Understanding Ireland's Economic Crisis by Kinsella Stephen & Leddin Anthony

Author:Kinsella, Stephen & Leddin, Anthony [Kinsella, Stephen]
Language: eng
Format: mobi
Publisher: Blackhall Publishing
Published: 2011-01-02T16:00:00+00:00

The Need for Continued State Investment

Government investment, by contrast, is subject to a considerable degree of scepticism. The concept of investment in education for instance took a long time to be accepted. Research and development (R&D) investment was not fully recognised as a priority until the late 1990s. Moreover, the calculation of the return on government investment has raised methodological problems on a continual basis. The role of environmental concerns or constraints in determining the savings to be achieved is something that we have come to terms with, but wider concerns such as flexibility, diversification, security and international connectivity, which should be important determinants of government investment in Ireland, have yet to be fully quantified or incorporated into standard methodologies.5 Yet, as has been emphasised, such considerations will powerfully determine the degree to which Ireland is a location for successful enterprises in the future. It is essential therefore that project appraisal for the future takes these kinds of dimensions fully into account.

It would be all too easy to accept that public finance constraints will mean a halt to significant new government investment in the years to come. Certainly, analysis of the figures is likely to point to that sort of conclusion, but there is still a lot that can be done in terms of preparation for investment, even if the main project expenditures are postponed for a year or two. In the first place, there are all the necessary regulatory processes and approval procedures to be gone through, such as thorough economic and environmental impact analysis, together with the necessary planning approvals. Secondly, large-scale capital projects typically involve extensive technical planning and procurement stages, which may nevertheless represent a relatively small part of the total cost. If an investment project is considered to be important for national competitiveness, the fact that the capital funding is not yet available for the project should not necessarily mean that the initial stages are not undertaken. By clearing the ground, both literally and figuratively, the projects themselves will be quicker and more efficiently implemented when funding is secured.

However, this preparatory stage should also be more comprehensive in its approach. The issues of future competitiveness, sustainability, security, diversification and international linkages should, as noted, be considered, but the full implications of that approach are that projects should not be considered in isolation but as far as possible as part of a package of investment that is intended to be undertaken in the planning period. This means that different kinds of infrastructure development, for instance, should be reviewed and appraised at the same time, even if the actors are different. Some infrastructure projects are undertaken by the National Roads Authority (NRA), others by the Electricity Supply Board (ESB), CIE (Córas Iompair Éireann, Ireland’s semi-state transport body, in charge of the national and local bus and train services) or local authorities. The Transport 21 initiative was a first attempt to assemble a package of projects in the transport field, but the approach ideally should be multi-sectoral because, for instance, transport development will affect infrastructure requirements in other fields.

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