Infrastructure deficit must be addressed

The IDA Ireland annual report for 2002, published earlier this week, should sound a strident alarm for anyone seriously interested in Ireland's economic prospects.

While the report headlines another successful year for the agency, more careful reading points to looming critical challenges, with little by way of comfort or assurance as to our ability to address them.

The report clearly illustrates that the wallpaper of grant incentives can no longer mask the cracks in our inadequate economic infrastructure.

It notes that each location in Ireland needs to be competitive in what it can offer in the face of other locations in Ireland, Europe and globally, and such competitiveness must be measured in terms of education, support services and infrastructure.

What it does not need to say is that in each of these areas we are being judged to be increasingly inadequate - ranked eighth worst out of 29 competitor countries in terms of infrastructure, for example, by a recent GEM study.

In 2002, much of the impact of such inadequacies was masked by spare capacity in our cities because of the economic slowdown. In spite of a successful year overall, employment in IDA-supported companies in 2002 declined by 13.6 per cent in the mid-west region, by 9.6 per cent in the west, 2.7 per cent in the north-east and 2.6 per cent in the midlands.

This is clear evidence that companies are voting with their investment decisions by refusing to locate in areas that do not have the basic infrastructure to support business activity. It highlights the limited base of our appeal to international investors and makes a mockery of the Government's declared aspirations in regard to balanced regional development.

The IDA was arguably the most important and successful State agency throughout the 1990s. In 1999 it was charged with a new task in regard to regional development, based on an objective to ensure that 50 per cent of jobs created through greenfield investment should be in the BMW region.

The IDA has taken this target seriously and, thanks to its professionalism, it has been successful in previous years. But the continuing failure to deliver the infrastructure provisions of the National Development Plan in time and on budget have finally made this objective impossible.

Of the 20 projects announced in 2002, only eight are greenfield projects and not one of these has been located in the BMW region. Indeed, only seven of the 20 projects are based outside Dublin and Cork.

At the launch of its annual report, IDA chief executive Mr Seán Dorgan noted that, after 2006, Ireland will have less discretion in giving regional grants under EU state aids policy and said that "this timeframe is very short and we are not sure that regions realise the limited timeframe available to achieve the necessary developments".

Regions are well aware of what is at stake - one company in the BMW region incurs €250,000 losses each year through products damaged in transport over inadequate roads.

Having just concluded a very successful national conference on the topic of the new agenda for local economic development, I am happy to confirm that the Chamber of Commerce movement stands ready and eager to play its part in supporting cohesive efforts at regional level to plan and implement development strategies.

But we cannot accept the suggestion that the onus and responsibility lie with regions and local communities. Such efforts will be of as little avail as those of the IDA unless the Government fulfils its role in delivering adequate transport, ICT, educational and lifestyle infrastructure.

Having discussed the issue at some length at our conference, here are three practical suggestions:

the current mid-term review of the National Development Plan should be used to prioritise productive infrastructure over all other concerns, initially by setting timetables and budgets for 10 key projects;

the National Spatial Strategy, which seems to be languishing on some shelf in the Department of Environment and Local Government, must be dusted off and measures agreed and implemented immediately to build up the critical mass in the identified gateways to make them viable and attractive locations for investment;

payment of the public-sector windfall known as benchmarking should be made wholly dependent on the performance of the public service in delivering the NDP on time and on budget, as would be the case in any normal business with which they seek pay parity.

The continuing state of our infrastructure and related decline in our competitiveness is the single most critical issue facing the State and one in which it is being served abysmally by the Government and the public service.

We think or at least hope that we are an all-conquering streak of Celtic tigers. The fear of the Chambers of Commerce of Ireland is that our willingness to accept rhetoric and excuses instead of action and results has turned us into a herd of Celtic lemmings galloping complacently to our own destruction.

John Dunne is chief executive of the Chambers of Commerce of Ireland