Minister Michael McGrath TD: Investing in infrastructure

Experience of previous crises shows that deprioritising infrastructure investment during economic downturn is a mistake. Investment in infrastructure has a ‘multiplier’ effect and is crucial to the national economic and social recovery post-Covid-19. Minister for Public Expenditure and Reform and Fianna Fáil TD for Cork South Central, Michael McGrath, writes.

At times it can be difficult to remember what the world was like before Covid. The most burning desire amongst the public at the moment is for a sense of hope that better days are ahead. While we remain in a period of severe restrictions on our day to day lives, the commencement of the vaccine programme has certainly given the country a new feeling of optimism that we will eventually be able to put this traumatic period in our history behind us.

It is undoubtedly the case that like many diseases, Covid leaves deep scars in its wake. Terrible illness and the loss of loved ones means that for many families, life will never be the same again. Even as the vaccine is delivered, the long-lasting pain of the pandemic will linger. The impact of coronavirus and the necessary response has and will continue to cause disruption to our society and our economy for some time to come. Recovering from the pandemic will necessitate concerted action to tackle these physical and mental-health impacts.

In order for us as a nation to fully recover from the havoc wreaked by the pandemic, we must also get our economy back on its feet. In so doing, we must grasp whatever positives we can find in the midst of the turmoil we have experienced

Investing in infrastructure is one of the key ways to create jobs and boost the economy. The package of public works under Franklin D Roosevelt’s New Deal projects helped the US Federal government survive the Great Depression by decreasing the employment rate by 10 per cent in less than five years.

Aside from its economic importance, infrastructure is the cornerstone of modern society and this dependence will continue to increase in the coming decades. Infrastructure investment is the backbone of a successful economy, keeping people employed and businesses afloat while maintaining the productive capacity of the economy. Further, investing in greener infrastructure projects will support the transition to a more sustainable society and help create a world that is ‘better than normal’ after Covid-19.

In times of crisis, our first instinct might be to put investment and particularly infrastructure investments lower on the list of priorities while trying to protect the everyday services and incomes of our people. But we know from previous crises that this is not the correct approach and can lead to constraints and shortages in the following years. Accordingly, in last year’s July stimulus and in Budget 2021, I allocated capital expenditure of over €10.8 billion for this year, a new peak in public investment. But investment in our economy has to be smart so that it benefits every region, town and city in our country. We must invest in a well-planned, well-targeted and well-managed way. That is why, some weeks after the Budget, the Government decided to bring forward the review of the National Development Plan, originally scheduled for 2022. We announced Review to Renew on 3 November 2020 and will launch a revised NDP in Summer 2021.

Review to Renew

Published in 2018, the National Development Plan 2018-2027 (NDP) is a €116 billion, 10-year programme of capital investment aiming at upgrading Ireland’s infrastructure, enhancing economic capacity, and promoting balanced regional development. Essentially it is a blueprint, setting out a strategic framework for public capital investment from 2018 to 2027. As part of Project Ireland 2040, there is an ongoing commitment to align the National Development Plan with the National Planning Framework. Central to this is the commitment to balanced regional development. Infrastructure investments such as the National Broadband Plan and the €1 billion Rural Regeneration and Development Fund will help reinvigorate rural Ireland over the coming years. The projects that are funded under the National Development Plan impact where we live, how we work, how we travel; our health and education systems and our social and cultural and sporting facilities. Crucially these projects will determine how successful we are in tackling climate change and protecting our natural environment. Review to Renew therefore has massive potential to shape how we as Irish people live our lives over the coming decade and beyond.
In planning for the future, the Government has committed to setting out substantial reforms to the development and planning process for infrastructure projects as part of the NDP Review.

This means:

• ensuring that the appropriate overall level of capital investment is set;
• striking the right balance in allocating investment across different departments and sectors; and
• introducing structural reforms and measures to increase capacity in the construction sector to ensure that construction projects are delivered on-time and on-budget.

While maintaining the focus on addressing the health emergency, we need to be prepared for the transition to the post-Covid-19 world. Building confidence is crucial amid an uncertain economic recovery and therefore public investment is being sustained to support the economic recovery and provide confidence, both nationally and internationally, regarding our pipeline of infrastructure investment. Throughout the process of Review to Renew, infrastructure projects already underway continue to be developed and delivered under Project Ireland 2040.

Rural Ireland must be a central part of our national economic and social recovery. We need to be forward-looking and ambitious and seek to realise opportunities for rural areas. The review will reinforce the Government’s plans to support rural Ireland over the coming years through compact growth in our rural towns and villages supported by the National Broadband Plan. It is imperative that we invest in climate mitigation and climate adaptation while ensuring that public investment across all sectors strive to meet to meet Ireland’s ambitious climate targets.

Infrastructure investments have a powerful ‘multiplier effect’ that stimulates demand, creates employment in construction and increases economic activity. Review to Renew will assess and adapt to these labour market impacts, which go beyond construction per se and include ICT, research and development and machinery and equipment.

As part of Review to Renew, I have asked my ministerial colleagues to rigorously assess the costs of existing planned projects to ensure that those costs are up-to-date and realistic. I am also developing a new external review process for all major projects worth over €100 million.

Public consultation

Importantly, the review also involves a public consultation. Effective consultation allows government to make informed decisions on matters of policy, to improve the delivery of public services, and to improve the accountability of public bodies. I want to make absolutely sure that all interested and affected parties have the opportunity to take part in this important process which is open until 19 February 2021. At the time of writing, we have received over 200 submissions. The strong stakeholder engagement in this process demonstrates the importance of ‘meaningful’ participation, which will help to inform and build towards a cohesive future for all citizens of Ireland.

Taken together, all of the strands of work that form part of Review to Renew will provide a strong evidence base to allow us, as a Government, to make informed decisions and to bring forward a new National Development Plan in the Summer of 2021.

In the wake of the Covid-19 pandemic, there has been much discussion about an ‘infrastructure-led recovery’ across the globe. We know that we need to now create opportunities to rebuild in an even better way as, without substantial reform, we risk repeating the mistakes of the past. Investment decisions must support the broader economic, environmental, and social outcomes. Our national recovery requires a holistic approach, involving the contribution of both urban and rural areas. It is important that we hear from as many people as possible, that we hear about the issues that matter to you now and into the future.

I encourage all interested parties, whether individuals, community groups or representative bodies, to visit gov.ie/2040 for more information on the National Development Plan.