Tuesday, January 23, 2007
Like Soviet leaders announcing to the comrades that the mines and collective farms had achieved record productions for the tenth year in a row, the Irish politburo hailed the triumph and prosperity that the country will enjoy over the next seven years.
There was something a little bit too controlled, a little bit too controlling, about the unveiling of the 2007-2013 National Development Plan (NDP).
It wasn’t so much the bit of flare and the bit of scare that comes with a mammoth E184 billion spending programme over seven years.
It was more to do with all the optics that surrounded the event in Dublin Castle. There was the huge fleet of shiny ministerial limousines lined up like an army guard of honour. There was all the slickness of the presentation, a big-spend PR endeavour. There was the promotional video where Bertie Ahern did a decent impression of Brezhnev at his most wooden as he read his answers from an autocue.
And then there was the blithe optimism. Growth rates will continue at four or four and a half per cent each year. We will build 60,000 social housing units; we will build 40,000 affordable homes. Our capitalist enemies will tell us that inflation will go out of control and that competitiveness will bottom. Reject their lies and propaganda comrades. Hail the glorious transformation.
Perhaps the key target date here wasn’t December 2013 but sometime in May or June in 2007. Are you implying that this is an electoral stunt? Don’t be so cynical! This has nothing to do with the election in, oh, four months time, or five at the most.
Despite all the pomp yesterday, the announcement of this NDP just didn’t carry in the imagination like the one announced in 2000; though this one envisages a whopping multiple of three in spending.
One of the downsides of being a much richer country is that nobody raises an eyebrow anymore when spending plans are announced. Sure the Government is occasionally guilty of pompous self-importance and serial bragging. But Transport 21, Towards 2016 (remember that: it’s social partnership silly) and now the NDP were all significant programmes by any measure. But in the media and public consciousness they soared like dead turkeys.
Still, politically, the Government is still thinking big. None of the initiatives announced were new – most are contained in previous initiatives like the ones mentioned in the last paragraph.
But the numbers are surprising. The Economic and Social Research Institute (ESRI) were called in to evaluate the project. The independent think-tank said, yes, the NDP was a good idea but recommended a total spend of E86 billion over seven years.
The Government went for broke and its proposed investment is a whopping E183.7 billion, though it includes a couple of big areas not covered by the ESRI evaluation. That said, the Government proposes to spend some E2 billion per annum than the figure recommended by the ESRI.
The Institute was concerned about the inflationary pressures that would be generated by such substantial increases in capital spending. It was also worried that it might lead to a further erosion in competitiveness.
The Minister for Finance Brian Cowen accepted that it would involve a major acceleration of capital investment, up from 4.7% of Gross National Product in 2006 to almost 6% in 2009 and that it is all predicated on a (relatively optimistic) growth rate of 4-4.5% each year.
But he argues that it’s necessary – this is the only window he says in which Ireland can address its infrastructure deficits.
He also contends that the construction industry will have the capacity to deliver the increased investment without causing an inflationary impact.
Admitting that that’s exactly what happened when the last NDP was delivered in 2000, Cowen promises it will be different this time. He points out that construction inflation had remained steady at less than 4% per annum. The Government and its agencies like the National Roads Authority and the Railway Procurement Agency now get full bang for their buck, he says, with most projects being delivered on budget and on time.
Acceding that the population of the Republic will have bypassed five million, there is a welcome tilting back to the National Spatial Strategy after the headrush that was Government decentralisation all but ignored it. Each of the regional gateways is mentioned by name. And the political imperative that development be regionalised and be balanced (and take place outside Dublin) is included in a stronger fashion than ever before.
As it is the six-year national plan after all, it includes the divvil and all, from broadband roll-out, to prison development, to schools, to courthouses, to childcare, to care for the elderly, to social and affordable housing, to all motorways being complete by 2010, to the new transport initiatives for the Dublin area.
Cowen uses a couple of key phrases to describe this 300-page documents (which by the way isn’t as specific as you would imagine – not by a long shot). “Coherence” is one of them. “Comprehensive Blueprint” is another. As are “infrastructure deficit”; “regional imbalance” and “value for money”.
Two phrases that are not used are “ambitious” and “highly aspirational. It will involve a huge spend, way more than recommended by the cautious ESRI. It is also based on consistent and high levels of growth, without interruption. It is also predicated on the absence of any increase in inflationary pressures or of any sudden jolts to the economy. The more you blow the bubble, the more you realise it is one that will never ever burst.
Of course, there is no such thing as a free NDP. And Richard Bruton of Fine Gael quickly reminded us it will cost E120,000 to every family or over E40,000 to every man, woman and child in the country.
Yes, Comrades. There will be another announcement later this year, when an evaluation will be released of the NDP that’s just finished. And when will that great occasion be? In June. And funnily enough, it will fall just after the elections.
But no matter. We have already seen the future and it works.
from the Irish Examiner