Ireland’s planning and objections systems remains one of the biggest barriers to delivering infrastructure, Ireland’s fiscal watchdog has said, with more value for money needed to address infrastructure deficits.
In a new report by the Irish Fiscal Advisory Council (Ifac), it noted that housing remains a “big challenge”, with Ireland having a historically low level of infrastructure.
According to the watchdog, the gap between Ireland and other higher-income countries in Europe is 25% per person. However, Ifac noted that this has narrowed from 47% per person in 1995.
“Yet there are significant shortfalls in four key areas: housing, healthcare, transport, and electricity,” the watchdog said.
According to the report, the gap between health spending in Ireland and other high-income countries remains large at 53% despite recent hikes in investment, with the shortfalls consisting of buildings and structures.
Meanwhile, the gap between transport spending was 41%, with the gap between electricity spending at 26%.
“While some additional government investment may be required, the amounts required are modest relative to overall government spending. Getting better value for money on existing spending could also help address infrastructure deficits.”
According to the publication, Ireland’s planning and objection system remains one of the biggest barriers to delivering infrastructure projects, with its “slow and unpredictable” natures increasing costs and delaying the country’s infrastructure needs.
Ifac said reforms to the system will be “essential” to addressing Ireland’s infrastructure deficits, adding that “time will tell if the new Planning and Development Act will bear fruit.”
Given the scale of Ireland’s infrastructure deficits and challenges, the watchdog said that these cannot be addressed in a single year, stressing that long-term, multi-year planning is needed to address these issues.
“If the Irish economy and population continue to grow, demand for infrastructure will continue to increase,” Ifac said.
Almost 80,000 additional workers may be needed to address these deficits, Ifac said, with this figure needed to build new housing and retrofitting existing homes.
However, it noted that a rise in productivity in the construction sector and a movement of workers could see this figure reduced to less than 20,000.
The watchdog said that construction productivity in Ireland remains 32% lower than the average. Compared to the country like Norway which is at the frontier, productivity in Ireland is less than half of that level.
“If productivity improved greatly, then house building could increase substantially without additional workers,” Ifac said. This could help address a key issue for the Irish economy and society.
“Ireland’s infrastructure deficits are long-standing issues which cannot be resolved overnight. They require a planned, multi-year approach,” said Niall Conroy, lead author of the report and senior economist.
“Ireland already spends a high amount on public investment relative to the size of its economy. The challenge is sustaining this and getting better value for money.
“Ireland’s slow and unpredictable planning and objection system makes it harder to deliver infrastructure projects and increases their costs.”
Given the economy is already performing close to capacity, Ifac warned that it does not require additional money being pushed into it. As a result, the watchdog stressed that any additional investment should be offset by increasing taxes or reallocating existing spending.
“Using offsetting measures like this would mean extra investment could take place without adding to inflation. This would keep the cost of living down and help maintain Ireland’s competitiveness,” the watchdog said.