If the Government is to meet its targets in relation to the National Development Plan (2000-2006) it will have to raise spending volumes by 24 per cent above what was achieved in the first two years of the plan, according to an analysis conducted by Mr Jim O'Leary of Davy Stockbrokers. And, given the circumstances whereby the Minister for Finance, Mr McCreevy, is already under severe pressure from the European Commission and the European Central Bank to cut back on Government spending, such a development appears highly improbable. This will almost inevitably lead to a failure to meet targets and a continuation of bottlenecks within the economy. Failure by the Government to implement its ambitious physical infrastructure plan should not be laid at the door of the European Commission, no matter how attractive a scapegoat it might appear to be at this time. After all, EU structural funding will contribute to many of the projects. And long before the European Commission expressed concern over the inflationary policies being pursued by the Minister for Finance, a shortfall in Government investment was developing. That shortfall was estimated at more than seven per cent for housing and 17 per cent for water services in the first two years of the plan. In his report, Mr O'Leary commented that in respect of roads, water services, housing and health, average annual capital spending over the next five years would need to be 30/40 per cent higher than in the 2000/2001 period. And he noted that the programme for investment in waste-management infrastructure had barely begun.
The main reason for the failure to meet targets has been an over-extended construction industry. Tender-price inflation for construction projects ran at 12.5 per cent during each of the past three years, while wages for skilled operatives rose by 11 per cent last year. The report saw little prospect of rapidly expanding the capacity of the Irish construction industry. And it concluded that many public construction contracts were too small to attract overseas interest. As a result, it suggested that some projects should be cancelled or deferred in order to ensure acceptable standards and value for money. And Mr O'Leary mentioned Stadium Ireland - which was not budgeted for in the National Plan - as a prime candidate for such consideration. Otherwise, he suggested that major projects be ranked by the Government in order of importance and pursued accordingly.
With a general election less than twelve months away, the Government may be reluctant to revisit the National Plan and to prioritise its various schemes. But that is what it should do in the interest of good planning. Otherwise, the inherent imbalance in favour of the more developed regions will be perpetuated at the expense of the Border, Midland and West regions. In spite of official policy to discriminate positively in favour of poorer areas, the tendency by State agencies, such as the National Roads Authority, has been to plan projects in line with current economic developments and projected traffic use. A recent study of the Midland region concluded that, without affirmative action and accelerated inward investment, the population would fall by at least 5,000 during the next 20 years. The situation, in terms of implementing the National Development Plan and developing the regions, cannot be allowed to drift.