Caution still the watchword when deciding infrastructural spending

As economic growth races ahead of the State's infrastructural capacity, this National Development Plan is the Government's chance to plot a coherent future.

The plan, as envisaged by the Department of Finance, will involve spending £33.4 billion over the next seven years on developing the State's roads and railways, its human resources, housing and sewerage services. It will determine the economic and social shape of the State for the start of the new millennium.

£33.4 billion is a lot of money. However, in the context of the extraordinary and sustained budgetary and economic performance in recent years, it is does not represent a substantial departure from traditional caution on public spending. The Labour Party has called for spending of £70 billion over the same period. The minority Government party, the Progressive Democrats, suggested a figure close to this at their conference in May.

The annual exchequer contribution to the public capital programme announced in the last budget was £2.3 billion - with EU funding this came to over £4 billion. Sustaining this level of capital spending - even with zero inflation - would give a total of over £28 billion over seven years. So the proposed figure reflects no seismic shift in Government thinking about infrastructural development.

However, there is a significant increase in exchequer funding proposed, bearing in mind the sharp reduction in EU funds available to the State.

The money is to be spent on four broad areas: economic infrastructure, employment and human resources, the productive sector and regional development.

The plan is based on a presumption that economic growth will continue well above the average of the last 20 years. After all the controversy over dividing the State into two new regions for the purposes of maximising EU funding, it is important to note that just 10 per cent of the funding for the plan will be administered by the new regional bodies, with almost all the remainder being administered by the Departments of Finance and Enterprise, Trade and Employment. Just £3.55 billion of the £33.4 billion plan will be spent on the new regional programmes to be administered by the two new regions designated by the Government.

Perhaps the central debate about the State's long-term development is the decision as to whether Dublin and its surrounding region should continue to develop rapidly, or whether other urban growth centres in the State should be designated and developed instead.

The Department of Finance is clearly not yet convinced of the widely canvassed view that Dublin's growth should be constrained by the development of a half-dozen or more urban growth centres outside the capital. In a cautiously worded section on this proposal, the memorandum to Government on the plan says the Minister for Finance has not yet decided what to do about this issue.

Pointing to reasons for caution, the memorandum notes that foreign investment is often attracted only to large cities. It also says it would take longer than the period of this National Development Plan to implement a strategy of developing alternative growth centres.

The apparent reluctance to fund the development of urban growth centres away from the capital is mirrored by a concentration on improving rail links giving access to Dublin city centre from points throughout the eastern region. While not taking a final view on the proposal to develop alternative urban centres, the memorandum raises a number of objections to it, and says further consultation is needed.

The memorandum proposes that EU co-financing for projects should be sought in a limited number of areas. These are economic infrastructure (roads, public transport and environmental services), employment and human resources (sub-programmes which give effect to EU employment guidelines), the productive sector (research, technological development and innovation sub-programme) and regional development (local development and rural infrastructure).

Under the EU Structural Funds Regulations, the Government is obliged to submit a National Development Plan to the European Commission within four months of the enactment of these regulations. This involves a deadline of mid-October for the plan which will provide the basis for a Community Support Framework to be agreed between Ireland and the EU Commission for the spending of the £3.4 billion in EU funds to come to the State in the 2000/2006 period.

Over the past months, the Department of Finance has examined submissions from Government departments and held bilateral meetings with them to discuss specific points. This process of arguing over specific allocations will intensify at political level in September as Ministers seek to maximise funding for projects in their policy areas.

The Economic and Social Research Institute submitted a report, commissioned by the Department of Finance, last March. The eight outgoing regional authorities and the two new ones also commissioned consultancy studies on specific priorities for the plan.

The memorandum to Government on the plan lists six key objectives it says form the basis for the plan:

sustainable economic and employment growth;

the promotion of balanced regional development;

tackling Ireland's infrastructural deficit as a potential major constraint on competitiveness, economic progress and social development - with special attention to the role of Public/Private Partnerships in this regard;

development of human resources with particular emphasis on education, training, skills and employability in general;

the introduction over the period of the plan of appropriate policies in the related areas of physical planning, spatial planning and land use systems to facilitate the efficient delivery and use of infrastructural investment and to assist balanced regional economic growth;

the promotion of social inclusion, with particular reference to measures to re-integrate the socially excluded into the economic mainstream.