IBEC urges Government to increase infrastructure spend in line with GDP
The government should aim to spend the equivalent of 4pc of gross domestic product a year on infrastructure development by 2020, business group IBEC has advised in a new report issued today.
The report – 'Building Beyond the Bailout' – insists that historically low interest rates provide a unique opportunity to invest "more ambitiously" in the country's future.
"In recent years, government has essentially shut down its capital investment programme," said IBEC head of policy and chief economist Fergal O'Brien. "We now need an ambitious medium-term plan for the country's capital needs, with specific focus on a new national spatial strategy and infrastructure plan to 2020."
He said that the World Economic Forum's competitiveness report for 2013 ranked Ireland 35th in the world and 22nd out of the 34 OECD members in terms of quality of infrastructure.
Mr O'Brien pointed to recent problems with water supplies as underlining the need for infrastructure investment.
IBEC said that cuts to capital expenditure would ease from the end of this year as the country exits its bailout programme.
The Government has committed to spending €3.25bn on capital projects in each of 2014, 2015 and 2016. But the business group said that while these figures would remain broadly steady as a percentage of overall government expenditure, they would fall as a percentage of GDP because economic output would be rising.
IBEC said that if the Government could leverage resources, infrastructure projects could be fulfilled at the best value-for-money rates in over a decade. It said the top priority for infrastructure projects would be those that would reduce Ireland's cost base.
IBEC said that the Government should also explore the investment potential of Irish pension funds, where €70bn was held.