The economy is continuing to grow at a rapid pace and the case for further private sector investment remains strong. Despite this growing affluence at a macro level, there is often a perception wider society is not feeling the benefits of greater material wealth. There are obvious reasons for this. Access to cash and a growing economy has not translated to equal access to either physical assets or services, which many regard as the mark of an affluent society. Indeed, a failure to plan for affluence, by building capacity has left the economy in danger of running into limiting capacity constraints.
Our major challenge is creating the capacity to continue to grow whilst maintaining social cohesion. We have failed to invest in absorptive capacity (eg, skills, housing, productivity, regional development or infrastructure) for record private investment levels. This congestion, in turn, has led to productivity being capitalised in rising asset prices rather than broad based and regionally balanced growth in quality of life, with significant distributional effects. This is now a material threat to economic advancement, generational solidarity and social cohesion.
Whilst this does not seem like an obvious issue for the business community to take up, State capacity – the ability to convert resources into achieving its policy objectives- is a driving force behind a thriving 21stcentury economy. In the 20th century, a business based itself wherever natural resources and transport links existed. Workers then flocked to those locations, in Ireland’s case to service exported demand. However, the growing intangibility of the global economy means that businesses now locate, and export demand is serviced from, only those regions where the most skilled people live and want to live.
In an open economy, where demand is driven by external forces and where targets such as carbon net zero are blind to economic cycles, this is a recipe for long-term competitiveness losses and a permanent capacity deficit. Ireland will need decades of consistent investment, regardless of the economic cycle, to meet its infrastructure needs.
Investment in public infrastructure is fundamental to creating the conditions necessary for a strong, competitive, and resilient economy. Underinvestment over recent years has depleted the country’s stock of critical infrastructure, further widening the range and number of areas that have become urgent investment priorities for the wider economy and society. An aligned National Development Plan (NDP) with a revised National Planning Framework (NPF) should deliver a comprehensive programme of well-prioritised infrastructure investment to underpin long-term sustainable growth.
It is important that the next Government overseas the provision of the necessary infrastructure and investment, as well as potential new delivery and funding models, to reimagine our cities, towns, and regions. Any reprioritisation of projects under the NDP must be justified and be accompanied by better delivery. Successful delivery of NDP projects and programmes necessitates a strong focus on the improving management and governance of public investment. It also requires a commitment from Government to focus on desired outcomes and a willingness to work with regional and local stakeholders, public bodies, commercial semi-states, and industry to address the barriers to delivery.
What measures business wants to see in the Programme for Government.
- A commitment to a NDP that delivers a comprehensive, planned, and sequenced programme of well-prioritised infrastructure investment underpinning long-term sustainable growth and balanced regional development.
- A commitment to extend future NDP cost-benefit analyses and infrastructure budgeting to take into account the inflation easing, supply-side impacts of some investments.
- A commitment to better delivery on infrastructure projects by improving project management and governance of public investment; and working with regional and local stakeholders, public bodies, commercial semi-states, and industry to address the barriers to delivery.
- A commitment to accelerating project delivery timelines by making required changes to public procurement, planning, compliance processes and project delivery mechanisms.
- A commitment to delivering strategic projects of national importance, which underpin economic growth, sustainable development, and contribute to our climate targets.
- A commitment to embracing innovative and diversified funding streams, including strategic utilisation of EU funding sources, enhanced engagement with the European Investment Bank, a pipeline of non-exchequer funding of infrastructure, and developing new models (e.g. City Deals) to fund urban transformation.
Ireland’s ability to respond to current and future capacity pressures in housing and other areas is the single biggest threat to our competitiveness and economic wellbeing. Our growing population will see a steady increase in the number of new households being formed. Each of these households will need a home. This will involve a combination of owner occupied, as well as renting households. There is currently a mismatch between what housing is suitable and what is available. We need the right mix of housing in the right areas, in accordance with suitable and sustainable development practices. It is important that the county’s housing policy adequately accounts for the expected demographic changes that will impact the housing stock and mix required over the coming years. The demand for homes is also driven by changes in the average household size. A holistic view of housing is required, allowing for an appropriate mix of location, type, tenure, and accommodation. Students, young professionals, families, and an older population all have different housing needs. The dysfunctionality of Ireland’s housing market can be seen in the rental sector. The rental market is a crucial barrier to Ireland’s competitiveness as a location for investment. There must be a sustainable, affordable, secure, and high-quality rental market in Ireland.
What measures business wants to see in the Programme for Government.
- A commitment to support the delivery of at least 300,000 homes and accounting for the required change in household mix and tenure over the lifetime of the next Government.
- A commitment to more ambition by the State in its approach to direct housing provision by delivering 20,000 social, affordable, and cost-rental units annually.
- A commitment to increase the capital spend on key underpinning infrastructure such as water, wastewater, and other utilities to support housing delivery of scale, which will ensure that capacity is available to meet on-going demand and zoned land is serviced in advance of development.
- A commitment to set a clear target for the delivery of rental properties as part of the overall national housing targets; and provide policy stability and regulatory certainty to the rental sector, including planning issues, tenants’ rights, and incentives for landlords.
- A commitment to boost off-site construction activity by ensuring a sizeable portion of future social and affordable housing be completed using offsite construction methods, to create a strong level of demand certainty for investment in modern methods of construction.
The achievement of balanced regional development is a key component of Project Ireland 2040. Given our buoyant long-term national population projections, this implies a greatly accelerated pace of development of homes, services and employment in cities and towns across all regions. Whilst regional development is multifaceted, plans set out under the revised National Planning Framework and aligned National Development Plan must be implemented in order to realise the full potential of each region and ensure growth is delivered to every part of the country.
All counties experienced population growth between 2016 and 2022. However, the Eastern and Midland region is experiencing a share of population growth beyond that envisaged in the 2040 target, with population growth and economic activity continuing to be over concentrated around the Greater Dublin Area. This is not in the interest of Dublin, or any other part of the country.
The EU Regional Competitiveness Index (RCI) has been measuring the major factors of competitiveness for all the NUTS-2 level regions across the European Union. In the RCI, the Northern and Western Region ranks 218th out of the 234 Regions of the EU27 on infrastructure and the Southern Region ranks 193rd. This is in contrast to the Eastern and Midland Region containing Dublin, which ranks 54th, highlighting the scale of infrastructure deficits in particular regions. It is vital that the next Government addresses the imbalance and turns the vision for regional balance into reality.
Regions require better infrastructure and increased service provision ranging from housing, transport, digital connectivity, through to public and voluntary healthcare, social services, and investment in education, skills and innovation. The delivery of critical public infrastructure remains central to creating a sustainable growth model for every region. It is key to improving accessibility, liveability, and quality of life; making regions more attractive and sustainable places to live, work and invest.
What measures business wants to see in the Programme for Government.
- A commitment to the accelerated delivery of critical public infrastructure and investment in every region.
- A commitment to unlock the potential of higher and further education for enterprise and regional growth.
- A commitment to prioritise road and public transport infrastructure vital for regional connectivity.
- A commitment to deliver affordable housing as a key determinant for enabling regional growth.
- A commitment to support the sustainable development of metropolitan areas, regional growth centres and towns and promote the development of a strong network of economic corridors.
- A commitment to maximise the potential of ports and airports to meet future demand, to provide high quality international connectivity, and to deliver renewable energy projects.
The transition to a net zero circular economy presents major opportunities to grow the Irish economy, create jobs, enhance energy security, and improve quality of life for all. In a changing world, investors, consumers, and talent follow environmental integrity, the transition away from fossil fuels and high carbon activities is now both an economic and environmental imperative.
However, Ireland’s ambitious climate and environmental targets are not backed by the necessary polices, supports, and resources. Ireland lacks a clear vision for what a circular net zero economy looks like. There remains great uncertainty regarding the role and interplay of different technologies/climate solutions and how the transition will be financed. Critically, the pace of infrastructure delivery remains far too slow. Consequently, Ireland is now at risk of missing its targets by a significant margin.
The next Programme for Government must prioritise smart forward planning, a scaling up of public and private investment, faster policy development, and a speedier roll-out of infrastructure to deliver on our decarbonisation targets. A cross-sectoral approach will be needed to advance the decarbonisation of the transport sector. For example, Ireland currently has the lowest level of electrified rail track in the EU – something we hope to see addressed through the All-Island Strategic Rail Review. Government can support the transport decarbonisation endeavour by facilitating the build-out of both charging and refuelling infrastructure for private electric vehicles, electric and hybrid public buses, compressed natural gas vehicles, and hydrogen as it becomes available.
What measures business wants to see in the Programme for Government.
- A commitment to set out a clear vision and pathway for a net zero circular economy – while also identifying opportunities for growth and sustainable reindustrialisation
- A commitment to accelerate the planning, permitting and other administrative processes to deliver vital energy infrastructure and to develop the Irish net-zero manufacturing sector.
- A commitment to develop ahead of the time the policies and regulation needed to support future climate solutions and technologies including carbon capture, private line, and hydrogen.
- A commitment to drive investment in the circular economy, maximising asset sharing and reuse opportunities, and integrating circular design principles, including through green and circular public procurement.
- A commitment to accelerate business decarbonisation, demand response, and energy efficiency with new supports and incentives including a multi-year competitive Carbon Contracts for Difference (CCfD) scheme to scale industrial decarbonisation.
- A commitment to enabling the decarbonisation of Ireland’s transport network through clearly outlined alternative fuel policy and necessary supports to ensure cost effectiveness.
- A commitment to use the National Training Fund to address skills gaps which are slowing down infrastructure delivery, the circular economy and climate action.
- A commitment to accelerate implementation of the National Biomethane Strategy’s 25 actions to achieve Ireland’s 5.7 TWh biomethane target by 2030, with appropriate operational and capital financial support.
The next ten years will see a transformation in the country due to the challenges of net zero, digitisation, ageing and technological change. This also means building capacity across the public sector to deliver on these projects.
Quality public infrastructure and services are key, not only to our personal quality of life but to our overall national competitiveness. There are also significant direct barriers to broader economic and social advancement from a lack of State Capacity. The business community has repeatedly drawn attention to the lack of technical, regulatory, administrative and planning skills across the public sector causing significant delay, backlogs and reputation risks when it comes to delivering large projects in Ireland. This includes, but is not limited to, the well-known issues in the planning system with regards to housing and major infrastructural projects.
What measures business wants to see in the Programme for Government.
- A commitment to ensure adequate staffing and specialist staff in both sectoral regulators across the economy, licencing bodies where significant backlogs have emerged, bodies in the planning system, courts, local authorities, and courts where they have capacity challenges.
- A commitment to embrace digital technologies and data interoperability to enhance operational efficiency and the quality of administrative procedures through increased automation of physical and digital tasks and embracing new tools.
- A commitment to lead and invest in secure, accessible online Government services and the inclusive digitalisation of public service delivery for organisations and citizens.
- A commitment to streamlining public procurement for more efficient public spending, encourage new procurement approaches, and transform the procurement of public works projects and programmes.
Vibrant communities, strong town centres and a world class Experience Economy are all central to growth in a 21st century economy. The vibrancy of our communities in our cities, towns and villages is a critical component of ensuring that Ireland has not just strong quality of life but remains attractive for investment. The Experience Economy and our cultural sectors, remain vital to all other sectors of the economy in providing the glue which helps companies attract and retain skilled workers.
To support quality of life, we must continue to invest in our communities in both upgrading the public realm and investing in safety. We must fund our experience economy and cultural sectors to provide life enhancing experiences throughout the country. Finally, we must ensure that the skills, knowledge and talent required to make Ireland a standout place to live continues to grow.
What measures business wants to see in the Programme for Government.
- A commitment that the Department of Enterprise, Trade and Employment have strategic planning oversight for Ireland’s Experience Economy and responsibility for driving the delivery of overall strategy.
- A commitment to a major future skills report and strategy for the Experience Economy.
- A commitment to invest in public realm enhancements and safety to revitalise urban centres and develop the night-time economy.
- A commitment to enhanced security and safety plans are required for urban centres, which support the full range of economic, cultural, and social activities.
- A commitment to provide for investment in festivals, public culture events and conferences to revitalise town centres.
- A commitment to protect our cultural sectors, with adequate funding and tax supports.
