Wednesday 21 August 2019

Infrastructure 'at risk' due to lack of cash for maintenance

Finance Minister Paschal Donohoe. Photo: Tom Burke
Finance Minister Paschal Donohoe. Photo: Tom Burke

Paul Melia Environment Editor

Ireland's infrastructure is at risk of deteriorating due to a lack of funding set aside for ongoing maintenance, the IMF has warned.

The 'Technical Assistance report - Public Investment Management Assessment (PIMA)' warned that the long-term costs of funding public private partnerships (PPPs) is not being factored into spending budgets.

It said the Government should consider establishing a dedicated 'Infrastructure Projects Unit' to ensure that the correct projects are chosen for investment, instead of continuing with the "ad-hoc" basis which currently applies.

While there are "ample signs" of a need to invest in infrastructure, especially given funding shortfalls in recent years, it cautioned against using PPPs to build schools and hospitals.

It said PPPs should deliver better value, with restrictions on projects which are likely to impose a "future fiscal burden".

Finance Minister Paschal Donohoe said while Ireland managed its public infrastructure "relatively well", strengths and weaknesses had been highlighted.

"The PIMA will play an important role in identifying how institutions and public governance systems which are responsible for planning, allocating and delivering public capital infrastructure might be further strengthened," he said.

The report, which followed an IMF review in July, suggested that spending over recent years has not delivered the outcomes expected. "Improving public investment management would enable Ireland to bring the efficiency of its infrastructure closer to the frontier of best practice in advanced countries, and deliver more 'bangs for the buck' from infrastructure spending," it said.

It also highlighted that the planning system is not aligned to decisions on funding, there are too many sectoral strategies and said the budget for maintenance should be increased.

"Maintenance funding appears to be well below generally accepted norms, and is likely to lead to early degradation of public infrastructure," it warned.

Apart from notable exceptions, including road condition surveys, the State ranks 'low' on completing asset surveys, and there is also implied criticism that cost benefit analysis and post-project reviews are not routinely published to aid transparency.

Areas where infrastructure is "relatively weak" include education and health, where large class sizes and low number of hospital beds reduce our rating.

PPP projects will cost €9.6bn over the coming years, but there are concerns about how payments will be spread. This represented a "potential risk" to the public finances as it opens the possibility of an "over-commitment of resources".

The public spending code appears to give "too strong" a dispensation from value for money considerations, with project over-runs higher than expected.

Irish Independent

Also in Business