Saturday 25 May 2019

The flight to capital: Dublin leaves the regions in its wake

Booming Dublin is pulling ever further ahead of the regions as more and more people and jobs migrate to the capital

Rural areas need Government help if they are to slow the movement of people and jobs to Dublin, which has a population of 1.17 million — and counting
Rural areas need Government help if they are to slow the movement of people and jobs to Dublin, which has a population of 1.17 million — and counting

Dan White

Last week's decision by Irish Ferries to pull its French-bound service out of Rosslare and move it to Dublin highlights once again just how dominant the capital has become. Can, or indeed should, anything be done to stop Dublin pulling even further ahead of the regions?

Irish Ferries' announcement last Tuesday that it was "unlikely" to operate a service between Rosslare and France in 2019 and that its new €144m WB Yeats superferry would sail from Dublin instead, caused consternation throughout the south-east - quite how Dublin Port and the M50 will cope with the extra congestion resulting from the new ferry service remains to be seen.

When even a prosperous region such as the south-east is losing out to the capital, the issue of Dublin's growing economic dominance over the rest of the country can no longer be ignored.

The Rosslare ferry saga looks set to join rural broadband in the charge sheet of those who believe that Dublin has become too big for its boots.

So just how dominant is Dublin in the Irish economy? Unfortunately, the CSO doesn't produce regional economic or income statistics. However, even on the basis of the statistics that are publicly available, Dublin's towering position vis-a-vis the rest of the country is immediately apparent.

There were 1.17 million people living in Dublin city and county on the date of the last Census in April 2016. That was up 9pc on the figure recorded in the 2011 Census and represented just under a quarter of the total population of 4.76 million.

Throw in Co Meath, Co Kildare and Co Meath and the combined population of the Mid-East region rises to 1.74 million, 36pc of the national total.

But Dublin accounts for a larger proportion of the country's jobs with 692,000 of the 2.27 million people employed in Ireland in the third quarter of 2018, more than 30pc, working in the capital.

Add in the three surrounding counties and the total rises to 1.02 million, 45pc of all jobs.

Even in the absence of regional income statistics, it is clear that not only does Dublin have an above-average share of the country's jobs, but jobs in Dublin are much better-paid than those in the rest of the country. In 2017, nationwide net receipts of PAYE income tax and USC totalled €16.2bn, of which almost €8.5bn (52pc) were collected in Dublin.

It is a similar story with most other taxes, with 44pc of self-employed income tax, 61pc of corporation tax, 60pc of VAT and 43pc of capital gains tax being collected in Dublin. Overall €22bn (56pc) of the total 2017 net tax take of €39.2bn was collected in Dublin. The tax take from the three surrounding counties raises the total to almost 63pc.

Property costs also indicate that the Dublin regional economy is performing much more strongly than most of the rest of the country. The median Dublin house and apartment price now ranges from "only" €324,000 in Fingal to as high as €545,000 in Dun Laoghaire-Rathdown. This compares to a median price of just €185,000 in the West of Ireland and €257,000 in Cork city, the country's second-largest city.

Dublin rents are also much higher than those in the rest of the country, ranging from an average of €1,215 a month in north Co Dublin to €1,981 in Dublin 4 for a one-bedroomed apartment.

The rent on a comparable property in Cork city is €972 and €895 in Galway city.

This willingness to pay much higher purchase prices and rents is further evidence of much higher incomes in Dublin than in the rest of the country.

As Dublin surges further ahead, it is the smaller towns, those with populations of fewer than 10,000 outside the catchment areas of Dublin and the other large cities, that are among the areas worst affected.

In a report published last month, the Society of Chartered Surveyors Ireland pointed out that 55 of the 79 towns recorded by GeoDirectory have recorded an increase in commercial vacancy rates since 2013.

"Regional high streets have been significantly affected by the recent economic downturn. The impact has been felt throughout Ireland with increased vacancy rates and a decline in the vibrancy of many rural communities."

The SCSI report made a number of recommendations to help smaller towns to compete with larger urban centres including restrictions on the development of new out-of-town shopping centres on the outskirts of smaller towns and making traditional town centres more pedestrian and cyclist-friendly.

An ESRI research paper published last January forecast that, by 2040, 42pc of the country's population will be living in the Mid-East region (Dublin and the three surrounding counties). The report also forecast an increase in the national population of more than 900,000 to more than 5.6 million over the same period, meaning the total population of the Mid-East region will increase to more than 2.3 million over the next 22 years.

"Dublin and the Mid-East are projected to have above average jobs growth [between now and 2040]", according to the ESRI.

So what can be done to halt or at least slow Dublin's seemingly inexorable advance? The paper's author Edgar Morgenroth, then of the ESRI and now economics professor at DCU, recommends developing the other larger urban areas such as Cork, Limerick, Galway and Waterford to take some of the pressure off Dublin.

"Developing scale in the second-tier cities will enable them to benefit from greater agglomeration economies. This has a benefit for the wider region as larger second-tier cities are able to provide services and functions that are currently only available in Dublin."

Unfortunately, we have been here before. In 2002, just as the Celtic Tiger was about to enter its final manic phase the Government of the day published the National Spatial Strategy. The NSS was supposed to be "a coherent national planning framework for Ireland for the next 20 years".

The reality was somewhat different. Instead of providing coherence, the NSS sought to placate every conceivable local interest group. The most notorious example was in the Midlands where instead of designating Athlone, by far the largest town in the region, as the main growth centre, Tullamore and Mullingar were also deemed to be "gateways". This something-for-everyone approach reached its apotheosis when then Finance Minister Charlie McCreevy unveiled his decentralisation policy in the December 2003 Budget.

Instead of moving entire departments or large stand-alone administrative units to other major urban areas, McCreevy scattered small units here, there and everywhere with 10,300 civil servants and other public sector workers moved to 53 different centres spread across 25 counties.

A 2012 report on the affair by the Department of Public Expenditure and Reform was scathing, The report found that the McCreevy decentralisation had led to a "major haemorrhaging" of corporate knowledge and resulted in significant additional costs.

More recently, the current regional development signature policy, rural broadband, has hit choppy waters. The cost, initially projected at between €500m and €1bn, is now expected to run as high as €3bn, most of the original bidders have withdrawn and Communications Minister Denis Naughten was forced to resign in October.

So is it possible to overcome the intense local rivalries that have largely derailed previous efforts to divert at least some growth away from Dublin? While the NSS and decentralisation may have helped to give regional policy a bad name, the fact remains that Ireland is much more capital city-dependent than most other small European countries. Doing nothing will result in ever more people and jobs migrating to the east coast.

In July, the Government published the National Planning Framework. Projected to run until 2040, the NPF supersedes the National Spatial Strategy. While paying lip service to the smaller towns, unlike its predecessor, the NPF focuses largely on the other large cities, Cork, Limerick, Galway and Waterford.

"We need to do an awful lot more to invest in the regions. The regions have suffered more than Dublin from a lack of investment over the past decade," says IBEC head of policy Fergal O'Brien. He believes that it is not a case of Dublin versus the rest of the country.

"Dublin is becoming very expensive. Indigenous companies are looking at locating outside of Dublin. We are seeing a big surge by Irish companies moving outside of Dublin. That is the biggest opportunity for the regions."

What many critics of Dublin's economic dominance fail to grasp is that the capital has become a major international city. It isn't competing with Cork or Limerick but with Barcelona, Amsterdam or Berlin in a sort of European FDI super league.

It is hard to see the likes of Google or Facebook, both of which employ several thousand people in the capital, locating anywhere else in Ireland. If they hadn't come to Dublin, then they wouldn't have come here at all.

If the regions are to attract indigenous companies relocating from Dublin, then there needs to be major infrastructure investment, particularly in roads and broadband.

One of the projects that needs to be speeded up is the Cork-Limerick motorway, which when completed will result in a continuous motorway from Cork to Galway, the southern half of the proposed Atlantic Corridor along the west coast.

"The biggest thing the Government can do for the regions is to get these investment projects to happen," says O'Brien.

"If the regional cities get scale they will be great drivers or growth for the regions."

Sunday Independent

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