Public Capital Programme

Here is a link to the new infrastructure and capital investment programme. There is a lot in there so it will take a little time to digest it.

Some quick points:

– There is a commitment to the National Children’s Hospital;

– There is funding for new schools;

– Luas BXD to go ahead (Metro North and DART Interconnector shelved, Metro West was shelved some time ago);

– the A5 project in Northern Ireland (80 km from the border to Derry) has now also been shelved (in addition to the shelving of 45 other national roads projects announced some time ago);

Author: Edgar Morgenroth

Professor of Economics at Dublin City University Business School

78 thoughts on “Public Capital Programme”

  1. Agri, Food and the Marine capital vote is 168m pa. What might this be?

    Direct infrastructure? Can anybody give examples?

    Or grants to farmers and fishermen to buy capital equipment?

  2. @Stephen McNena – there is a diverse range of expenditure on marketing, subsidies to the food sector, on farm facilities and afforestation. The NDP envisaged capital expenditure of 320 million in this area for 2012.

  3. Kenny has completely broken his promise to go ahead with the A5.

    This is what he said in May:

    Kenny said his Government is committed to co-funding the A5 project with the Northen Assembly because it would “significantly improve” access from the north-west to Dublin. “I’ve travelled that on many occasions and it does need to be developed. The previous government had committed to put money in there and WE WILL HONOUR THAT COMMITMENT,” he said at the annual conference of the Institute for British-Irish studies in UCD.

    http://www.independent.ie/national-news/kenny-commits-to-motorway-in-north-2659629.html

    I really don’t see why any of Kenny’s other ‘commitments’ should carry any more weight. Therefore, I would ignore the words ‘commitment’, ‘funding’, ‘go ahead’ in Edgar Morgenroth’s opening post. They are meaningless in relation to any of Kenny’s pronouncements.

    Donegal, Derry, Tyrone, Monaghan, Cavan have no rail link south, the only part of the island of which this is true. Now they are going to be the only part of the island with no motorway link south either. This puts them at a severe disadvantage in attracting new investment.

    The decision is entirely ideological, and springs directly from their Fine Gael and Labour’s partitionist mentality. Fine Gael and Labour have always neglected the border region. They regard it as ‘abroad’. That is why, until the last election, Fianna Fail always polled so well in those counties. To add to it, we now have a particularily ‘partitionist-minded’ and generally useless transport minister. I doubt if Varadakar has ever been north of Navan in his life. I said yesterday in another thread that, offhand, I couldn’t think of a single piece of infrastructure in Donegal, Monaghan or Cavan that has been built by Fine Gael/Labour. If you painted all the roads in Donegal, Monaghan and Cavan green if built by Fianna Fail and red/white/blue if built by Fine Gael/Labour, they would all be green. In addition to their long-term ideological hatred for people in the border region (both sides), the people in Donegal, Monaghan and Cavan are obviously being punished for the fact that both the Fine Gael and Labour Presidential candidates polled very badly there. I expect people in these counties, and the neighbouring ones across the border, will have to wait for a Fianna Fail government led by Sean Gallagher before they see any more new roads. The only good thing about the decision to stop the A5 is that Fine Gael and Labour will be slaughtered in Donegal, Monaghan and Cavan in the next election.

    More generally, the Fine Gael’s and Labour’s decision to slash road-building to nothing is symptomatic of their traditional contempt for road safety. These are the figures for road deaths in Ireland between 1994 and 2010:

    1994 404
    1995 437
    1996 453
    1997 472
    1998 458
    1999 413
    2000 415
    2001 411
    2002 376
    2003 335
    2004 374
    2005 397
    2006 365
    2007 338
    2008 279
    2009 238
    2010 211

    road deaths UP by 16.8% during the last FG/Lab government (from 404 in 1994 to 472 in 1997)

    road deaths DOWN by 55.3% during the last FF government (from 472 in 1997 to 211 in 2010)

    That’s because FF build roads,while FG/Lab don’t.

    Give the current Fine Gael/Labour government enough time, and I am sure they can get road deaths back up to close to the 500 they were at when they exited office in 1997. That should at least win them the undertakers’ vote.

  4. @JTO – “Fine Gael and Labour have always neglected the border region.” – that is not borne out by the data. For the period 1995-97 when FG and Labour were in power per capita public investment in the border region was second highest. Since then it was only 4th highest.

    It is hard to justify a project North of the border if you are slashing everything in the south, even if we assume that it is a good project. A true all-island (non-partitionist) approach would recognise that the link from Donegal to Belfast is more important to Donegal than a link to Dublin e.g. because the nearest international airport is in Belfast not Dublin.

  5. BX-D good call, but D should be the first part to get the additional depot and kick start the much needed gentrification of Broombridge. Irish Rail’s repair budget for that station will be a beneficiary, not to mention increased business for security companies to guard the trams. Disappointed about Interconnector but not surprised.

    As for the A5, now it is being long-fingered maybe Translink can get a dribble of cash to move up previously deferred work on the Belfast-Dundalk railway line.

  6. @JtO
    I agree Fine Gael and Labour are partitionist. It’s because there is a partition (grown ups call it a border). You might as well call the French government partitionist because they refuse to build roads in Germany.
    Any increase in road deaths between 1994 and 1997 has nothing to do with transport spending in that period as there is a considerable lag between capital investment and outcomes.

  7. Mark Dowling – “maybe Translink can get a dribble of cash to move up previously deferred work on the Belfast-Dundalk railway line.” At peak times the train is packed all the time but reliability is a real problem. Putting the A5 on ice frees up a significant portion of the Northern Ireland capital budget – this should be put to good use!

  8. Sad , very sad – typical Irish entropy economics.

    The report displays a similar attitude to the NAMA meme a few years ago – we spent billions & billions on concrete so we must make it work no matter what.

    The high continual input costs into the road network that is not all expressed on the fiscal books is not talked about amongest polite dollar centric economists i.e. the much higher depreciation & fuel input costs of road vehicles over Tram & light rail.
    (Trams typically operate for 2 to 3 decades – buses & taxis less then a decade before they display obvious reliability problems due to the shocks & bumps of continuous everyday road use.)
    This effects our trade balance in a very real way which up until the euro crisis was not considered of utmost importance, now its everything so why do we continue with this disastrous road policey ?

    The probable generational lack of bank credit for the purchase of consumer durables (cars) is not expressed – this will dramatically effect the size & reliability of the national car fleet going forward as they say.

    Therefore there is no recognition that money must replace credit or else we enter into a depreciation vortex where the stock of our capital goods declines back into Victorian squalor.

    They must now accept the national motorway project was a misallocation of resourses when all input costs are factored into the equation and not just fiscal as the costs were hidden by cheap private credit and oil.

    If we tie our success to a flawed transport / housing policey just because it is built we will die a slow death I am afraid – these are 20th century consumption sinks , but Ireland was always last to the trough of transport policey with investment not returned as the world moved on and we did not – with canals , rail and now road – history is repeating itself.

    A radical anti – private car tax policey is the only mechanism to save us from this transport dead end if we cannot create our own money.
    We won’t even be able to run to standstill as the static driveway / carpark depreciation costs become apparent.

    PS any transport economists out there who can give half decent car depreciation costs would be much appreciated.

  9. @JtO

    I place responsibility for the demise of the A5 on all those latently strategic establishmentarian partitionists in Fianna Fail ….

    This one will need re-visiting.

  10. @The Dork of Cork – for all intents and purposes (national) roads building has stopped. The programme now envisages more spending on public transport than roads – through differential cuts. There is a tendency to look for flashy projects (either on roads or public transport), yet the impact and return on incremental cost effective improvements is much bigger.

    The question about depreciation is not that easy to work out – you need to know what milage a car has done when it is scrapped along with its initial cost. I had worked out a rate (cost per mile) for my car once, but as it has lasted much longer the depreciation per mile has been decreasing.

  11. @Stephen McNeena

    My understanding is that if a farmer gets a 60% grant to build a slatted house with slurry tank, the grant is ‘capital expenditure’.
    So in a way you could say that a lot of State capital expenditure is in the sh*t.

  12. Very interesting French tram project in the town of Valencienne(pop just 40,000+) – this is not a typical compact French town / city.
    http://www.trams-in-france.net/valenciennes.htm

    Situated near the Belgium border it was near totally destroyed during the Great war and during the second round – subsequent urban development was industrial / car based during the remaining part of the 20th century.
    fr.wikipedia.org/wiki/Arrondissement_de_Valenciennes

    Looking at Google Earth the development is very Irish like infact with little rationality to the urban / rural divide.
    Much of the phase II(8.8km) line uses a ancient train line(6.5Km) to terminate in the satellite town of Denain (pop 20,000), with the town of Anzin in between (pop 14,000)
    Phase I moves through a more conventional suburban mess to terminate at the university.
    http://www.youtube.com/watch?v=HKywpU4ANVo

    This is also not the richest part of France – it is certainly not Bordeaux or anything like that.
    And yet we have a 120,000ish Cork city with 15,000 class satellite towns in Ballincollig ,Rochestown , Carrigaline & 5,000 class Passage west and Monkstown , – a major port in Ringaskiddy , a University , a tech collage all along the south river which has no rail or heavy tram access !! – eventhough some of the old blackrock / passagewest railway route is still intact!!!!!

    As I said we are a classic example of entropy economics operating in open view here – “just depreciate everything both human & physical to get a short term return”
    Rationality be damned – its a foregin word in this bog.

  13. Jto

    Your lack of vitriol on the decision to shutter 45 other projects in the 26 displays two traits i) you are an inverted partionist biased agains everybody south of Cavan ii) you are cut from the gombeen FF class who puts local before national.

    Maybe the A5 can go ahead if SG can raise the funds from people he has never met.

  14. 1. BXD (Luas link-up) is scheduled to commence construction in 2015. This is an effective deferral of a relatively modest project with a very high BCR. There will be 4 hairshirt budgets from now to 2015 – this government may not last that long.

    2. Linking the Luas lines will require building over areas to be excavated for Metro North. If would seem sensible to at least construct the empty station boxes at Stephen’s Green and O’Connell Bridge so that the Luas does not have to be taken up shortly after it is finished. (Same goes for the station box under the new Children’s hospital)

    2. The programme for govt included a commitment to “rebalance transport policy to favour public transport”. This plan reduces capital spend on public transport by 70% between now and 2015, while cutting road spend by 14% (compared to last year’s capital plans)

    3. Insulation retrofitting programmes have been cancelled from end 2013. In the words of Brendan Howlin, people will have to look to “non-exchequer based solutions”.

    4. Last week’s medium term fiscal statement announced that voted current expenditure for 2012-2014 would rise by €2bn compared to the IMF stability plan update from April this year. So the capital budget is not being slashed in the name of fiscal tightening but to facilitate higher current spend.

    5. Varadkar announced in the Dáil yesterday that “Capital investment is a very expensive way to create jobs. The probable best way in which the Government can sustain employment is to try to keep wages up and taxes down and that is its priority.” In other words: let’s cancel capital projects that may make a return in the medium to long term and frontload current expenditure because ‘high wages sustain employment’.

  15. @Edgar
    I can’t see how such limited spending on public transport can even partially replace our car dependency.
    If the 1.9 million private cars depreciate at 1000 euros a year thats 1.9 billion alone although as the car fleet gets older the depreciation would reduce as they slowly become worthless. – add in tyre replacement , maintenance , fuel costs etc and I am sure they would dwarf the input costs of public transport by a few factors – especially if public transport is more utilised using enlightened tax policey.
    As I said I would like to see a in depth economic study of the holistic costs of a car based transport policey in this country.
    Maybe the authorties just do not want to know – see no evil /hear no evil and all that.

  16. @Edgar Morgenroth

    For the period 1995-97 when FG and Labour were in power per capita public investment in the border region was second highest.

    JTO again:

    This is ridiculous.

    The previous FG/Lab/Stickie government was only in power for 2.5 years, a brief interlude in the 24-year period of FF government. All the spending priorites for that period were set by FF. FG/Lab/Stickies weren’t in power long enough to change them. Look at FG/Lab’s record over the long-term, then you might understand why nobody in Donegal votes for them. If you are so confident that FG/Stickies invest in infrastructure in Donegal, Monaghan and Cavan, let’s have an inventory of all the infrastructure in those counties and see under which governments it was built.

    tull mcadoo:

    Your lack of vitriol on the decision to shutter 45 other projects in the 26

    JTO again:

    Au contraire. If you read my post, you’ll see that I condemned the FG/Stickies government for winding down the road-building program generally because of its effect on road safety.

    According to Edgar Morgenroth: “for all intents and purposes (national) roads building has stopped.”

    This is disgraceful, but all too typical of FG/Lab governments, and not in the least unexpected from them. They will deserve all the flak they get when road deaths start soaring again and Monday morning news bulletins are dominated by reports of road deaths of 10, 15, 20 young people over the weekend, which was the norm in this country before FF made their massive investment in new roads.

    However, there are good reasons for particularily condemning the A5 decision:

    (a) The North-West corner of the island is the only one without a motorway link. Not only that, but it doesn’t have a rail link either. So, it is doubly deprived and at a huge disadvantage when it comes to FDIs deciding where to locate in Ireland. Not that Kenny and co will lose any sleep over that.

    (b) The road deaths rate in the border counties is far higher than elsewhere. I have calculated them as follows:

    road deaths rate by region in Ireland from 1997 to 2010

    defined as: number of road deaths per 100,000 population

    [1] Dublin and Mid-East region
    [2] Border region
    [3] Midlands region
    [4] South-East region
    [5] West region
    [6] Mid-West region
    [7] South-West region

    ———–[1]——-[2]——-[3]——-[4]——[5]——-[6]——-[7]

    1997 9.976 20.088 19.664 14.238 11.299 14.789 11.473
    1998 9.097 14.856 18.009 17.306 14.615 12.733 11.737
    1999 7.779 19.045 12.629 12.361 12.332 11.346 11.065
    2000 8.142 19.025 20.333 11.013 12.135 7.573 8.140
    2001 8.149 13.882 14.512 13.685 9.767 11.333 11.534
    2002 6.317 16.416 12.868 11.567 11.833 12.368 7.409
    2003 4.937 14.786 16.927 9.758 8.224 10.222 7.648
    2004 6.310 16.674 12.690 10.274 11.672 10.127 7.210
    2005 5.750 17.705 17.776 11.136 10.848 11.045 8.207
    2006 5.413 11.743 16.292 10.850 8.448 11.079 8.694
    2007 4.160 14.128 11.530 10.542 9.537 9.320 7.117
    2008 2.777 10.152 9.745 9.430 8.683 9.949 6.671
    2009 3.282 7.968 5.543 4.431 8.577 9.091 5.093
    2010 2.412 9.387 8.050 5.177 5.113 6.407 2.932

    The number killed on the roads is far higher in the border region because the roads are much worse. But, I’m sure Kenny will find that every cloud has a silver lining – they are mostly FF voters.

  17. The Press Release saya:

    “I am pleased that the Strategic Investment Fund will today be announcing a new fund of up to €1billion for investment in new and existing infrastructure assets.”

    Are they just taking this 1bn from the NPRF or are they saying they will raise 1bn from private sources over the course of the plan?

  18. @JTO – “this is rediculous” – I assume you are referring to your own argument – you might thing that through for a change!! But then you never let the real facts get in the way of you bias.

  19. @Eggar Morgenroth

    I assume you are referring to your own argument .

    JTO again:

    No, I was referring to your’s. Another incorrect assupmption by ESRI.

    If you actually read the posts, I am the one who presented real facts in considerable statistical detail. You are free to challenge them in comparable statistical detail if you wish.

  20. @ Ossian
    1. If you believe the BCR;
    2. BXD will reduce the BCR of Metro North through duplication;
    3. They did rebalance it, or be it by cuts – remember there is a very binding budget constraint. Of course it would be nice if we could spend more on public transport, provided the right projects are chosen;
    5. Not all capital projects yield a return – some are just a cost. The cost of an IDA created job is a lot lower that a publicly funded construction job.

  21. @JTO – you are accusing FG/Labour of neglecting the Border and at the same time you are arguing that they were not in power long enough to change plans i.e. they could not have neglected the Border.
    Regarding the data you might trouble youself and look at my 2010 paper in a peer reviewed journal (Regional Studies). All you have done is given us some data on road deaths without any analysis whatsoever about the causes.

  22. The stickies as in the official IRA/ Worker’s Party ? What on earth are you blathering about.

    Fine Gael are to blame for road deaths in Donegal ???

    Someone call the men in white coats.

    Does anyone have any thoughts on the shelving of Grangegorman. It was part of a wider Urban regeneration Plan which included HSE facilities, schools and so on moving to the site, not just DIT. Wondering if the entire re-gen project has also been cancelled.

  23. @jto – I consider the first bit of your last comment liabolous and will remove it as soon as I get back to a proper computer. It is very easy to make remarks like that while hiding behind a pseudonym.

  24. The dollar became the worlds first and only petro currency after the Great war – slowly losing its link with Gold until formally breaking the bond in 1971.
    Here in Ireland after the war of independence / civil war destruction the decision was made to strip and run down rail to cater for the Ford factory and the general economic realities of living in a dollar centric car /oil dominated world.
    Now there is no realisation that this monetory / physical reality is coming to a end.
    Instead of slowly stripping and running down the road network and releasing the surplus energy to create a new transport network much like how the rail network was run down we will continue to put scarce resourses into maintaining a dying transport philosophy.

    No strategic vision me thinks.

  25. 1. If you believe the BCR;

    Do you mean that you disagree with the BCR model used or the assumptions or something else? The assumptions are in appendix 2 of this document.

    2. BXD will reduce the BCR of Metro North through duplication;

    Surely there would be +ve and -ve effects. BXD will feed passengers to the catchment areas of Metro North from North West Dublin city. There is also the network effect to consider. RER and Metro in Paris complement each other.

    3. They did rebalance it, or be it by cuts – remember there is a very binding budget constraint.

    If budgets are so constrained then why is the current budget increasing by 2bn? And why is public transport being cut so much more severely than roads?

    5. Not all capital projects yield a return – some are just a cost. The cost of an IDA created job is a lot lower that a publicly funded construction job.

    Being an expert on transport economics, you will know that the returns from transport project are difficult to predict and wholly dependent on myriad assumptions such as the long term future price of fuel, how to price human life and health and time and many other philosophical questions. BCR’s are at least useful for comparing projects of the same type.

    I think your own analysis of MN using two methodologies came to two contradictory conclusions. The essential benefits from public transport projects are surely long term and centre around making a city a better place to live and do business. The construction jobs are surely a fraction of the long term benefits just as the disruption during build is a fraction of the costs.

  26. Now that FF are wiped out in Dublin the government won’t be allowed to spend a penny there without JtO throwing accusations of bias agin’ the playn peeple of Oireland.

    As for the infrastructure programme, it makes one weep to see Crusheen (population: tumbleweed) will get a new station on the heavy rail network while places like Blarney still lack one (though long promised) and places like Clonmel have a wholly inadequate quality of service. Perhaps Ennis-Athenry 110 seater trains might gain an extra passenger to keep the other ten company.

    Meanwhile botch jobs like Hansfield (fully constructed if you forget the developer got away without building the promised road) will also count as “new stations” due to the addition of a road and a car park which it was not supposed to need previously.

  27. The NPRF investment is interesting. It is commiting €250m with another €50 already committed from other sources.

    To get to €1bn, they can lever the fund 2x-2.5x pretty handily I’d have thought. So they really only need to raise a further €100m-€200m in equity.

    They haven’t said what kind of returns they are expecting from the fund other than that they will be ‘on commercial terms’. I think we can expect some of the Irish banks, insurance companies and pension funds to be asked to ‘wear the green jersey’ and invest.

    Irish Life appear to be marketing the fund but not necessarily committing capital. AMP are to manage it.

    If this fund is successful, they could try another one again in a couple of years. That is if the NPRF’s discretionary portfolio has not been totally liquidated by then.

  28. @Eoin

    The basis of funding for much of the DIT centralisation would have been a) obtained from the phased disposal of the city centre sites that the DIT occupies and through b) bundling of a number of PPP projects together and attracting investor interest. If i recall the project was initiated around the time the OPW had got super prices from disposal of a number of sites at the top of the market (e.g. former Vet College to Glenkerrin).

    The sites are now worth alot less than they used to be and the PPP market in Ireland is pretty well closed for business given the debt to equity requirements to get funding and the way this does not stack up. The appetite to bid i suspect is diminished given the amount that has been poured in recent years into PPP bids that have had the competition subsequently cancelled.

    On the other hand what is now being proposed for the childrens hospital is interesting – a kind of securitisation of the future income from the lottery.

  29. @ossian – regarding BCR you might have a look at a paper I published yesterday. The fact that a project has a good BCR does not mean it is the best project. I take your point about positive and negative impacts of doubling, but serving roughly the same area with two routes reduces benefits.
    I would also prefer there to be more money for public transport and all sorts of other projects, but we don’t have it. I have not looked at the current expenditure aspects of the medium term plan but I suspect we are spending more on social welfare etc.
    The cost of a job difference refers to the average (see my 2009 working paper) and is quite large.

  30. Edgar,

    Leave JTO alone. He stands as reminder why we got rid of FF and off why they must stay buried. I find his narrow anti 26 county partionist mentality quaint.

  31. @all

    I just crunched the numbers on this and coupled it with the fact that the coalition has included 25BN Euro (wlking around money) in the total debt of 170BN.

    The five year capital expenditure plan of 17BN is very interesting when we compare it to modest projected growth of the NRPF(exclusive of the 12.5%shares it owns in the banks)

    We know that a 3.6BN “adjustment” has been pencilled in for 2012 and is broadly accepted by the majority of the population. We also now know that capital expenditure for 2012 will be 4Bn and will come out of current expenditure during which time the NRPF will rise to 9BN (with at least 1.6Bn being poured into each year between 2013 and 2017) and that the fund performs comparitively well.

    We also know that opposition to further austerity will be very strong in 2013 among at least one of the caolition partners. who also have historically never really been in favour of the the NRPF and have reservations about privatising state assets beyond the 2BN which has been tentatively agreed.

    Both parties accept that taxation has to exceed growth in 2014 but neither party is particularly interested in allowing taxation to increase by much more tha 2% in subsequent years.

    Both parties are also keenly aware of the madness that is currently going on in Europe and are not overly enamoured with the presence of the Troika.

    Consequently it does not stretch the imagination that “adjustments” in 2013 will include 4BN capital expenditure (replaced by NRPF “purchasing” of state assets) 1BN tax increases, 1BN legacy savings from the Public service “Golden Parachutes” together with various public expenditure savings, and 1BN as part of the pre agreed privatisation.

    Add the above 7Bn to 3.6 Bn “adjustments” in 2012 budget and we get 10.6BN “adjustment” with at least 10BN (down from 25BN) reamining out of existing borrowings to date .

    This would allow Ireland to bid farewell to the Troika with a 3% deficit, be prepared for a Euro implosion (or depature) and counteract “sustainability/austerity” arguments by pointing to the NRPF and money in the current account as well as the eagerness of private Irish pension funds to buy into Irish bonds.

    If the Euro survives than2 arecovery success story” would have to carry a 75BN premium for Irish membership. If the Euro does not survive than Ireland concentrates on strengthening the European Union (when we take over the presidency in 2013)

    If the Euro survives we may see a “3 tier Europe” a small number of rich countries which are not in the Euro, a decreased number of countries who use the Euro and a third “tier” of countries who may use national currencies or something pleasantly described as a “Euro plus”.

    IMHO Irelands choice in 2013 may well be to decide between a non Euro “Tier 1” or continue with the actual Euro itself (if it survives).

    I hope this provides food for thought:)

    There is an Economic and political “war” going on in Europe and it looks to me like the Irish have resorted to diplomacy, limited rationing and stockpiling.

  32. @JTO – comment deleted.

    @All- The lack of a response shows the true character of this guy. This sort of thing shows why posters are not engaging as much as was the case when the blog was started (and why I do not post that often anymore). There is some good discussion on this site but there are a few people who abuse this site.

  33. @Edgar and all

    re: funding for new schools.

    Hopefully somebody will come up with the “bright idea” of converting some of the office buildings/hotels currently in the hands of NAMA . There might be some good “deals” available there for the taxpayer which would allow more of the “schools” money to be targeted at the “labour intensive” element of the earmarked expenditure. which can then be redirected at the end of the plan towards new housing construnction when we fnally “run out” of houses at the middle of the decade.

    We have very little shortage of “concrete” constructions around the country at the moment which could provide a variety of public uses. IMHO it is time we became more “creative” with what we have (and using them to create jobs and improve our society) rather than focusing on what we dont have.

    @Dork

    I understand your concerns about too many cars in Ireland and the need for more public transport. One positive side effect of this recession is that a “3 car family” is finally no longer deemed a be a necessity.

    However we need to remember that there ar a lot of people living in “Bally-back-of-whatever” (and even more central locations than that) who cannot hop on and off a Luas, Dart, bus or train. Cars are often more of a hassle than a luxury but many people simply cannot do without them.

  34. @Edgar Morgenroth

    Browsing through the capital programme, I did not come across any table of ‘jobs attached’ to the capital spend.

    This surprises me. It should not be too difficult to estimated the amout of ‘direct’ jobs involved in next years cpital spend of almost 4 billion.

    Did I miss something or is such a detailed estimate available?

  35. @Joseph Ryan – I was thinking of that. If I find a bit of time I might have a go.

    It is worth noting that the public capital programme has been slashed successively by the last administration and now by the new one. I am on record for stating that I thought a further cut was likely and would not be the worst thing to do given where we are. I would think twice (at least) about further cuts and it will be important to ramp up capital expenditure as soon as it becomes possible. In the 90’s we ramped up capital expenditure to late and we never cought up with the infrastructure deficit until the economy crashed. We now have time to plan and evaluate our projects properly.

  36. @Livonian – good point. I know of a local authority building project started less than 2 years ago, that is right beside a NAMAd mixed development that. The NAMAd development will be an eyesore for years to come and it is already falling into disrepair.

  37. with bad roads to the north it be harder for shoppers to escape the rip off republic and any vat rises, yes yes i see it now 🙂

  38. @JTO

    the Cork to Limerick motorway has been axed as well, that between the 2nd and 3rd largest cities in the Republic…..I blame the Dubs what do you think JTO??? 🙂

  39. JTO
    I gather that the DUP are happy with the decision to stop the “road to nowhere”. It will mean the NI resources can be diverted to more productive investments such as schools and hospitals in the Wee 6.

  40. I have removed the two most recent comments by JTO – this is an economics blog not politics and this thread is on the revised infrastructure and capital investment programme (ICI).

  41. Remind us again why was this country spending money to build a road in another country? Was another one of Berties socialist/populist brainfarts??

  42. We should not be giving grants to farmers to build capital – surely they can borrow from banks to fund investment.

    If not, then maybe give them soft loans – but not grants.

  43. @JtO
    Earth to JtO. Countries do not normally build infrastructure in other countries. Northern Ireland is part of a different juridstiction to the Republic of Ireland. It’s part of a state called the United Kingdom of Great Britain and Northern Ireland. There was a referendum to change articles 2 and 3 of the Irish constitution to recognise this fact. Seeing as you slept through all this I have to break some bad news to you… Princess Diana is dead.

    As for Tyrone… puke football.

  44. Public Capital spending should be focussed on goods not provided by the market, like public infrastructure. It should not be spent on private capital.

  45. @Johnny Foreigner Says:

    Countries do not normally build infrastructure in other countries. Northern Ireland is part of a different juridstiction to the Republic of Ireland. It’s part of a state called the United Kingdom of Great Britain and Northern Ireland. There was a referendum to change articles 2 and 3 of the Irish constitution to recognise this fact. Seeing as you slept through all this I have to break some bad news to you… Princess Diana is dead.

    JTO again:

    If you knew anything about the geography of the island, you’d know that it is the road to Donegal. I have to break some bad news to you… Donegal is part of a state called the Republic of Ireland

    Donegal is in uproar over the decision. See below. If its money being spent in a ‘foreign country’, why are people in Donegal up in arms about the decision?

    http://www.donegaldaily.com/2011/11/10/letterkenny-chamber-wades-into-row-over-axing-of-a5-motorway/

  46. JTO,

    If the absence of the “road to nowhere” helps to prevent the Doengal football team from playing in Croker it will be a good day for Ireland.
    Donegal may be in uproar but the rest of the country will survive.

  47. Worth noting that tender prices are now a third lower than peak values and have returned to 1998 levels:
    http://www.scsi.ie/publications/press_releases/scs_press_releases_2011/tender2

    Is it really a great idea to wait 10 years until prices have re-inflated and the city is choked with congestion again to start building public transport infrastructure?

    Also worth considering that various EU grants and loans will be forsaken if these projects are abandoned so that current spending is increased. The European Investment Bank had approved Metro North for a €500m loan. Cork-Dublin and Dublin-Belfast would both have qualified for funding under the trans-European transport network (TEN-T) programme.

  48. Is it really a great idea to wait 10 years until prices have re-inflated and the city is choked with congestion again to start building public transport infrastructure?

    If you have the money, then no. Its a bad idea.

    However, if you don’t have the money it is a bit of an irrelevance.

    Where would the money come from to build Metro North ( circa €4bn) Dart U ( circa €3bn), A5, M20 and other roads (another billion plus) over the next 5 years?

    Its a great time to buy a house. They have been cheaper in the guts of a decade and a bit. So why aren’t people buying them Ossian?? Think about it. Its the same reason that the housing market isn’t booming.

    And for those giving out about a partitionist mindset on the A5, that’s rubbish. The A5 is a partitionist project – it involves linking up Donegal to Dublin. A non-partionist project would be to link Donegal, Derry and Belfast up. Linking Donegal to Dublin up before that is inherently partitionist.

  49. @Livonian
    They cannot hop on these public transports because they simply do not exist as most transport resourses went into private car expenditure that created this low density suburban / subrural mess.
    We simply do not have the resourses to sustain this Californication of Ireland – we must divert our now limited resourses towards the linking up of the remaining Edwardian nodal points that were themselves a product of late 19th early 20th century rail connections
    You see wasteful expenditure cannot be taxed – it just evaporates in the economic ether or more accuretly feeds the appetites of Gulf oil sheiks & there fellow Banker travelers.
    And yet absurdly fiscal policey is not directed with much vigour to counter this gross misallocation of resourses !!!
    According to the recent census Cork citys population has declined marginally with more and more people living in Corks satellite towns.
    And yet very little public transport resourses have been deployed to link this linear follow the river development that is very suitable for a heavy tram project because the nature of the topography made Cork the most compact of our larger cities – linking the commuter town of Ballincollig all the way to Crosshaven terminus which has experienced explosive growth during the boom.
    This is a triage operation – we must try to save the semi rational development and let the grossly misallocated habitations wither on the asphalt vine.
    The lack of imagination and elan of our “planners” is striking.

  50. @JTO

    You’ve only considered half the road death stats available: Irish road death stats are available from 1970.

    Here’s the link

    Looking at the 70s and 80s we see that road deaths fell marginally under FG/Lab from 1973 to 1977 and fell considerably from 1982 to 1987 under FG/Lab.

    On the other hand road deaths increased significantly under successive FF governments from 1987 to 1994.

    Whether we should allow a lag(say 3 years) for government policy to take effect is another question; your original post that I’m responding to allows for no such lag.

    Looking at these stats from the past 40 years I think it’s very difficult to argue that one political party or another can be associated with an increase or decrease in road deaths.

    I think its pretty clear that political partisanship does not play a part in Irish road deaths.

  51. On a completely different note, I see the budget includes replacing a big chunk of Dublin Bus and Bus Eireann’a buses. This effectively means that perfectly good buses will be gotten rid of (a well maintained public transport vehicle will last 20 years, though DB/BE get rid of theirs after 12 years. It will also mean that the Irish taxpayers and fare payers will be locked for a further decade into what is probably the most expensive bus service Kilometre for kilometre in the European Union. How the IMF could think that this is any sort of step towards opening up sheltered areas of the economy, I do not understand.

  52. Antoin o lachtnain: here in Toronto 12 years is the aspired to timeframe to replace buses. You can get 18-25 if you rebuild but *only* if the frame construction is sufficiently good that it has that much more life left, and in any case a rebuild isn’t free either and it means slippage behind current accessibility standards etc.

  53. @ JTO
    You have annoyed me a few times – sometimes you’re a little too much of a landed gentry type of guy making money of us the indebted peasantry south of the border. But only sometimes.
    On balance your view of the strengths of the Irish Economy is excellent and a real counterbalance to overwhelming negativity. We should be a united island. The traditions on the island would benefit each other economically. It’s a dream we should keep alive

  54. Mark: apparently not true. See page 20 onwards of this document. . Those buses are built for a 20 year lifespan. Rebuilding is not expensive.

    http://www.unhabitat.org/downloads/docs/7997_98920_Adam%20Giambrone%20Toronto.pdf

    The climate in Toronto is very different.

    Dublin Buses last far longer than 12 years. They sell them on at that point to other operators.

    Dublin Bus also has large scale maintenance operations. There is one mechanic for every three buses and so rebuilding should not be much of a difficulty resource-wise.

  55. Presumably the upgrade will provide more fuel efficent vehicles thus provding an annual reduction on fuel costs/green house emissions.

    In addition I would guess new buses would mean more accessible buses and so a massive benefit for those of our citizens that are unforunate enough to require a wheelchair.

    @ All
    re: JTO

    I too value JTO contribution to the site. I find his posts are phrased in a manner that straddles some great spot between hillarious/absurd/offensive/informative/rational/considered/factual. In fact I’d go further and say he helps in the good fight of ‘groupthink’ and hypocrisy. Something some/all of our media, academics, politicans, this country etc have a track record of being particularly vulnerable too.

  56. @Eureka

    100% thanks for that.

    @John Foody

    85% thanks for that

    JTO again:

    However, I have decided not to post any more on the site, although I will read it. But, as someone in Belfast once said, ‘I haven’t gone away, ye know’.

    I am setting up my own blog, called Ireland Calling (unless that name is taken, in which case I’ll call it something else). It will be hopefully quite professional.

    As I have a day job, it will be the Christmas holidays before I have time to do all the stats for the first couple of months entries. I’ll probably launch it in the first week of January, after the festivities are complete. It will be totally non-commercial and free, of course, like this one.

    It will be based on high-quality (hopefully) and sober (which probably means boring) statistical analysis covering lots of topics, not just economics (but also, demographics, health, road deaths, sport), with lots of nice histograms and charts, and will give equal weight to N. Ireland and R. Ireland statistics, with lots of comparisons between the two. It won’t be me ranting off with my own opinions about the topic of the day.

    The trouble with this one is that it gets too heated in the cut and thrust of the debate, myself included. So, I want to avoid that, and just do something that involves mater-of-fact (but hopefully quality) analysis of statistics. As I said, this site often gets out of hand, myself included.

  57. @all

    A5 plans on track – McGuinness

    The major cross-Border A5 road link thought to have been effectively shelved by the Government is back on track, Martin McGuinness has said.

    The Deputy First Minister made the comment after he and his government partner, First Minister Peter Robinson, held talks with Taoiseach Enda Kenny. The Stormont leaders were in Dublin attending the inauguration of President Michael D Higgins, but also held talks on the stalled road plan with Mr Kenny.

    “It is far from dead and I think as a result of our discussions today we are greatly heartened by what we have heard and we look forward to completing some work between ourselves and the Taoiseach over the course of the coming days.” The Sinn Féin representative added: “I think it is fair to say it’s back on track.”

    http://www.irishtimes.com/newspaper/breaking/2011/1112/breaking1.html

  58. @All – I would very much prefer if people contributing to this discussion (and other discussions) would refrain from insults and insinuations. It should be perfectly possible to have a civilised discussion about these issues.

    Back to the topic:
    Donegal undoubtedly suffers from relative remoteness that is exacerbated by the border (as does Fermanagh). In that context it is justified to consider solutions. However, in my view the current plans for the A5 are not an optimal solution (apart from the fact that we can’t afford them right now):
    1. This plan is overspecified (dual carriageway all the way) because other projects in the Republic have also been overspecified (M9, M3). Using the UK criteria for road building and the traffic projections produced by the contractor the section between the Border and Omagh should only have a single lane road on it (that would save money).
    2. The proposal is terribly unimaginative (as have other roads schemes) in that it simply increases capacity and travel speeds along the current corridor. There seems to have been no consideration of what would actually make a difference. Above I already noted that access to Belfast would be more efficient and would support the development of the all-island economy more than the current proposal.
    3. Significant waste is built into the project e.g. on southern side Emyvale needs to be by-passed but that section has been rolled into a bigger project by-passing the new Monaghan by-pass. Traffic levels do not justify this. Likewise on the Northern side Newtownstewart has already been by-passed.

    To me the big question is – could we achieve more with the given budget? I think we can. Alternatively, one might ask could we get a higher benefit-cost ratio by amending the specification? Again I think we can. As usual the provision of the infrastructure becomes the objective rather than what the infrastructure can do for us. As long as that view persists we will continue to waste scarce resources.

    Regarding buses, I draw you attention to an interesting section in the ICI (page 5/6) – which considers maintainance vs new investment. Maintainance is often a very cost effective substitute to new investment but of course less flashy.

  59. The government is attempting to correct a current account deficit by cutting capital spending while raising current spending in both nominal and %GDP terms. This makes no sense to me. Robert Watt is secretary general to Howlin’s new Dept of public expenditure reform that presented this plan. I’d love to hear him explain the logic of this move.

    The difference between capex and opex is clear to anyone in business, partly because Revenue treats these expenditures in different ways (you cannot deduct capital expenditure in calculating your taxable profits).

    Imagine a capital project at a cost of 100m with benefits and costs over 30yrs. Financed at 8%, that’s 8.8m/year. We cannot cancel this 100m project and then increase current expenditure by 100m/year while claiming that the adjustment is revenue neutral.

    The government announced last week that the A5 would be given 50m despite the capital spending review. It is worth noting that the Derry-Belfast train is so antiquated that it only manages 50km/h. Money might be better spent on the Dublin/Belfast/Derry corridor by upgrading the train r completing the Derry-Belfast motorway.

    Lastly, the new plan is to spend twice as much on investment in roads as on public transport between 2012 and 2016.

  60. @Ossian Smyth
    “the new plan is to spend twice as much on investment in roads as on public transport between 2012 and 2016.”
    Shocking, isn’t it, what with private road use three times the level of public transport (most of which uses roads…). How that level of misallocation of resources can be countenanced, I don’t know…

  61. Why should transport capital spend respect the existing modal split, when state policies aim to achive a modal shift? If 90% of existing journeys are undertaken by car, then should 90% of new transport capacity be for cars? I’ve seen this argument in The Economist more than once but I can’t fathom it.

    Modal split is determined by state investment and taxation choices in transport infrastructure, not the other way around.

  62. Ossian:

    Yes you can cancel the project and claim it is cash neutral. Not spending 100m now will mean that you have 100m to spend on something else. If you were looking at it from a financial accounting point of view, it would work out differently because you would only release the cost to the P+L slowly, over the life of the asset, but you would still have to find 100m to fund the asset.

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