How to get best bang for our buck from the national development plan

An infrastructure commission could identify projects, set priorities and look at funding options

 Taoiseach Leo Varadkar launching Project Ireland 2040 at Sligo Institute of Technology. Committing €116bn   over a 10-year period, the  plan has the potential to address many infrastructural  issues. Photograph:  Alan Betson

Taoiseach Leo Varadkar launching Project Ireland 2040 at Sligo Institute of Technology. Committing €116bn over a 10-year period, the plan has the potential to address many infrastructural issues. Photograph: Alan Betson

 

The new national development plan, Project Ireland 2040, could very well be a game-changer in terms of Ireland’s economic prospects. Historically the stock and quality of our infrastructure has lagged behind international peers. Poor roads, water and telecommunications infrastructure has diminished people’s lives and limited the economy’s capacity to grow.

Committing €116 billion over a 10-year period, the new plan has the potential to address these issues. However, the outcomes will be heavily dependent on how infrastructure policy is implemented and managed. Transparency will be vital in this regard.

The announcement of the plan and identification of new projects has naturally grabbed the headlines. But the detail in relation to the management of public investment will be critical in determining if the new plan is successful.

Shortcomings in public infrastructure management have undermined the performance of the Irish economy for years. This has been illuminated in a recent IMF report on public investment management. Although the IMF finds that the standard of management of public infrastructure in Ireland is stronger than the global average, it falls short of the average for the advanced G20 countries.

The IMF makes a raft of sensible recommendations for addressing weaknesses in the management of Ireland’s infrastructure that must be implemented if Project Ireland 2040 is to achieve its goals.

This lack of transparency raises suspicions about how decisions are made about investments costing billions of euro

Overall, the IMF makes 27 recommendations aimed at improving how sustainable investments are planned, appraised, selected and implemented. A persistent theme across many of these recommendations is the need to improve the collection and use of information about public investment. Critically, there is a strong emphasis on transparency and making this information publicly available.

Capital tracker

The information and transparency-related improvements recommended by the IMF include the establishment of a “capital tracker” database as a tool for informing many aspects of infrastructure management.

Such a database should provide comprehensive information on the annual cost profile of projects, and data on adjustments to project design and costs, implementation and delays.

It is striking that this type of database has never been established, especially when one considers that Project Ireland 2040 is the sixth national development plan published since the late 1980s.

The IMF also recommends improvements to how projects are appraised. The standard of appraisal methodologies like cost benefit analysis (CBAs) is considered good, but the IMF recommends improvements including the publication of project assessments with key performance indicators and underlying assumptions.

This might seem like a no-brainer, but the fact is that appraisals such as CBAs are rarely, if ever, made public.

It was interesting to hear Prof Edgar Morgenroth recently tell the Marian Finucane Show that the original plan for Metro North was subject to three different CBAs, yet none of these were made publicly available.

This lack of transparency raises suspicions about how decisions are made about investments costing billions of euro. It protects the politicians and civil servants who make the key decisions from scrutiny, and makes them less accountable.

Performance audits

Other recommendations include the strengthening of the post-assessment of major projects and the publication of such reports. In addition, the Comptroller and Auditor General should carry out more performance audits of major investments. These reforms will require a commitment by government to invest resources in ensuring public money is well spent.

But will politicians and civil servants be sufficiently incentivised to make such investments? Past experience suggests the answer is no, and this explains why these institutions and structures have never been established or properly resourced to date.

In the context of a €116 billion expenditure plan, the implementation of these recommended measures will involve relatively small changes that can yield considerable benefits.

The task of ensuring the implementation of these measures could be allocated to a newly established infrastructure commission. The establishment of such a body has been suggested by a number of commentators, including the National Economic and Social Council.

The idea is that a commission should be responsible for developing long-term infrastructure needs, identification of priority projects, and options for funding and financing investments. An infrastructure commission would constitute an important institutional development.

External board

If it is to succeed, however, it is important that it is not subject to capture by vested interests, and has a degree of independence such as oversight by an external board.

Calls for an infrastructure commission highlight wider recognition that the successful implementation of Project Ireland 2040 and the National Planning Framework will require accompanying institutional change. A good starting point would be the adoption of recommendations in the IMF’s Public Investment Management Assessment.

Professor Eoin Reeves is head of the department of economics, University of Limerick

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