Possibly. There is little in the pipeline of work resulting from planning or design for professional, contracting or supplying companies. This is leading to a lack of confidence in the sector. With little real movement on the National Development Programme, this will have a catastrophic impact on the economy. We need to act immediately.
We could ask where are we headed. The construction output is falling towards €7 billion by 2011, or 6% of GDP. We are seeing serious under-spending in the different Departments. I will look at water services in particular, which are the responsibility of the Department of the Environment, Heritage and Local Government. There is serious underspending there, which must be of concern, not just to the construction sector but to the officials. Construction output spending of 6% is only half of the EU average. We should spend more than that. If we head towards €7 billion, we will probably see another 120,000 job losses in the construction and allied sectors.
I have used a graph to show the capital project lead-in time. I have done this for two reasons. First, a very small percentage is spent in the first three years of any major capital project to get the project shovel-ready. That spending has not occurred for at least 18 months or more and there is no sign of it occurring over the next year or two. We will not have projects shovel-ready to get them to construction. Second, a serious lead-in time is needed for a project. The graph shows at least nearly five years to get a capital project from ground zero to shovel-ready and people on the ground. We need to ensure that planning and design work advances. We also believe there are not enough projects, even on the shelf, to fill the gap, because of the lack of design over the past two years.
We need to look at public private partnership schemes. Those schemes are not attractive to outside investors. We must remind ourselves that three or four years ago nearly 40 European banks were involved in funding PPP schemes. That number is now fewer than ten. We are competing against other EU countries for finance, interest from large overseas construction companies and investors. A credibility gap is creeping into the Irish PPP sector. If the situation regarding design spend and planning of projects continues we will see the remaining design teams decimated and contracting capacity collapse.
This issue has received considerable attention in recent weeks, particularly since we launched the manifesto on 21 June. The Irish Times wrote, “Major project delays slowing recovery”. We firmly believe that. This is the first time in my professional career I have seen David Begg of the ICTU and Danny McCoy of IBEC agree on something, which is the need for Government to act resolutely on capital spending.
I use the water services investment programme as an example of the gap between an announced programme and the reality. What the public hear is that more than 130 projects are currently in progress, with a value of €1 billion and 340 contracts to be done over the next two or three years, at a value of €1.8 billion. The reality from e-Tenders, which is the official tendering mechanism for public projects, is that only €60 million was awarded in March and April, the two critical months for getting projects to construction over the summer period, which is Ireland's building period. In January and February the amount was €45 million. No contracts were awarded in 28 of the 35 local authorities.
There are various reasons for this. One is that local authorities do not have matching funding. Whereas previously, a local authority might have had to put up between 20% and 30% of a project, that percentage is now moving to a 60/40 ratio. Government needs to look at how local authorities fund projects. We urge central Government funding of 90% or even 100% of local authority projects.
There is a lack of a policy document on solid waste services. There are policy documents from the late 1990s but there is a lack of clarity, leading to a lack of investment in the public and private sectors. Unfortunately, the EU obligatory targets for 2013 and 2016 will not be met. A four year derogation already applies to those targets so no further derogation is available to Ireland. The estimate of the fines for missing those targets is €50 million per annum. There is a serious shortfall in solid waste services at present.
The OPW has done very good work on flood relief but increased funding is needed to control catchment flooding. All of us, particularly those of us from rural counties, appreciate that local authorities have neither the staff nor the finances to do even basic roadside drainage.
There are serious transportation deficits in the Dublin region. There are certainly serious deficits in parts of the country, particularly the south and west. We will see those on a later map. At present, only 33% of the transport plan has been delivered.
I know that education, skills and health are not part of the Department's brief. However, this shortfall in spending is also occurring in the other Departments. Some 1,000 schools need major capital works. If the school population projections for 2020 are correct, a further 625 schools will be required. Our spending on education is only 4.7% of GDP which is below the OECD average. The reality is that we are not investing enough in our future.
On health, the then Minister, Deputy Martin, said our health care system must reflect our national values. The ESRI healthcare report highlights the need for ongoing capital commitments. The reality is that of 500 primary care centres targeted by the HSE in 2000, we only delivered 200, something which we have addressed in our manifesto. I refer to health and education because there is currently no counterpoint to the lack of capital expenditure on other social and capital infrastructure sectors. It is of serious concern.
The CIC position is that we questioned the wisdom of withdrawing investment in infrastructure. We included photographs in our submissions to demonstrate what we mean by infrastructure. This would lead the wider economy from recession to recovery. For every €1 billion invested the actual cost to Government, through the various taxes levied on salaries and expenditure, is €490 million, and we get the benefit of infrastructure. Every €1 billion cut from capital expenditure costs all of us half that amount in welfare payments, etc., but we get no infrastructural gain. We question the wisdom of withdrawing that investment. The lack of a real capital programme will impact on jobs and the domestic economy. The capital programme of €5.5 billion, which has already been halved, is not a stimulus. However, we see it as an investment for the future which we implore people not to reduce any further.
The Taoiseach said that the lesson from the past is that by providing a clear sense of direction by setting out a long term vision and set of goals and prioritising the resources needed to achieve them we will secure immediate gains from increased confidence and a determination to deliver. We now believe that the time is right to prioritise the resources needed for our capital infrastructure.
The photographs I have included show a mix of infrastructural projects that have been built by the State over the past number of years. They include hospitals, visitors centres, colleges, schools and libraries. On the map of Ireland we have included are various road schemes which are not all dual carriageways or motorways. The roads which have been built link Dublin to the major cities. There is a significant road infrastructure gap in Rosslare, Waterford, Cork, Limerick, Galway and Sligo, which covers the Atlantic corridor and the west of Ireland.
The next photograph shows some of the rail infrastructure, bridges and toll bridges we have built. The water infrastructure we have provided is in Mutton Island and Cork and includes the gas infrastructure distribution network and water supply schemes in Wexford. On waste management, the largest bale waste landfill in Europe is in Athurstown in Kill which is closing at the end of the year. It also includes gas utilisation, lichee treatment and other things we need. Flooding, as I mentioned earlier, does not just affect houses and people, it also affects our primary arteries, such as was the case with the road flooding in Clarecastle.
We have bypassed a lot of towns and villages with the road infrastructure over the past number of years. There are a lot of local amenity schemes needed in those towns which would employ local labour. Such schemes are labour intensive and we could examine the social amenity side of these towns and villages to determine what can be done to their streetscapes.
We will circulate the executive summary of our manifesto. There are ten primary points. Mr. Keogh may wish to discuss them.
