Infrastructure spending must come before tax cuts, says Ibec
Ireland's largest business lobby group, Ibec, has called on the Government to prioritise infrastructure investment over tax cuts or other expenditure.
In the first in a series of policy position papers on Ireland's competitiveness and productivity, the group called on the Government to retain a consistent level of capital investment and drop barriers in the planning system for big 'common good' projects.
Ireland will need to build a minimum of 500,000 homes and significantly upgrade the State's infrastructure between now and 2035 to address the country's rising population, Ibec said.
'It is critical that, in a world of growing uncertainty, we do not risk repeating the macroeconomic mistake we have made consistently over the past 50 years – deprioritising public investment when the economy slows,' said Fergal O'Brien, Ibec executive director of lobbying and influence.
Ibec called for the introduction of an explicit fiscal investment target to 'provide a fiscal anchor for the capital budget through good times and bad' as a way of guaranteeing a consistent level of public capital investment.
The lobbying group said the State has cut public investment as the 'path of least resistance' when needing to introduce fiscal cutbacks. 'Consistent failure to invest in necessary infrastructure does not result in savings,' it said. 'Infrastructure deficits accrue as a form of 'technical debt'.'
'Ireland today is a living mausoleum to these past policy errors,' the policy paper said, suggesting sustained investment of €200 billion by 2035 be funded by the Exchequer, proceeds from the €13 billion Apple tax judgment, the Infrastructure, Climate and Nature Fund, and future share sales. Read More EY staff in Chins encouraged to wear Communist party badges
Retaining a consistent level of capital spending would, Ibec said, reduce the need for catch-up spending when economic conditions change and lower the reliance on large-scale projects as forces of macroeconomic stabilisation. These factors would then provide more certainty to companies and young people in investing in capacity and the skills for sectors downstream from the infrastructure delivery sector.
To enable the delivery of large-scale infrastructure projects, Ibec wants the Government to examine reforming the planning system, including the 'disproportionate influence of individual objectors', suggesting that constitutional change be considered.
It called for a 'radical improvement' in the delivery and timelines of projects, aided by a centralised oversight structure and a prioritisation structure in the planning system. Ibec said that just 11 of the 44 big infrastructure initiatives in the pipeline in 2019 have been delivered on or before schedule.
The body also called for the delivery of region-specific infrastructure to sustain local economic growth across the country.
The Ibec executive director said getting infrastructure investment right could 'open the door to delivering large-scale projects that can transform our economy and society, service homes at the pace required and upgrading infrastructure to meet the standards of a modern economy and achieve our climate goals.'
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