Connect with us


Gerard Brady: The ambitious Infrastructure Fund requires reforms and more workers



Gerard Brady: The ambitious Infrastructure Fund requires reforms and more workers

The announcement of the extra few euros in tax cuts or welfare increases is no doubt what makes people tune in to the Budget, one of the big set pieces of the political year. But often, the most meaningful changes announced can be things which don’t immediately catch the eye but are the seeds of long-term and far-reaching changes in how we live and work.

For one, the changes announced suggest that we are moving toward a more Northern European style of social model. Announcements of higher PRSI, a much higher minimum wage, and pay related unemployment payments are all steps in an ongoing transition. The final leg in that journey is a comprehensive investment to support lifelong learning in the workplace. That final shoe didn’t quite drop on Budget Day, but there were strong commitments to unlock the unjustifiably large €1.5bn surplus in the National Training Fund, which must now be acted upon.

The most significant change, however, might be in the way in which we deliver public infrastructure. Over the past 50 years, our delivery of public capital projects has swung between famine and feast. In bad times investment has been cut drastically, leaving the catch-up investment spending to the good times when everything costs far more. 

The announcement of a new Infrastructure, Climate and Nature Fund, which Ibec has been strongly advocating for, has the potential to break this cycle. It can help significantly enhance social, economic, and environmental infrastructure over the coming decades.

The fund will help to protect public capital projects during cyclical downturns and reduce the need for ‘catch-up’ spending when times are good. As a result, we will see better opportunities to get value for money. We can also now offer greater certainty to sectors and workers downstream of infrastructure delivery.

This will enable organisations to build capacity, invest in long-term productivity and retain skills. Finally, the fund also recognises that additional capital investment will be needed to meet our targets in areas like climate and biodiversity. But even with this fund in place, the broader policy system will also need to be geared for consistent infrastructure delivery for the first time.

The first key to unlocking the promise of the new Infrastructure, Climate and Nature Fund is ensuring that we build and reform the State Capacity to help us deliver on our investment goals. The business community have repeatedly drawn attention to the lack of technical, regulatory, policy, administrative and planning skills across the public sector causing significant delay, backlogs and reputations risks when it comes to delivering projects in Ireland. 

This means more planners, more architects, more engineers and more expertise generally. Capacity building and reform will also be needed across the regulatory system in licencing bodies, in the planning system, local authorities, and courts where significant backlogs have emerged.

The second challenge is the National Planning Framework, which helps to dictate what projects we build and where. The review of the framework, currently underway, will be critically important to how we plan for key projects. Ibec was critical of the demographic projections underpinning the current framework for being unduly pessimistic about our growth prospects and openness. 

The current framework is based on a projected increase in employment of around 660,000 jobs by 2040 over 2016 levels and net migration of around 65,000 people between 2016 and 2022. By 2023 we have already hit 628,000 more people in work, 95% of our 2040 target. Net migration, even excluding Ukrainian refugees, has hit over 250,000. More ambition will be needed.

Finally, going back to our €1.5bn surplus in the National Training Fund, unlocking it will be vital to ensuring we have the workforce we need to deliver on these plans. We must also continue to increase investment in Further Education and Training Centres to help build industry capacity and digital and other relevant skills in modern methods.

  • Gerard Brady is chief economist of lobby group Ibec
Continue Reading