State spent €30m on goodwill payments for roads

 

THE STATE spent €30 million on goodwill payments to landowners for not obstructing agricultural land sales for road projects between 2007 and 2011.


A so-called goodwill payment of €5,000 for every acre of agricultural land sold for road projects was made as part of a deal to ensure farmers co-operated with compulsory land purchases under the second National Development Plan (NDP).

An estimated €30 million was added to the €1.4 billion cost to the State for land purchase under the second NDP because of the goodwill payment. The fee applied to the purchase of approximately 6,000 acres of land.

The fee was a key part of the National Roads Agreement (2001), which was devised in response to farmers refusing access to their lands in a bid to secure higher compensation.

The agreement was signed by then minister for the environment Noel Dempsey, and then Irish Farmers Association (IFA) president Tom Parlon and the National Roads Authority (NRA) in December 2001. During the first NDP, goodwill payments added €27 million to the €1.32 billion cost of land for road building.

The IFA, NRA and department extended the deal in 2007 to cover the second NDP, with the €5,000 per acre payment unchanged.

However, with investment in new roads coming to a virtual halt due to lack of exchequer funds, Minister for Transport Leo Varadkar has decided to terminate the scheme one year early.

A department spokeswoman said the “Minister concluded that the continuation of this payment could not be justified. The budget for road maintenance and development will be very constrained in the short-to-medium term and it is essential to ensure that the best return is obtained for the limited funding available”.

The payment will still be paid in respect of land sales that have commenced and which are completed by the end of the year.

The IFA has described the removal of the scheme as a “short-sighted and costly mistake”. IFA roads project team chairman Jer Bergin said the deal had provided a balance between the State and individual landowners.

“The removal of the goodwill payment will force landowners to reconsider how they deal with local authorities and the NRA, and this may lead to a delay in the pre-construction phase of road realignments and new road projects.”

NRA spokesman Seán O’Neill said the agreement was introduced in 2001 to allow the authority “buy the peace” at a time when up to 30 NRA road projects were delayed by up to a year because the IFA was refusing access to land for surveys and archaeological work.

Eliminating these delays had saved the taxpayer money, he said. The NRA said a goodwill payment was made in most, but not all, land purchases.

The scheme was not without its critics. In 2004, the Comptroller and Auditor General identified the deal as being “instrumental” to land price inflation when he examined cost inflation associated with the projects to build the motorways linking Dublin to the other main cities.

According to property consultants Frank Knight, the cost of an acre of land has fallen from €20,782 in 2006 to €10,064 in 2011. Last year saw a rebound in land prices from the low of 2010 when the average price was €8,776 per acre.

A goodwill payment received by a landowner is considered part of the purchase price, and is therefore subject to capital gains tax.