Unveiling a plan to spend more than €100 billion on infrastructure and capital projects by 2030, and another €175 billion in the five years after that, the Coalition is betting heavily that it can achieve a step-change in addressing the infrastructure deficit that has developed in recent years.
If that deficit is the biggest problem facing the State – and the Coalition say constantly this is so – then the Government is planning to solve the problem by throwing a ton of money at it.
Tuesday’s announcement adds more than €30 billion to previous plans, promising a surge of investment, especially in the areas of water, energy infrastructure and housing. A further €175 billion is due to be spent by 2035, though much of that will fall to the next government to make those final decisions.
Spending money – or promising to spend it – is in itself no guarantee of success. Past performance is evidence enough of that.
RM Block
As Tánaiste Simon Harris acknowledged, the real test will be the Government’s capacity to deliver the projects within something like the timescale envisaged. “Our watchword,” said Harris, “must be delivery … We have to say to [Government] agencies, ‘get on with it’.”
But experience suggests this is easier said than done. However, the ability to ensure that Government and its agencies deliver those projects expeditiously now becomes a critical issue for this Coalition.
It has mortgaged its future on transforming the State’s infrastructure, especially housing. But those housing units are visible and countable: if the Government fails to deliver 50-60,000 a year, there will be nowhere to hide.
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In private, Taoiseach Micheál Martin has reportedly expressed impatience with the system’s failure to move more quickly in response to decisions of its elected leaders. But there is nobody in Irish politics with deeper or broader experience of the system than Martin. Success or failure of the Government – and perhaps his legacy as Taoiseach – depends on his ability to get the machine to produce results. It is a formidable task.
It is complicated by factors outside the Government’s control. Chief among them is the uncertain international environment. The European Union and United States stand on the brink of a trade war that has potentially serious consequences for our economy and those corporation tax revenues which will bankroll much of the planned building spree.
Launching their summer economic statement, barely an hour after the National Development Plan announcement, Minister for Finance Paschal Donohoe and Minister for Public Expenditure Jack Chambers admitted that their budget plans would have to be rewritten if US president Donald Trump’s 30 per cent tariffs – or anything like that – take effect.
The two men promised a budget package of €9.4 billion in October – a number that means sharp reductions to the recent growth in current spending budgets (but growth all the same). But then they immediately said that number may change if the conditions change. Here’s the budget, they said – for now, anyway. This is the world we live in.
Martin, Harris, Donohoe and Chambers were united and unambiguous on one thing: if budgets come under pressure, they will trim current spending growth to safeguard capital budgets.
The principle is a laudable one: taking short-term pain for long-term gain. But what if that short-term pain comes in the shape of severely constrained spending on welfare, pensions, public services and increased taxes?
In recent budgets, the Government was able to cut taxes, increase spending, save money and still run surpluses. That happy era is coming to an end. Tougher choices will soon be unavoidable. With them comes tougher politics.
