science and technology and concerns about loss of competitiveness.

Some €54.7 billion will be spent on economic infrastructure; €20 billion on enterprise, science and innovation; €25.8 billion on human capital; €33.6 billion on social infrastructure; and almost €49.6 billion on social inclusion.

The Government said the plan was necessary as the population had increased by 8% since 2002 and will rise by another 12% in the next 10 years, increasing pressure on services and infrastructure.

It said the plan was affordable on the basis that the economy would grow by an average of 4% to 4.5% over the period. The plan provides for higher levels of investment than those proposed by the Economic and Social Research Institute.

The Plan sets out a major new proposed framework for all-island co-operation. For the first time it contains proposals for significant Irish Government investment in North/South projects and initiatives for mutual benefit.

The Government said all projects would be evaluated and implemented with the aim of providing value for money, while an annual report on the plan's progress would be submitted to the Oireachtas.

Minister for Finance commented:

This is the fourth National Development Plan since 1989. When the 1989 Plan was launched unemployment was 15%, the National Debt was 107% of GNP and we experienced net emigration of some 208,000 in the 1980s. By contrast the backdrop to the current Plan is virtually full employment, a debt/GNP ratio of 25% and a population increase of almost 609,000 over the last decade.

The three previous National Development Plans, funded in considerable part by EU Structural Funds, have played a significant role in this remarkable turnaround. Investment under these Plans, especially in employment creation, training, education and in infrastructure combined with other successful economic, budgetary and taxation policies and underpinned by the Social Partnership process, helped transform the economic climate into the excellent situation we enjoy today.


IBEC Comment:

Turlough O’Sullivan, Director General of IBEC has welcomed the comprehensive and inclusive approach of the National Development Plan 2007-2013. "The high priority afforded to social inclusion through the €50 billion investment plan should ensure that the development of social capital keeps pace with overall economic development," said O’Sullivan. "But this will only be possible if the Plan addresses the productive capacity of the economy and enhances our competitive position."

The Plan envisages expenditure on economic infrastructure of about 5.5% of GNP which is in line with previous IBEC submissions. The timely implementation of such a programme will be essential to ensure sustainable high levels of per capita income. IBEC says that it particularly welcomes the recognition by Government of the need for balanced regional development in creating urban centres which are of sufficient scale to drive economic growth: it is crucial that we stop adding to the congestion and housing problems in Dublin and that we spread economic development throughout the country. With new synergies across the Border, this is a unique opportunity to set the island of Ireland on a sensible strategic path: future generations will judge us harshly if we do not spend this money wisely.

In a context of rapid changes in technology and the organisation of work, IBEC noted that the the Plan acknowledges the central importance of education and skills for economic performance and individual job prospects. The €28 billion investment in education and training will return significant economic and social benefits, provided that the delivery systems are flexible and responsive. IBEC particularly welcomes the €252m investment in technology in the classroom.

However, given the strategic importance of energy, IBEC has expressed disappointment that the Plan has failed to provide exchequer resources for the development of critical energy infrastructure.

IBEC has also warned that the costs and benefits of each of the Plan’s programmes must be rigorously appraised before they are embarked upon.

O’Sullivan said "This should be open and transparent so that genuine national interest will outweigh any local political pressures. There should be high-level private sector participation in monitoring projects. We must ensure all projects pass through the planning process as quickly as possible so that these can come on stream in a timely manner, or even ahead of schedule. Following the implementation of the Strategic Infrastructure Act, there should be no excuse for the sort of delays that held us back in the past. The Plan has huge potential but will ultimately be judged on its delivery of realised benefits."

The IBEC-CBI Joint Business Council said it warmly welcomes the strong commitment to North/South issues in the new National Development Plan, which was launched by the Irish Government today and will run from 2007 to 2013.

In welcoming the Plan, Brendan Butler, Director of EU and International Affairs IBEC stated:

"The IBEC-CBI Joint Business Council welcomes today’s Plan and in particular its prioritisation of North/ South cooperation and the benefits that would flow from addressing issues from an all island basis. All- island collaboration offers a unique source of competitive advantage for both the North and the South."

Mr. William Poole Chief Executive of the IBEC- CBI Joint Business Council stated

"When taken in tandem with the recent Comprehensive Study on the All Island Economy, which was published by the two Governments, there is a real opportunity to consolidate on North/ South cooperation to date and to develop the all island economy to the mutual benefit of businesses and citizens, in both jurisdictions."

The IBEC CBI Joint Council also welcomes the fact that in future development funds in areas such as education, energy research, regional and tourism development will be opened up on an all-island basis.

The Construction Industry Federation (CIF) has welcomed measures aimed at addressing sectoral infrastructure deficits and regional imbalances.   In issuing its welcome, CIF has called on Government to adopt a partnership approach to ensure delivery under the Plan.   

According to CIF Director General, Liam Kelleher:

 “The Plan outlined today represents an opportunity for the State and all those involved in the provision of infrastructure to address once and for all the infrastructure bottlenecks and regional imbalances that exist in Ireland, and to build up the capacity of the Irish economy.”

 “In its submission to the Department of Finance, CIF called for ring fenced funding for the country’s eight Regional Gateways to give effect to the National Spatial Strategy.  The announcement of a specific innovation fund for the Gateways in the NDP is therefore welcome as a beginning in this area and will have the effect of increasing private sector confidence in the Government’s regional development plan.  Indeed, an important element of a plan of this nature is its ability to encourage increased private sector investment across the economy”.

 “On the sectoral infrastructure side the commitment to addressing deficits in areas such as transport, energy, water, health and education is welcome and in line with the CIF’s recommendations to Government.  CIF particularly welcomes the commitment to place the National Spatial Strategy at the heart of infrastructure investment priorities”.

 “As an employer of over 277,000 people, CIF welcomes the investment of €25.8bn to meet the labour skills requirements of Ireland’s growing economy”.

 The construction industry wants to see a partnership approach to the Plan’s implementation.  The construction industry has built up both capacity and expertise in the delivery of large-scale infrastructure projects and the State must draw on this to ensure smooth delivery of the Plan between now and 2013.  Implementation management, including project planning and management on the public sector side, and alignment of planning and statutory processes with the content of the Plan, must have the highest priority from the outset of this Plan”.

 CIF supports the view of the Minister for Finance that the construction industry has the capacity to delivery on the new NDP.  Construction provides a range of services in line with demand.  In Ireland, demand is evident across all segments of the economy and the symptoms of infrastructural and regional imbalances are all around us.  Addressing these imbalances is a very substantial task, but one that the Irish construction industry has shown itself more than capable of undertaking”. 

The allocation of €800 million to tourism marketing, training and product development announced today in the National Development Plan is welcomed by the Irish Hotels Federation. The IHF states that this investment recognises the significance of Irish tourism as a major contributor to the success of the Irish economy and acknowledges its potential to continue on a growth path. In addition, the IHF welcomes the allocation of over €3.6 billion for sports, culture and heritage infrastructure, which are major stimulants in developing tourism throughout the country.  

According to Annette Devine, President, IHF, the Government’s reiteration of its commitment to the implementation of the national spatial strategy is also significant and will benefit tourism particularly regional tourism. However, a part of its challenge will be that underperforming regions get additional supports to improve their tourism performance.

“It is noteworthy that the tourism industry is referred to and impacted by a wide range of measures covered by the plan. We believe today’s announcement provides a strong foundation to further accelerate tourism growth which will assist realise the Government’s ambitions of securing some 10 million overseas visitors to Ireland by 2010,” says Ms Devine.  “The total allocation to tourism signifies a real commitment by Government to safeguard and grow Ireland’s tourism success story.”

The IHF maintains that the NDP’s focus on improving regional transport infrastructure will allow for easier and better access to the regions. Improvements in this regard will assist the regional spread of tourism and assist the newly created Regional Tourism Development Boards fulfil their marketing objectives and increase tourism activities in the regions.

It is imperative that we facilitate the movement of people easily and quickly around the country to assist invigorate tourism in the regions and to enable visitors maximise their time in Ireland. This will require substantial improvements across a range of rail and road access and we are delighted to see that this is now integral to Government policy today,” says Ms Devine.

CPA calls for standards for the management of capital expenditure

The Institute of Certified Public Accountants in Ireland (CPA) positively welcomed today's announcement but urged prudent management of expenditure and public transparency to ensure the effective and timely delivery of public projects.

In particular the CPA welcomes the priority given to infrastructure spend. "Delays in vital infrastructure projects over the years are now costing us economically", commented Padraig O Feinneadha, CPA President. "In the interest of business we should not wait any longer for the implementation of vital projects aimed at relieving current pressures."

"The existing infrastructure network is causing massive bottlenecks and negatively affecting the quality of life for those living and working here. Effective investment in infrastructure is essential to ensure the continued success of the Irish economy. However it is vital that this investment is followed through and in a timely manner, as many completion dates have already slipped in the current transport plan", continued O Feinneadha.

"The real issue here is value for money. Our Public Service has proven it can deliver cost effective services - one has only to look at the Revenue operations to see an example of an effective service.  The immediate change of existing guidelines on public expenditure to mandatory standards with attaching Ministerial responsibility, without discretion, would be a significant learning from the mistakes of the past." concluded O Feinneadha.

The Executive Summary circulated with the Plan document sets out in detail the investment proposed under.

Economic Infrastructure

  • An investment of €54.7 billion is proposed for Economic Infrastructure. Key target outputs and objectives for this funding include:

  • Completion by 2010 of the major inter-urban routes linking Dublin with Belfast, Cork, Galway, Limerick and Waterford;

  • Significant enhancement of the Atlantic Road Corridor from Letterkenny through Sligo, Galway, Limerick, Cork and Waterford;

  • Major expansion in rail capacity in the Greater Dublin Region including Metro to Airport and Swords and extension of Light Rail;

  • Enhanced rail services outside GDA including new commuter rail services in Cork and Galway;

  • 15% of electricity generation from renewable energy by 2010; and

  • New North/South and East/West Interconnectors and significant ongoing investment in the electricity network.

Enterprise, Science and Innovation

  • There will be a total investment of some €20 billion under this heading. Key target outputs and objectives under this heading include:

  • A radical enhancement in the quantity and quality of Research & Development with a particular focus to ensure that such research can be translated into commercial products with resultant economic benefits;

  • Investment in potential start-up and growth potential companies;

  • Investing €800m in Tourism numbers to increase visitor numbers from 7.4 million in 2006 to 10 million in 2012; and

  • Investment across a number of headings in Agriculture to assist farmers to be more efficient, promote environmentally friendly farming and an agri-food sector that can compete internationally.

Human Capital

  • Some €25.8 billion will be invested in the key areas of training and education. Key outputs and objectives under this heading include:

  • Continuing upskilling of the workforce and improvement of employment prospects for groups such as lone parents and people with disabilities;

  •  A particular focus on providing new schools in rapidly developing areas including through proactive engagement on planning with Local Authorities;

  • A comprehensive ICT programme for schools;

  • Further increase in the numbers attending third level, especially from disadvantaged areas;

  • Delivery of 35 large scale capital projects in the third level sector by 2010; and

  • Implementation of major reform and modernisation programme in the third level sector assisted by the Strategic Innovation Fund.

Social Infrastructure

  • Some €33.6 billion will be invested in the area of Social Infrastructure. Key outputs and objectives under this heading include:

  • 60,000 new social housing units and 40,000 new affordable housing units;

  • Investing in primary care to achieve a target of 500 primary care health teams by 2011 as committed to in Towards 2016;

  • Expansion of range and quality of sports facilities throughout the country, including the Lansdowne Road and Abbotstown projects; and

  • Investment in arts and cultural facilities countrywide, including a new National Concert Hall and a new National Theatre.

Social Inclusion

  • About €50 billion is provided as a multi annual financial framework for schemes and programmes to promote social inclusion. Key target outputs under this heading include:

  • The creation of an additional 50,000 new childcare places by 2010;

  • Progression towards the target of halving the proportion of children with serious literacy problems in primary schools serving disadvantaged communities;

  • 7000 additional people with disabilities to be in employment by 2010;

  • An additional 550 teachers as language support for the integration of migrants; and

  • €9.7bn for older people, both to support them living independently in their own homes, and, when they can no longer live at home in independence and with dignity, to support the provision of high quality residential care.

Horizontal Themes

  • The Plan sets out a strong framework and commitment to investment in the following key policy areas:

  • Regional Development;

  • Rural Economy;

  • All-Island Co-operation; and

  • Environmental Sustainability.

Regional Development

The Regional Development strategy set out in Chapter 3 of the Plan will give a major impetus to the implementation of the 2002 National Spatial Strategy. Whilst recognising the importance of maintaining Dublin as Ireland’s International Gateway the Plan sets out an investment strategy for the development of the other 8 NSS Gateways with a view to ensuring better balance in economic development.

This approach is about a better quality of life for citizens in all regions including the Greater Dublin Area. A key element is developing sustainable urban and rural settlement patterns and communities to reduce distance people must travel to employment, services and leisure facilities and to maximise use of investment in public services, especially public transport.

The Plan sets out in Chapter 3 a list of investment priorities in each of Gateway areas. This will be complemented by appropriate planning and land use strategies to maximise the impact of these and other investments.

Gateways Innovation Fund

A special Gateways Innovation Fund is being established under the Plan to assist development of the Gateways in line with the NSS framework. An initial €300 million is being provided by the Exchequer for the years 2008-2010 from this Fund. This is intended to leverage significant additional funding from private sector and/or other parts of the public sector so that the total quantum of investment will be more significant than the Exchequer contribution. I envisage that the Fund will finance local infrastructure such as urban regeneration projects, transport initiatives, in addition to those under Transport 21, and quality of life projects. A key consideration will also be the existence of close co-operation between Local Authorities in Gateway Areas.

Rural Economy

The Regional Development strategy will not be implemented at the expense of the Rural Economy. Chapter 4 of the Plan sets out a general framework and key initiatives to develop the Rural Economy over the period of the Plan. The broad objective is to sustain the continuing process of growth and diversification in the rural economy through enhanced accessibility, communications infrastructure and activation of local development potential in areas such as local enterprise and services, tourism and the natural resource sectors.

  • Key Plan interventions that will assist the development of the Rural Economy include:

  • The roll-out of broadband in rural areas, particularly those areas where the commercial provision of broadband would otherwise be uneconomic;

  • Investment in non-national roads and rural water services;

  • The Rural Transport Initiative, the remit of which will be significantly expanded; and

  • Investment under the LEADER and Rural Economy Programme to promote diversification of the rural economy.

Environmental Sustainability

It is clear that we face major environmental challenges over the period of the Plan and beyond. These include climate change, waste management and the maintenance and improvement of water quality. The Plan provides for investment of some €25 billion in programmes which will directly protect the environment. Of particular note is the fact that we are more than quadrupling public transport investment as compared to the period 2000-2006. This is complemented by the regional development strategy based on a land use strategy which is environmentally sustainable.

All-Island Co-operation

The Plan sets out a major new proposed framework for all-island co-operation. For the first time it contains proposals for significant Irish Government investment in North/South projects and initiatives for mutual benefit. The Government wishes to agree and implement these with the British Government and a restored Northern Ireland Executive in the period 2007-2013. The proposed investment, to be funded from the overall Plan funding envelope, can only be of great mutual benefit to both parts of the island. For example, under Transport 21, we are funding the enhancement of the southern section of the road linking Dublin and the Letterkenny/Derry Gateway. We are now signalling a commitment to a contribution to the northern section of this key route. We look forward to urgently progressing these initiatives in a co-operative way.

Value for Money (VFM)

The bulk of capital projects are now being delivered on or below budget and, in some instances, ahead of schedule. Building on this performance, all expenditure under the NDP 2007-2013 will be subject, as appropriate, to a robust Value for Money framework.

Key elements of this framework include:

  • All projects will subject to project appraisal to ensure that NDP programme objectives and Value for Money are being achieved;

  • All capital projects over €30 million will require a full cost benefit analysis in line with the Department of Finance guidelines of February 2005;

  • New procurement arrangements which will deliver greater cost certainty for public capital projects;

  • NDP Programme Evaluations and Value for Money and Policy Reviews will be published and submitted to the relevant Select Committees of the Oireachtas; and

  • As provided for under the Budget and Estimates Reform proposals set out in Budget 2006, all Ministers will submit an Annual Output Statement with their Annual Estimates to the relevant Oireachtas Committee. This will detail target outputs for the Estimates and the following years’ Statement will set out achievements against target. This process will encompass Exchequer funded NDP spending.

  • This robust and transparent process will be augmented by the new requirement for the submission of an Annual Report on NDP progress to the Oireachtas where it will be subject to debate. Other factors such as the Strategic Infrastructure Act 2006 and extra judicial resources will also impact positively on Value for Money, delivery and implementation.

© Copyright 2007 by Finfacts.com

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