Project Ireland 2040 is the Irish Government’s long-term overarching strategy to change how investment is made in public infrastructure in Ireland. A composite of the National Development Plan (‘NDP’) and the National Planning Framework (‘NPF’), the overarching aim of Project Ireland 2040 is to move away from the approach of the past, which saw public investment spread too thinly and investment decisions that didn’t align with a well-thought-out and defined strategy. Michele Connolly and Robert Costello of our Infrastructure practice outline the KPMG view.
Earlier this year, the Government undertook a review of the National Development Plan. The public consultation sought views on ensuring that the overall level of capital investment planned for the future is set at the right level and also to establish what needs to change to deliver more quickly on meeting Ireland’s challenges and to fulfil the priorities in the Programme for Government, including on housing, health, climate action and transport.
KPMG has long been advocating for increased capital investment commitments, changes to policies and practices and the removal of roadblocks to ensure more timely delivery on projects. Our response to the Government’s submission reiterated these points, along with other suggestions as to how we can deliver on what is planned better and faster.
It is projected that by 2040 there will be circa. one million extra people living in Ireland. This population growth will require hundreds of thousands of new jobs, new homes, more cultural and social amenities, better regional connectivity and improved environmental sustainability. The NDP sets out the strategic investment plan to achieve this.
Currently, the annual level of capital expenditure in Ireland is just below €10 billion per annum, which is tracking the level of planned spend set out in Project Ireland 2040. This a significant increase on capital expenditure between 2008 and 2018. However, there is still a large infrastructure gap in Ireland across a majority of sectors – health, education, housing and public transport. In addition, Ireland has renewed climate and sustainability targets for 2030 and 2050 which must be met to avoid the existential threat to our economy and society. This also requires significant capital investment in areas such as energy, built environment, and electric vehicle charging infrastructure.
The COVID-19 pandemic has provided the country with a once in a generation opportunity to accelerate investment and capital expenditure in an effective way. Funding is available at a country and EU level and the cost of this funding has never been as low. For example, EU funding is being made available through the Recovery & Resilience Facility – a €750 billion fund to help in the recovery plan from COVID-19. Half of this is grant funding and must be invested by the end of 2026. Ireland should aim to take full advantage of these grants. Additionally the IMF recently stated that public investment can play a central role in the COVID-19 recovery. It has the potential to directly create “between 2 and 8 jobs for every million dollars spent on traditional infrastructure, and between 5 and 14 jobs for every million spent on research and development, green electricity, and efficient buildings.”
In the short term, the investment will deliver a boost to the economy through the provision of jobs but, in the long-term, there will be even greater societal and economic benefits.
When we look at the recent capital spend in Ireland it is dominated by transport and housing. Significant projects are either being planned or underway and but in housing the investment is not translating into new homes as quickly as it could and should.
There are two areas that stand out as having limited capital investment: climate action and health.
When it comes to spend focus should be put on how we deliver on what is planned better and faster. This includes:
The projects the Government is currently investing in will last for more than 50 years and therefore should be built with future generations in mind. There is significant opportunity for a connected and integrated infrastructure that puts a focus on communities and creates a sustainable way of living and working. The pandemic has presented a real opportunity to balance development with greater investment in regional towns and cities, a key objective of Project Ireland 2040. As a country, we must focus on the positive aspects of that change which are advantageous in the long-term, plan accordingly, and embed the new demands into our infrastructure indefinitely.