Sunday 18 November 2018

Brendan Keenan: State must learn lesson from the empty fields of Athenry

An artist’s impression of the Apple data centre that was originally planned for Athenry in Co Galway
An artist’s impression of the Apple data centre that was originally planned for Athenry in Co Galway
Brendan Keenan

Brendan Keenan

Remember Athenry! The battle over the Apple data centre, like conventional battles of the past, is about matters of enormous consequence for the country. Whether for good or ill, depends on what we make of the aftermath.

It is still not clear whether we will just be remembering the Athenry project or celebrating - if that is the right word - its confirmation. Either way, it should be recalled as a near-perfect microcosm of Irish governance, and how it needs to change.

The world itself seems certain to change dramatically. At this stage, it is very hard to see how an unpleasant Brexit can be averted. The EU is unlikely to give way on the core principles governing membership and external arrangements, which means the UK will not get an extended transition period while it works out new deals with both the EU itself and other countries.

That will leave Britain with only two choices: to abandon Brexit or become just another foreign country as far as the EU is concerned. This may well coincide with the decline of the 60-year policy of attracting US corporations which has served Ireland so well.

We can expect that changes in EU rules will eventually remove much of Ireland's attraction. It is also possible that US President Donald Trump's tax changes, while of limited significance on their own, will alter American attitudes to taxation of overseas operations.

Ireland will need to transform itself, quickly and in trying conditions. To see what needs to be done, remember Athenry. To start with, what is the point of these mammoth data centres, with their gigantic appetite for power?

They seem a strange investment for a country whose electricity network is under pressure even before the possible need for a post-Brexit grid, and which has no prospect of meeting its agreed carbon emission limits. We would seem to have more urgent and profitable uses for extra energy capacity than fuelling data centres.

Even if we do not, what are the chances of the required enormous expansion of the network, with its turbines, power plants and pylons, taking place on any realistic timescale for the tech companies? In Athenry, planning hearings and appeals, for a project similar to several others already operating in the country, dragged on for two years and threatened the whole scheme.

On past form, appeals might go on for many years yet. The Corrib gas case probably killed Ireland's remaining prospects as an offshore energy supplier, while costing Irish citizens a couple of billion in potential tax revenues. (True, they might not have been collected but that would be a different failure.)

The working of the legal system is one of the least recognised of Ireland's handicaps. The Apple case came to an unusually abrupt judicial end (if it is indeed the end), which coincided with the signs that the company was having second thoughts - but the end may have come too late.

Everyone, judges included, should surely ask why two of the most egalitarian, environmentally-conscious countries in the world, Denmark and Holland, can complete a data centre and a gas plant while the Irish projects are still meandering through the planning process.

There have been a few intriguing comments from the judiciary recently. One reasserted the principle that judicial review covers procedures - not the conclusions reached by regulators and other authorities. No-one could disagree, but if it walks like a duck, etc.

The official response to such problems tends to be emergency opt-outs and bypasses of the system. That is bound to end in no system at all, and it goes beyond planning.

There is much debate about the value of 'evidence-based policy'. Evidence is not everything: politics and national preferences should play a part in decisions. But they must be based on the best available evidence and departing from the evidence, for whatever reason, should be accompanied by analysis of the costs and benefits involved.

The problems with the Dublin tram extension were predicted by several outside commentators; raising the question as to when the planners identified them and how they came up with the present arrangements as the best solution.

The suspicion in nearly everything, from trams to children's hospitals, is that politics come first. Decisions are made and the purpose of research is to justify the decision. While any individual data centre may make sense on it own, the construction jobs involved and the opportunity to tie multinationals more into the economy may well have made a national strategy of locating data centres irresistible. That supersedes arguments the project itself, and others like it, offers no net benefit to the State.

At least Ireland's benign climate is an inherent attraction but the tax arrangements will be favourable too. The country has become so dependent on the foreign sector that companies now bargain quite openly with the Government on tax changes which will suit their particular operations.

There can be no doubt about the dependency. The anguish of Athenry is a recognition that, without foreign companies, nothing much is likely to happen in small regional towns. The food innovation hub looks like a poor consolation prize but, if we can get over the appalling politicking of Fianna Fáil's decentralisation, the location of State activities may be a key part of future regional development.

The indigenous Irish economy is transformed compared with the 1960s but the multinational sector kept pace, so its contribution to employment and national income remains vital.

That has to change, even if the danger of a sudden exodus is overstated. The inflows of recent years are unlikely to continue, Dermot O'Leary of Goodbody Stockbrokers said in a note last week, highlighting that MNCs account for over 8pc of Irish business jobs, compared with an average of less than 3pc in the whole EU.

The lessons of Athenry will have to be learned. In particular, the firms of the future, whether national or foreign, will favour large urban centres. That will have to be faced and the implications, however unpopular, accepted and acted upon by the political establishment. The same could be said of the health service, housing and national networks, where past debt and current spending are among the highest in the euro area and quality among the lowest.

Apart from Athenry itself, the rest of us perhaps need not be too sorry to see the Apple data centre sail out against the sky; but the reasons for its departure should concern us all.

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