A full strategy is not in place for urban transport investment in Dublin

While in the past the high-point of public economic policy each year has been the Budget, the publication yesterday of the National Plan must surely take pride of place for 1999, if not for a number of years to come. Few recent economic policy documents have been the subject of such prolonged public consultation prior to their finalisation and, as a result of this process, and the extensive leaks, yesterday's publication did not bring any major surprises. The consensus on the priorities of the plan guarantees it a widespread welcome. Investment in roads, public transport, sanitary services, and housing - economic and social infrastructure - is accorded top priority, with their share of plan expenditure rising from around 40 per cent this year to around 50 per cent in 2000 and subsequent years. The planned investment in transport is, if anything, greater than had been anticipated, and this decision is to be welcomed.

However, while provision is made for a major increase in investment in urban public transport, it is not clear that a full strategy for this investment is in place, especially for the Dublin area where there is no strategic physical plan. This makes it very difficult to know where roads and rail lines should be put on the map.

The plan calls for a very big increase in resources devoted to social housing, recognising the rapidly growing problems facing low-income households. This must receive a wide welcome.

While investment in education and training remains crucial to the success of the economy, the falling numbers of young people, and the declining numbers unemployed, means that overall expenditure will decline slowly over the course of the plan. Because much of the expenditure on education is not included in the plan, it is difficult to assess the underlying strategy, though it is clear that a significant increase in resources is being devoted to the needs of the disadvantaged.

Somewhat more surprisingly, the investment aid to the private sector is budgeted to increase over the course of the next seven years, in spite of the very favourable business climate that already exists. With labour shortages growing daily, one would have expected some winding down of support for private sector investment across a broad range of activities.

A novel feature of the plan is the adoption of an explicit objective of promoting balanced regional development through a centre-based strategy.

The plan envisages that two tiers of urban centres will be developed, the first consisting of the larger centres (including Waterford) while the second-tier centres, or "gateways", are not yet identified. The choice of these latter towns is crucial to the success of the strategy, which requires a concentration of investment to be effective.

Another new feature, which ties in with the regional strategy, is the inclusion of funding for investment in cultural and recreational facilities. This type of infrastructure can play an important role in the development of individual centres, and without such a provision, suitable facilities may never be provided in the most deprived urban areas.

Experience in other countries has shown that, even with unlimited funds, it is almost impossible to satisfy the potential demand for road space from commuters, or for water and other infrastructure from households. Even with the major increase in investment, Ireland will still have a serious shortage of infrastructure for much of the next decade.

Under these circumstances price should be used as an instrument for rationing access to the scarce infrastructure. In the case of commuting by car, we face the choice of rationing by exhaustion or rationing by price. Most commuters would probably choose a judicious mixture of investment in urban public transport and charging for use of road space, rather than sitting for ever-longer periods in traffic jams. The plan does not face up to this important issue.

WHILE the plan will provide the finance for the necessary investment, and the political will is there to undertake it, many important projects may never happen because of the problems inherent in the physical planning system. The proposals by the Government to deal with this latter problem are to be welcomed, but there still remains the hurdle of the courts - the hurdle where some of the biggest projects have fallen over the last 20 years.

The plan calls for a major increase in the output of the building industry - an increase on top of today's exceptional level. As the industry is currently facing major problems filling vacancies, it is not clear that it will be able to deliver on the large number of planned projects.

While the money may be spent, it could end up being frittered away in price increases due to rapidly rising profits for landowners, widening margins for builders, and higher wage rates to attract workers from northern Sweden or Berlin.

For this reason, the planned investment in social housing must be accompanied by a major reduction in other supports for house purchase, such as mortgage interest relief, taking enough money out of the housing market to compensate for the increased expenditure on social housing.

In the case of civil engineering projects, the choice of appropriate contracts, including public-private partnerships, will be important. If suitably structured they could attract in major building firms from abroad, enhancing competition and adding to the stretched resources of the sector.

With the current background of budget surpluses, in the rush to invest there is a danger that we could forget the hard-learned lessons of the 1980s.

Bad projects are still bad projects, even if the Government has the funds to undertake them. It is essential that every project in the plan be rigorously evaluated to ensure value for money. This will be as important in the next decade as it was in the 1980s.

John FitzGerald and Edgar Morgenroth were two of the authors of the ESRI's study on National Investment Priorities published earlier this year.