Saturday 7 December 2019

Dan O'Brien: The good, the bad and the dubious of new national plans

The amount of material contained in the documents makes evaluation tough, but there are positives, writes Dan O'Brien

Big cuts: Brian Cowen, as former finance minister and Taoiseach, said many times how capital spending would remain a priority.
Big cuts: Brian Cowen, as former finance minister and Taoiseach, said many times how capital spending would remain a priority.
Dan O'Brien

Dan O'Brien

In anticipation of the publication of the Government's new planning and investment strategies, this column last week made the point that the importance of such plans tends to be overstated.

Changing technologies, economic structures, lifestyles and geopolitics matter more to how a country develops.

If there are doubts about that, consider this.

Everyone agrees that Ireland has not been a world leader in planning and infrastructure prioritisation. Despite this, the Irish economy over the past quarter of a century has been one of the fastest growing in the developed world. If planning and public investment were the main factors in economic development, Ireland would still be a laggard.

With that caveat out of the way, let's start by saying something good and something not so good about the spatial and infrastructure spending plans published last Friday.

The positive is that a more strategic and rigorous thought process went into formulating the plans than was the case in the past. Instead of the Department of Finance simply asking other departments for spending wish lists, as used to happen, a more coordinated process was conducted from the very top. That process took a view of priorities for the next 20 years. It then sought ideas from departments about ways they could achieve these objectives in their own areas. That's the good part.

Now for the somewhat jaundiced part. Fine Gael came to office in 2011. Within months it unveiled a five-year capital spending plan. Three years and 10 months later, and in the run-up to an election, another five-year infrastructure plan was unveiled. Now, less than two and a half years later, yet another long-term infrastructure plan has been assembled.

Politicians like announcing how much taxpayers' money they are spending on infrastructure.

Last Friday saw the publication of two plans. The first, covering the next 22 years to 2040, is more of a plan for other plans. It sets out, for instance, that each of the State's three regions will draw up "regional spatial and economic strategies" by next year.

It states that it is "by necessity a framework; it cannot determine every detail now, as to do so would limit our flexibility to adapt as circumstances change, as well as our ambition in the face of such change".

How planning and bang for infrastructure spending buck are improved will depend on the nitty-gritty of management, the evaluation of proposals, prioritisation and decision-making.

The plan includes the setting up a new Office of the Planning Regulator (OPR), which will be doing exactly that. While a lot of populist nonsense is spoken about agencies independent of ministries (that quango­isation mostly makes sense is to be seen from the fact that all countries have moved in that direction), in this case there is reason to question the creation of a stand-alone body.

Would this role be best placed in the department of the Taoiseach? It is true that prime ministers' offices everywhere have become overloaded with additional functions in recent decades, but there is a reason for that. More state functions have a cross-government dimension than ever before. The centre needs a role, if only to minimise turf battles between and among ministers. It is not clear that the new office will be able to settle such disputes when they inevitably arise.

An unambiguously positive aspect of the plans is the focus on "brownfield" sites within existing conurbations. There is a dinginess to many Irish towns and cities that one generally doesn't see in other western European countries.

The GeoView quarterly survey of commercial properties shows that 17pc of premises were vacant in the capital's worst-hit area, Dublin 8, as of the final months of last year. That was higher than the national average of 16pc.

To improve usage of brownfield sites, the plan includes a target for at least 40pc of all new housing to be delivered within existing built-up areas. The best way to achieve that would be a land valuation tax, but no party is brave enough to make such a major change - even if the new vacant site tax goes some way down that sensible path.

Another welcome focus is on better management of state-owned land and property. It is sheer lunacy to have low added-value activities, such as garages for buses to park overnight, in prime city-centre locations. Selling these off would generate substantial cash that could be ploughed back in investment. Having them built on would also boost density which, though not an elixir for the creation of high-quality urban living, has many benefits.

Analytically, two issues about employment in the plans give cause for concern. The report states that jobs are moving east. This is not what the labour statistics and census data from the CSO show. Both the detailed quarterly jobs survey going back 20 years and the census data on employment going back to 1981 show a remarkably stable pattern of employment distribution across the country. If those drafting the plan failed to spot this, questions must be asked.

Another reason to question the analysis is the discussion of the relationship between population and jobs. The plan states the population will rise by around a million over the next 20 years and that 660,000 jobs will be needed. This has the direction of causality the wrong way around.

Without jobs growth, population growth will decelerate sharply. Given how mobile Irish people have been historically, and continue to be, there should be little doubt about that. This makes long-term planning for an inherently volatile, small open economy difficult.

Another change in the plans is the longer time periods for planning and spending frameworks. These are designed to firewall investment spending in the event of a downturn. In this regard, one would have to be somewhat sceptical.

Brian Cowen, as finance minister and as Taoiseach, said many times how capital spending would remain a priority, come what may.

When the recession came, it was cut by two thirds, many times more than any other area.

The reason that happened is the reason it will happen again, if and when tax revenues shrink. Well over half of Government spending goes on welfare benefits of various kinds and public sector salaries. The incomes of hundreds of thousands of households come entirely or partly from these sources. Any government that cuts people's incomes gets severely punished. If there is a choice between that option on the one hand, and postponing the building of a road or a hospital on the other, politicians will always choose the latter.

That political calculus is timeless. Last Friday's reports won't change it. If the new arrangements protect capital spending in future downturns, it is likely only to be at the margins.

It is only fair to flag to readers that most of the comments and conclusions here are tentative.

The two documents published last Friday afternoon come to hundreds of pages. Such a short period of time works against thorough analysis.

It is long past time that governments should make such material available to the media in advance and under embargo, so the public can be served with more considered analysis.

Sunday Independent

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