Government presses ahead with broadband despite pleas to stop
Business Week: also is the news was competitiveness; GDP; and financial services
Taoiseach Leo Varadkar arriving at the launch of the National Broadband Plan with Ministers in tow.
It seemed as though just about everybody was shouting stop at the Government this week, but it vowed to press ahead nonetheless with the National Broadband Plan despite the starkest of warnings from even its own officials.
The Cabinet approved the plan and gave the consortium led by US businessman David McCourt the thumbs up as preferred bidder. The bottom line is now expected to exceed €5 billion, with a 60-40 breakdown between the State and the consortium respectively.
The €5 billion figure suggests the average cost of connecting each of the premises will be up to €10,000 – 10 times the cost of connecting homes in towns and cities. To make matters worse, the Government will not own the network once it’s built.
The plan will involve the laying of up to 140,000km of fibre-optic cable through remote and, in some cases, difficult terrain. More than 80 per cent of the 540,000 homes and businesses covered by the plan are located outside villages.
Opposition parties have accused the Government of using the plan as a vote-getting exercise ahead of elections later this month. Indeed, an EU audit last year ranked the Republic sixth out of the 28 EU states for fast rural broadband.
The resistance wasn’t limited to Opposition benches either. New documents showed the Department of Public Expenditure strongly recommended to Government that it not proceed with the preferred bidder for plan.
They also warned that a number of projects could be delayed as a result of extra capital funding being spent on broadband. These include the delivery of more than 2,000 social housing units, as well as 18 primary schools and nine to 10 primary healthcare centres.
Minister for Public Expenditure Paschal Donohoe admitted the plan would be “risky” but denied any projects would be affected. He said going ahead with it would be one of the “very biggest” decisions the Government will make in its tenure.
While the Department of Communications insisted its cost-benefit analysis demonstrated a strong case for the project, the Department of Public Expenditure dismissed that as “not credible”.
Taoiseach Leo Varadkar described the plan as “a leap of faith”. He also said every home, school, farm and business will be connected through high-speed broadband within seven years. Make a note in your diaries.
Brexit lull but warnings keep coming
The torrent of Brexit warnings over recent months may have slowed to a trickle now that the can has been kicked down the road to October – but we shouldn’t get too comfortable, according to a number of analysts.
The head of the National Competitiveness Council this week warned that rising rents and labour costs combined with the high rate of personal taxation are now posing a serious threat to our competitiveness.
Peter Clinch said wage costs were now rising four times faster than the rate of inflation and in certain sectors were out of line with the UK and other peer countries. He also highlighted the rapid jump in residential property prices.
Then there’s the European Commission, which said the State’s GDP growth is expected to slow to 3.8 per cent this year and 3.4 per cent in 2020 on the back of troubling external factors.
“The uncertainty surrounding Ireland’s economic outlook comes mainly from external factors, particularly the terms of the UK’s withdrawal from the EU, as well as possible changes in the international taxation and trade environment,” it said.
One line of defence the State will adopt will be to try and get more people to come here. Tourism Ireland is to double its marketing spend in China from €500,000 to €1 million as it looks to grow visitor numbers to Ireland from there to 200,000 by 2025.
It seems the emphasis on growing tourism hasn’t escaped the attention of the hotel industry. More than 4,000 hotel bedrooms were under construction in the first quarter of this year, which was a post-crash high. That’s according to data from real estate agency Cushman and Wakefield, which said about 88 per cent of the bedrooms are being built in the capital.
More than 2,000 rooms will be delivered this year with another 1,143 to come to the market in 2020. Indeed, the €55 million Marlin Hotel will open in Dublin 2 in July, creating 110 new jobs and offering 300 bedrooms. The 110,000sq ft building at 11 Bow Lane East will be situated next to St Stephen’s Green Shopping Centre.
Insurers warned by regulator
Central Bank governor Philip Lane is soon to fly off to pastures new at the ECB, but the regulator’s work is continuing as normal as it awaits the arrival of his successor Gabriel Makhlouf.
Insurance brokers and underwriting agents were among those in the crosshairs this week, as deputy governor Ed Sibley told them to take more responsibility for assessing the financial soundness of companies offering cover.
That was in light of Irish consumers being affected by the collapse of some overseas firms in recent years, including Malta-based Setanta Insurance, Gibraltar-regulated Enterprise Insurance, and Danish firm Qudos Insurance.
His warning came as the Central Bank’s head of insurance Sylvia Cronin is set to leave the regulator at the end of September after deciding not to renew her existing five-year contract.
Staying with finance, Permanent TSB (PTSB) said its new lending increased by 25 per cent in the first quarter to €300 million, with analysts also lauding the bank’s improving interest margins and capital reserves levels.
PTSB’s new mortgage lending grew by 19 per cent in the first three months of the year, compared with the corresponding period in 2018, the bank said in a trading statement. It said borrowers were lured by its cashback offer.
Over at Ulster Bank, money has been set aside to cover a likely Central Bank fine for the lender’s role in the State’s tracker-mortgage scandal. “We have a provision taken, and we will not be disclosing the amount,” the bank’s chief financial officer Paul Stanley said.