Address by Dr Martin Mansergh, TD,
Minister of State at the Department of Finance,
with special responsibility for the Office of Public Works,
at the Infrastructure
Fairways Hotel, Dundalk,
Thursday, 11 March 2010, at 9.00 am
Let me first say, I am very pleased to be able to address this Conference today, even if I had to press the importance of being able to do so on the Whip’s office. Dundalk is an excellent midway between Belfast and Dublin to discuss national infrastructure in an all-island sense. As everyone here is well aware, we are working our way through some of the most challenging economic circumstances, both globally and here in
There are three key elements in the Government’s strategy for economic recovery.
First, by restoring order to the public finances, secondly, taking action to repair the banking system, and thirdly, taking measures to regain
In addition to this, the Government is committed to investing in the infrastructure projects that promise the optimal contribution to sustainable job creation and to boosting the economy’s capacity.
The Government has had to take some very difficult measures in order to help stabilise our budgetary position. Every area of Government spending has had to make a contribution to those adjustments. Nonetheless, we are still very well aware that it is vital for us continue to invest in our key infrastructure so that we can best position ourselves for the recovery when it does come.
Despite our straitened budgetary circumstances, our capital allocation for 2010 amounts to €6,429m, approaching 5% of GNP, which remains high by international standards. Thus,
Over the period 2010-2016, Exchequer capital investment will amount to over €39bn. This Exchequer capital programme will be supplemented by projects part-funded by private investment in the PPP programme and by the investment programmes of the commercial State-sponsored bodies.
The downturn in the economy has led to a more competitive market in the construction sector. Indeed, recent data show that tender prices are down by over 25 % from their peak levels and this downward trend appears to be continuing. This offers us the opportunity to obtain greater value for money from our capital programme. Government Departments are accordingly reporting very significant savings in procurement – the Department of Education, for instance, has noted reductions of up to 30%. This means that we can now obtain more for less.
The core rationale for our capital investment programme is to ensure that we have the requisite public infrastructure to facilitate a return to growth, thereby supporting sustainable job creation into the longer term. In addition, the physical construction activity itself helps to maintain employment in this sector.
The Government is very conscious of the fact that there has been a high level of job losses in the construction sector. The Government has committed €403 million in 2010 for a number of new Labour Activation Measures, including making more education and training places available for the unemployed.
With jobs support in mind, the 2010 capital allocations will provide for the prioritisation of investment in smaller scale works in certain areas. Such works, by their nature, tend to be more labour intensive. There will be significant employment benefits from prioritised investment in areas like tourism capital, the school building and enhancement programme, and energy efficiency supports. This approach also has the advantage of distributing the employment benefits on a nation-wide basis.
Outline of Capital Expenditure
The 2010 Exchequer capital allocation is €6.43 billion. A further €5.5 billion Exchequer capital allocation was announced on Budget Day for each year from 2011 to 2016. Thus, the cumulative Exchequer capital investment programme from 2010 to 2016 will amount to over €39 billion.
This is a significant investment programme, which will build on the high level of public sector investment which has taken place over the past decade. Going forward, Government Capital Investment will support those projects which will help:
As well as identifying funds that could be released for other priorities, we are identifying the projects and programmes that best contribute to economic recovery and which should be prioritised. We are assessing, on an ongoing basis, what can be done to support employment, both in terms of long-term sustainable employment and in terms of supporting direct, labour-intensive employment in the delivery of economically valuable investment. We are examining how the enterprise sector should be supported.
This Government places very high value on investment in Science, Technology and Innovation (STI), the importance of productivity and competitiveness, and the development of the Smart/Green economy in promoting long-term, sustainable economic recovery. These sectors are of huge importance for our future economic development. We are keenly aware of how considered infrastructural investment supports environmental sustainability. Finally, I wish to reaffirm the importance of maintaining and enhancing vital social infrastructure, for example, in areas such as that of health provision.
The Government’s key strategy, the Smart Economy Framework, prioritises investment in STI. A continuing substantial level of funding will be available for Science Foundation
In addition, the very significant achievements of the Programme for Research in Third Level Institutes in building research capacity will have greatly improved science infrastructure. STI is a key priority for higher education capital investment, and further returns on such targeted investment can be expected.
We are targeting investment to help facilitate a return to enterprise-led growth driven by a vibrant exporting sector. There will be a continued high level of investment through the enterprise development agencies. The prioritised investments will help to develop the national skills base, put in place critical infrastructure for a return to growth, assist in realising greater economic return from existing infrastructure, and in making
Water services investment has been identified as a core area for prioritisation both in 2010 and thereafter. This year alone, €508 million has been allocated for capital investment in water and waste water infrastructure, with further significant investment planned for future years. Besides the public health and potential economic benefits, investment in this sector will improve environmental sustainability and assist in meeting various environmental compliance specifications. In addition, continued supports for energy efficiency will also yield environmental benefits.
An area for which the Office of Public Works has responsibility are flood defences. Major schemes are underway in towns such as Clonmel, Fermoy, Mallow and Ennis, and the severe flooding of last November will be the backdrop to the drawing up of river catchment flood risk management plans covering the whole State.
As well as contributing to environmental sustainability and energy security, two key side benefits of our investment in energy efficiency measures are the provision of labour-intensive construction sector employment and the development of the market for energy-saving technologies.
In 2010 alone, €94 million in Exchequer funding has been made be available to fund the Department of Communications, Energy and Natural Resource’s sustainable energy programme.
In addition to this, €45 million has been provided in 2010 to retro-fit social housing stock to bring it up to modern energy efficient standards. These energy efficiency measures provide direct support to target lower income families and those at risk of fuel poverty, offsetting the impact of the carbon tax.
Some Key Areas of Exchequer Capital Investment in 2010
In addition to the investment I have already outlined, our capital investment programme for 2010 includes, but is not limited to, the following:
· €1 billion for improvement of the National Roads network;
· €414 million for local and regional roads improvement and maintenance;
· €615 million for investment in public transport;
· over €890 million for social housing;
· €507 million for the primary and second level school building programmes, which will be further augmented by €72 million in funds carried over from 2009 - I was in the Dáil Select Committee on Finance and the Public Service on Tuesday, seeking approval of the Statutory Instrument which sanctions this;
· €444 million for HSE capital investment;
· €141 million investment in higher education capital, including €46m for the promotion of science and innovation; and
· €160 million for investment through the Enterprise development agencies.
Indeed, I might just pause to note that this year we will complete the network of major inter urban roads connecting Dublin with the border, Galway, Limerick, Cork and Waterford. This represents the successful culmination of one of the most substantial investment programmes in the history of the State. Economic analysis has shown that not only will the individual roads themselves have a positive economic return, but that the completion of the network as a whole will multiply the benefits. We can point with some pride to a nationwide high-quality road network, and look forward to the positive impact it will have on economic recovery and regional development. It is no accident, for example, that two towns in Co. Tipperary experiencing rapid development are Cashel and Cahir alongside the M8. I was in the Department of the Taoiseach yesterday in the
Complementing our Exchequer investment programme, the Government continues to seek investment through alternative means such as the Public Private Partnership programme. A number of key infrastructural projects have been earmarked for public private partnerships including the Gort Tuam N17/ N18 scheme, the N11 Gorey to Enniscorthy scheme and the combined N11 Arklow/Newlands Cross Junction project. PPPs have been used to deliver landmark projects such the Cork School of Music, the new fine Criminal Courts Complex down by Heuston Station, and the new Conference Centre in the Docklands, which is due to open later this year.
In conclusion, while, economic circumstances have meant we had to curtail substantially the nominal levels of Exchequer funding we had originally intended to invest in the public capital programme, we still retain proportionally one of the larger infrastructure investment programmes in the EU. Furthermore, our strategic prioritisation of capital investment, coupled with the fact that more can be achieved for our money than previously, due to a highly competitive market place, means that we are focusing on achieving the highest levels of benefit from our investment. The continuing improvements in our infrastructure will also help to avoid the bottlenecks that we experienced in the past and which hindered our development. Our PPP programme continues to augment this exchequer investment. Over the next few years we will strategically target our resources to help best position
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