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Infrastructure 2020: Building beyond the bailout

On 2 December 2013, Ibec published a new report, Infrastructure 2020: Building beyond the bailout, which calls on government to spend 4% of GDP on infrastructure development by 2020 to confront long-term economic and demographic challenges. Government should take advantage of historically low interest rates to invest more ambitiously in the country's future. In just five years to 2012 Ireland fell 17 places to 21st out of the EU 27 in terms government capital spending on infrastructure relative to the size of its economy.

The report sets out five key messages for infrastructure:
    1. Government should aim to spend 4% of GDP per annum on capital expenditure by the year 2020: Ibec believes the Irish economy can grow at an average rate of 3-4% per year, over double the EU average, for the next 20 years. By committing to spending 4% of GDP on infrastructure development by 2020 will guarantee that we do not repeat the mistakes of previous economic downturns when cutbacks in capital expenditure led to the development of bottlenecks which proved costly to overcome.
    2. Government should develop an infrastructure 2020 strategy: Government should begin work on a comprehensive medium-term plan for the country’s capital needs beyond 2016; with specific focus on a new National Spatial Strategy and infrastructure plan to 2020. The current capital expenditure framework (2012-16) will result in the vast majority of the capital budget being spent on maintaining existing capital stocks by 2016. A new medium-term strategy is necessary to avoid a loss of competitiveness and addressing serious demographic pressures on infrastructure over the next 20 years.
    3. Government must embrace innovative funding sources: Public private partnerships (PPP) should be the key delivery mechanism for infrastructure funding. Diversification of funding streams must occur and Government must be ambitious in availing of external sources (e.g. EU/European Investment Bank, institutional lenders such as pension funds etc) to fund infrastructure delivery over the lifetime of the current capital programmes and in planning for subsequent initiatives. Non-exchequer finance is a valuable source of foreign direct investment.
    4. Ensure effective delivery of projects: The infrastructure delivery process in Ireland should be streamlined. Delays due to planning or the public procurement process can undermine confidence in Irish projects, potentially damaging Ireland’s reputation as a place in which to do business. All unnecessary non-construction costs and delays should be rationalised. A project pipeline containing clear timelines should be produced and regularly updated. The planning process should be reformed to take into account economic and strategic considerations.
    5. Designate a Government champion for infrastructure: There are too many departments responsible for infrastructure policy, early project development and subsequent delivery. Government should formally assign responsibility for infrastructure to an existing minister. This would ensure better co-ordination and integrated delivery of spatial and infrastructure planning across all elements of the State. This minister would also take the lead in championing investment in Irish infrastructure internationally.
    Thursday, 19 December 2013