EU legacy is planning discipline

Over the past decade the structural funds payments to Ireland have played a double role in promoting economic growth. The first and most obvious benefit has been to help fund vital investment. Without this assistance in the late 1980s the investment might not have been undertaken.

However, the structural funds process has had an additional benefit in encouraging us to plan our own public investment in a rational manner.

The first National Development Plan was introduced because of the requirements of the structural funds process. This has also required us, after the money was spent, to consider whether it was well spent. This legacy of planning and evaluation may prove the most important contribution of the structural funds.

However, our own perception of the role of the structural funds is now getting in the way of rational policy-making. Over the past year, instead of debating our own investment priorities for the next decade, we have devoted a disproportionate amount of public debate to secondary issues concerning eligibility for structural funds.

For the next planning period, from 2000 to 2006, the vast bulk of the funding for investment will come from the Irish taxpayer rather than from the EU. While in the past we had to answer to the not insubstantial ghost of Chancellor Kohl for our use of the structural funds, in the future we must answer to ourselves.

By focusing on the role of Brussels we are in danger of forgetting that future investment should be undertaken to meet our own needs based on our own priorities, and that it will be paid for largely with our own money. The focus to date on the EU dimension rather than on developing our own National Development Plan has not been helpful.

If a project is worth undertaking with EU funding, it is equally well worth undertaking with Irish taxpayers' funds. Just because funding may be available from Brussels does not make a bad project good.

Money spent on a poor project means less money for other good projects. This will be even more true in the period 2000 to 2006 when under 10 per cent of the funding for investment will come from the EU, with between 90 and 95 per cent coming from the Irish taxpayer.

To date there has been a surprising degree of agreement on the key priorities for investment under the next plan. Both the ICTU and IBEC, in their submissions to the Department of Finance, shared a rather similar vision.

The need to increase greatly the investment in urban public transport, inter-urban roads and sanitary services is widely accepted. There may be less agreement on the role of social and cultural infrastructure in development, but it is also important.

Now that investment in training and education is bearing fruit, there is a need to follow up on the successful formula of the recent past.

With declining numbers of young people, an improvement in services will not require as big an increase in funding as occurred under the current plan. Finally, direct aid to investment in the business sector - industry, agriculture and tourism - can be phased down in coming years, reflecting the success of the economy in creating jobs.

Given the strength of the economy, the next planning period should see more than adequate funding available to the Government from its own resources to fund our future investment needs. The halving of the EU structural funds payments should not prevent any worthwhile project from being included in the next plan.

Public private partnerships, as they have come to be called, can have a valuable role in ensuring that future investment is undertaken efficiently, but they would be an expensive way of funding investment as the Government already has adequate resources.

While the growing bottlenecks in the economy provide evidence of the very pressing needs for major public investment over the next decade, and the funding is likely to be available to undertake the investment, there are obstacles to success.

First, in planning for the huge changes which current demographic pressures entail, we may not show sufficient vision or imagination. The very large number of teenagers and young adults today means that over the next decade we will see the number of households in Ireland rise by 30 per cent. After 2010 the rate of growth in household formation will fall off very rapidly.

This is both a huge challenge and also a major opportunity. Whereas urban areas elsewhere in Europe are already literally cast in concrete, we will have an opportunity to plan comprehensively for the development of our urban areas.

For example, putting in place new urban public transport infrastructure in an existing city is expensive and not terribly efficient. By contrast, if we move rapidly to implement good public transport systems in our major cities we can actually influence the pattern of development to enhance the return from the investment. This opportunity will be over after 2010.

A second danger is that even if the plan is suitably ambitious and the funding is available to implement it, sclerosis of the planning process, a painful condition, will result in failure. Unless we prove more efficient in the future at implementing plans for major infrastructural investment than in the past, economic and social life in Ireland could suffer severely from increasing congestion.

Finally, the need for a huge expansion in the number of households will put serious pressure on our environment, especially in the vicinity of urban areas. Ensuring that the essential massive physical development is undertaken in a sustainable way will prove difficult.

John FitzGerald is a research professor at the Economic and Social Research Institute

Tomorrow: Tim O'Brien, Regional Development Correspondent, looks at what is involved in implementing the plan and how it must be managed