National Development Plan Mid-Term Evaluation: Statements.

Minister of State at the Department of Finance (Mr. Parlon)

I welcome the opportunity to address the House this afternoon on the mid-term evaluation of the national development plan published by the ESRI last week. Before commenting on the ESRI evaluation, I feel it would be useful to recall the objectives and content of the NDP.

When the plan was launched in November 1999 there was almost universal support for its objectives and strategies. The exhaustive analytical and consultative process, which was conducted by the Government and preceded the preparation of the plan, revealed a strong consensus on the key sectoral issues to be tackled and on the measures necessary to deal with these.

The NDP, as published, set out the following overriding objectives for investment: continuing sustainable national, economic and employment growth; consolidating and improving Ireland's international competitiveness; fostering balanced regional development; and promoting social inclusion. Consistent with these overall objectives, the plan provided for a most ambitious and unprecedented level of investment of almost €52 billion at 1999 prices across all sectoral areas pertaining to the economic and social development of the country. Key elements of the investment strategy were the continuation of stability-orientated macro-economic policies; a major investment programme in economic and social infrastructure; the promotion of education and employment training policies attuned to the needs of the labour market with a special focus on those most at risk of unemployment; and greatly accelerated investment programmes in key areas such as research and development and the provision of child care facilities.

Of the €52 billion provided, nearly €46 billion was from domestic sources, mainly the Exchequer. This included a massive acceleration in Exchequer investment in economic and social infrastructure. The EU contribution of almost €6 billion represented just 12% of the total funding of the plan, compared to 40% for the 1994-99 plan. A target of €2.5 billion was included for the public private partnership contribution to the funding of the infrastructure programme.

The plan was predicated on the continuation of stable macro-economic and budgetary policies. It was also based on the broadly positive outlook over the period then being forecast for the world economy as a whole. On budgetary policy, the NDP stated that the annual allocation and ultimately the overall commitment of the plan would have to be kept to a level that respected the public expenditure ceilings set by Government, take account of wider budgetary priorities and accord with the requirements of economic stability.

As Senators are aware, there has been a significant international economic downturn since the plan was launched, which has inevitably impacted on Ireland's growth. Nonetheless, as I will outline shortly, the Government has continued to accord priority to the NDP infrastructure programme, notwithstanding a much more difficult budgetary situation. The plan comprises seven operational programmes covering the key areas of sectoral investment pertaining to economic and social development. Reflecting their importance in terms of competitiveness and employment growth, the bulk of the investment was planned to be channelled through the economic and social infrastructure programme – that is €26 billion altogether – and the employment and human resource programme of €14.2 billion. The plan also contained, for the first time, two regional operational programmes mainly comprising locally based investment in the Border, midlands and west, BMW, and southern and eastern regions, respectively.

I wish to focus in particular on the Economic and Social Infrastructure Operational Programme. This is pivotal in terms of addressing the country's infrastructure deficit. Accordingly, the plan provided for massively accelerated Exchequer capital investment in key areas including roads, public transport, environmental protection, housing, health and education. To put this acceleration in perspective, the average annual Exchequer provision for these areas over the first three years of the plan was over €3.9 billion, which represents an increase of 42% over the corresponding 1999 provisions.

This reflects an Exchequer financial commitment over the period considerably in excess of that planned. For the OP as a whole, the Exchequer delivered about £1 billion more than originally planned over the first three years of the plan. In other words, notwithstanding the economic downturn since 2000, the Government more than honoured its financial commitment to the NDP infrastructure programme.

The result of this investment is visible on the ground throughout the country. There have been problems, articulated by the ESRI, which I will address but I strongly assert that by the end of 2006 the plan will have brought about a significant enhancement in our economic and social infrastructure.

The ESRI evaluation stems from the requirement under the EU Structural Funds regulations for a mid-term review of the performance of Structural Funds measures in each member state. In the case of Ireland, the Structural Funds comprise a small part of our national development plan. The Government, therefore, decided that the ESRI should evaluate the performance of the entire plan, not just the co-financed part.

Those who take time to read the evaluation will see that it is a broadly positive account of the performance to date of the plan. First, and crucially, the ESRI states that the overall strategy underlying the plan is as valid today as it was when it was first drawn up. On the overriding plan objectives which I outlined earlier, the ESRI states that the ". NDP has made significant progress towards its objectives of continuing sustainable national economic and employment growth and of consolidating and improving Ireland's economic competitiveness." Furthermore, the evaluation states that the NDP ". will have a sustainable positive effect on competitiveness and the productive capacity of the economy in the long term." As regards macro-economic impact, the evaluation states that "NDP expenditure over the period 2000-02 raised the level of GNP by over 7% above what it would have been in 2002." In the long run the level of GNP will be around 3% higher, representing a real rate of return on NDP investment of approximately 14% This is an exceptional economic performance by any standards, which proves that the NDP will leave a lasting legacy to the benefit of generations to come.

The evaluation is very positive about the impact of the plan on the other overarching NDP objectives of promoting social inclusion and more balanced regional development. It points out that investment in areas such as housing, child care, education and training has had a substantial effect in promoting social inclusion. The evaluation finds a mildly positive impact on the goal of better regional balance in economic development while urging better alignment between NDP investment and the national spatial strategy over the remainder of the plan. The ESRI evaluation gives a very positive endorsement of the impact of plan investment to date in terms of its macro-economic impact and achievement of key objectives.

The evaluation expresses concern about the impact of inflation on output and, in certain instances, the quality of programme and project management. The institute lays stress on the need for proper project appraisal and evaluation before public funds are allocated to programmes and projects. It also highlights the need to appraise the value of proposed changes in the scope and specification of programmes and projects before proceeding with any such changes. Apart from stressing the need for an optimal appraisal and evaluation regime, the ESRl report also puts forward a number of specific recommendations across various areas. These recommendations include a more rigorous pricing regime for the provision of infrastructure, guidance on investment priorities and improvements in the physical planning process.

The evaluation also sets out the recommended allocations by operational programme over the rest of the plan. These allocations reflect the ESRI priority of investment in infrastructure, human resources and RTDI, with lower priority recommended to several other areas, including grants made to industry, agriculture and fisheries. The recommended allocations are firmly grounded on the foundation of maintaining a stable macro-economic and fiscal climate as set out in the Government's stability programme published earlier this year. The ESRI affirms the original parameter that plan investment going forward must remain subject to the prevailing budgetary climate.

The ESRI evaluation, while purely advisory, will be an input into ongoing Government consideration of investment priorities. The evaluation is undoubtedly a comprehensive analysis of investment under the NDP. As Senators will appreciate, Government consideration of investment priorities must take account of a number of factors, including value for money and economic impact of the investment. The ESRI report contains much useful guidance on the latter. It is clear that the strategy, priorities and key objectives of the plan remain fully valid. The ESRI's conclusion that the plan is impacting so positively on the attainment of these objectives is welcome, as is its conclusion that the plan remains as relevant today as when launched in November 1999.

There will be no recasting of the plan's strategy and priorities. While it is the Government's intention to continue to progress implementation of the plan, it will be prepared to adapt investment priorities over the period to 2006, if necessary, in the light of the evolving situation and available resources. The clear message from the ESRI evaluation is that the Government has got it right in terms of prioritisation of resources. The allocation of resources for investment is an important issue and the Minister for Finance is already on record as favouring a multi-annual regime for capital investment. The Minister wants to bring about a situation where Departments and agencies can have reasonable certainty on the availability of capital resources over a number of years. Such an approach would undoubtedly facilitate better programme and project management.

The Department of Finance is at present revising the capital appraisal guidelines for public investment projects, which will issue shortly. The objective is to ensure the use by Departments and agencies of the best appraisal and evaluation techniques and optimal efficiency in the execution of major capital projects. The ultimate objective must be to ensure as far as possible that only the most economically justifiable projects receive priority and that all projects are executed on time and within budget. While the Department of Finance will issue guidance, however, it cannot and will not manage individual projects for Departments and agencies. The onus must remain with the latter as regards programme and project management.

I note the ESRI's recommendation that the Department of Finance should have some additional resources devoted to project and programme evaluation. Efforts in this area have been augmented in recent years through the expenditure review initiative and the extension of the remit of the CSF evaluation unit to cover all plan expenditure.

While the Department will consider the ESRI's proposal, the focus must be on improving evaluation and project management techniques at implementing and sanctioning agency level. Beneficial changes have already been made, notably in the National Roads Authority. Public private partnerships also have a role to play in better project delivery. Momentum has now been built up on PPPs in the roads programme and the Minister for Finance is determined to extend this to other areas in a way that yields greater value for money.

I acknowledge that the Border, midlands and western region is behind the indicative target for infrastructural investment set out in the plan as published. This reflects the fact that the infrastructure gridlock and bottlenecks are most severe in the southern and eastern region, especially in the greater Dublin area, and that priority has had to be accorded to major projects in this region. It might, however, be noted that there have been positive economic developments in the BMW region. Over the period 2000-03, employment growth in the BMW region was 3.3% as compared to 1.8% in the southern and eastern region. In addition, percentage population growth in both regions between 1996 and 2002 was almost identical. Thanks to the successful negotiating strategy of the Government at the 1999 Berlin Summit, the BMW region has Objective One status for the period 2000-06, despite its GDP per capita in 2000 being well in excess of the threshold for such status.

In its evaluation, the ESRI makes a number of recommendations which relate to different areas of ministerial responsibility. They are mostly matters for those Ministers, some of whom have commented on them. I will, however, briefly comment on aspects of the recommendations in the key area of transport. The evaluators question the level of specification for some of the key inter-urban routes and the appropriateness of toll-based private financing for some of these routes. There is some validity in the ESRI arguments as regards specification but it is my view that we should look at the investment on the major road routes in terms of the return over the long term. We must avoid regularly upgrading the same stretches of roads as traffic volumes increase. We have seen how toll-based private funding has delivered on the Dublin-Belfast road and what it will deliver via the Kilcock-Kinnegad project. There is potential to roll out much of the rest of the upgrade of the key routes between Dublin and the other gateway cities designated in the national spatial strategy in the same way.

On public transport some of the evaluation findings merit reflection. The report states:

The net impact to date of bus and rail investment in the Dublin area has been a substantial improvement in bus patronage, at modest cost, versus a disappointing passenger performance by rail, at substantial cost.

It also states with regard to urban fixed-line projects that international experience shows:

It is exceedingly rare for such projects to cost less than estimated by the project promoters. It is equally unusual for their schemes to deliver the passenger volumes promised.

These findings must be borne in mind on future decision-making on urban public transport.

The ESRI evaluation endorses the NDP strategy, stating that the plan is as relevant today as it was when launched. More importantly, it states that the plan is delivering on its objectives. We can and will do better in programme and project appraisal and evaluation. From the Government's viewpoint the evaluation gives us the reassurance and motivation to redouble our efforts on plan implementation so that when the final assessment is made after 2006, the same positive verdict will be given.

Mr. Higgins

Last week's ESRI's halfway progress report on the NDP is a damning indictment of the management of the biggest investment programme in the history of the State. The ESRI judgment was clinical, crisp and critical. The clear message is that the thrust of the programme of the NDP is sound, but the Government is manifestly incapable of managing a €51 billion programme, designed to create a modern and efficient Ireland capable of meeting the economic and social demands of the 21st century. The Minister of State, Deputy Parlon, claims the programme is fundamentally sound and that was the ESRI's judgment. However, the plan, which is at its 50% juncture, is mismanaged, grossly over its expenditure targets and needs to be revamped to get it back on track immediately.

Instead of accepting the ESRI's analysis, Ministers immediately set upon the report after its publication. First out of the traps was the Minister for the Environment, Heritage and Local Government, Deputy Cullen. His insulting dismissal of the report as absolute nonsense was followed by support for his view by the Minister for Communications, Marine and Natural Resources, Deputy Dermot Ahern. On the ESRI's call for the Government to leave investment in broadband to the private sector, he offered the equally insulting and derogatory observation that "To a certain extent, maybe they did not fully understand broadband".

Next into the fray, responding to the ESRI's view that there was no justification for the creation of 3,000 new hospital beds while beds lie idle throughout the State, was the Minister for Health and Children, Deputy Martin's spokeswoman, who doggedly asserted that the Government was committed to an already discredited health strategy and that 3,000 new beds would be provided, notwithstanding. The fourth Minister to do down the ESRI report was the Minister for Transport, Deputy Brennan, who rejected the call for considering downgrading the standard of roads on lesser used routes which the NDP has earmarked as motorway standard. This barrage was followed by the slightly more conciliatory statement by the Taoiseach. He observed that "it is a good report" containing positives and negatives which should not be ignored and that the Cabinet "should be big enough to take some criticism".

What has happened to collective Government responsibility? One is left with the distinct impression that instead of the Taoiseach, at long last, showing some leadership and decisiveness, the Government wants it both ways. It is not obliged to accept every iota of the ESRI report, but it should show some cohesion in its reaction to the plan. Equally, the Government should come forward with an official response, instead of the piecemeal and disjointed reactions we have had to date. Today in the Seanad, we have not had a coherent, comprehensive analysis by the Government of how it intends to respond to the ESRI recommendations. It is a large, good and analytical report. One would imagine, having studied the report for at least a week, the Government would have come forward with some comprehensive response rather than, as the Minister of State continually said in his speech, the recommendations being borne in mind. Bearing them in mind is not good enough. We want to know exactly what the Government is going to do with regard to the recommendations.

As a politician from the west, in common with the Leas-Chathaoirleach, I am upset about the report's recommendations for the BMW region. This region was the key trump card in the Government's hand when we joined the EEC. It was the economic and social debilitation of the region that played a major part in Ireland qualifying for Objective One status in structural, cohesion and social funding from Brussels. Despite this, the vast bulk of EU spending went to Dublin and the east, with the paltry crumbs, by way of an occasional by-pass, sewerage or water scheme, coming west of the River Shannon and to the Border and midland regions. It was clear that facing into the last negotiations with Brussels, Ireland, collectively, would lose its Objective One status because the rest of the country had leapt far ahead and was on a par with the better-off areas of Europe. However, due to the outcry from the BMW region and the clear economic and social evidence from there, it was again awarded Objective One status. The legitimate expectation was that the region being the only one so categorised in the country would at last get the top-up of combined EU and Government investment that it obviously needs and merits. This was not so.

The Indecon report, Mid-Term Evaluation of the Economic and Social Infrastructure Operational Programme, was not referred to by the Minister of State. It was commissioned by the Government in order to fulfil requirements under the Structural Funds regulations. The report graphically illustrates how the BMW regions have again been left on the hind tit. Of the total investment of €10.6 billion on national roads, public transport, environmental service, sustainable energy, housing and health services, €8.2 billion – 77% – was invested in the south east region. This left a mere €2.4 billion – 23% – of total investment going to the BMW region. The Minister of State understated it when he said that the BMW region was now behind the indicative targets. It is actually grossly behind them. This is a travesty and an absolute disgrace. Indecon spelt it out when it stated that "there are significant differences between the two regions, with investment in the BMW region below expectations". It is another blatant example of disregard on the part of the Government for a region starved of the vital infrastructure that it so badly needs in order to survive, let alone thrive. I am personally taking this matter up with the EU Commissioner for Regional Policy, Mr. Barnier.

If ever a Government deserves to be charged with gross discrimination, bias and abuse of its position, it is this Fianna Fáil-Progressive Democrats coalition. What particularly galled me were the recommendations of the report on the planned expenditure in the BMW region. It stated that spending on water provision, waste management, commerce and communications, seaports and tourism should be decreased. It also stated that spending on microenterprises – there are not many big enterprises in the region – should also decrease. I particularly commend the work done on regional innovation by the IRDs and the Leader programme. However, the review states that spending in this area should decrease. It states that spending should decrease in forestry, a natural resource and an area with huge potential in the west of Ireland, the Border region and the midlands. Spending should also apparently be decreased on fisheries and harbours, and on the Gaeltacht and islands. In the area of agriculture under two headings, general structural improvements and alternative enterprises, it is recommended that spending should decrease.

What kind of warped thinking would suggest that an area bled white with emigration for centuries whose sons and daughters have built the economies of the United States, Great Britain and Australia, and which has never had a fraction of its just economic desserts from either national or European budgets, should be dumped upon in such an unfair and illogical fashion? Knowing the attitude of the Government to the BMW region, this is possibly an area the Government might gladly embrace. One might ask where the spatial strategy currently stands. One might also ask what is the reaction of the Minister for Community, Rural and Gaeltacht Affairs, Deputy Ó Cuív, the so-called great defender of the west, to the scandalous recommendations affecting the BMW region in this report.

No Government in the history of the State has ever been handed such a bonanza. No Government in the State's history has so grossly mismanaged such plentiful resources by an arrogant presumption that it knew, and knows, better than the State appointed bodies charged with delivering on infrastructural projects.

Everybody accepts that Dublin is a mess. It is congested with people, housing, traffic and even crime in certain areas. However, it has been a mess for about 20 years. It was patently obvious that it had to be disentangled in the interest of Dublin and the regions. Year after year, instead of long-term planning, more money was poured into perpetuating the mess by building a series of concentric road circles, each supposed to relieve its inner and now inadequate and redundant predecessor. The result is that Dublin has become more bloated and uncontrolled.

When the State-appointed National Roads Authority proposed its plans to upgrade existing national primary roads, the Government then basking in the glow of the fully healthy Celtic tiger, decided to overrule the NRA and come up with its own programme with commitments to far more ambitions and extravagant interurban motorway project with five spokes in the wheel, from Dublin to Belfast, Cork, Galway, Limerick and Waterford. This was to be constructed by 2006 at a cost of €6.8 billion. The programme is still only at the halfway stage. What was supposed to be €6.8 billion is now estimated to be a massive €16 billion. What was to have been completed in 2006 will not now be completed until 2010 at the earliest.

This budgetary overrun is scandalous. Equally scandalous is the net effect of the projects, each of which is having a negative effect on Dublin and is sucking more traffic and people into an already suffocated city. As a further result, some much needed bypasses, for example the Ennis bypass, and other infrastructural works have had to be shelved or neglected. The list continues to get longer. The Luas project is late and massively over budget. The initially estimated cost was €290 million. The revised estimate – perhaps I should say guesstimate, as this is the way these projects seem to operate – is now €750 million.

I am disappointed the Government has not come forward with a coherent and definitive response as to what it will do. How long more will it be before we have a response from each Minister outlining how they will react to these recommendations? The Minister agrees with the report's finding that inflation is a serious problem and has been since the NDP began. Projects were upgraded without proper evaluation. I would support the consideration of a property tax on second houses. What will happen about that? A key recommendation is the implementation of a congestion charge in Dublin. What will happen about that? The Minister of State has said the Government would bear in mind increased funding for transport investment. What will happen with the reduction of direct support for business from the Exchequer?

This is a very critical report and one the Government should have studied in detail and allocated the past ten days to decide what would happen. The Government needs to put on the brakes where necessary. It needs to revamp and re-jig the plan and get it back on track as quickly as possible. It is vital that the Government does this.

Ms O'Rourke

I welcome the Minister of State, Deputy Parlon, to the House. I was interested in what Senator Higgins said. He started by welcoming the plan and called it crisp, concise and challenging, which are all lovely alliterative words and made good listening. Where the Senator disagreed with the plan, it was not crisp, concise and challenging, but all sorts of other things. While the Senator is entitled to his point of view, he is not entitled to two points of view on one topic.

I very much welcome the report. Of course individual Ministers rushed out to protect their bailiwicks and went on to the battlements, which is understandable as they are worried about their future funding and how their projects proceed. The Government was right to obtain this report, the Mid-Term Evaluation of the National Development Plan and Community Support Framework for Ireland, 2000-2006. The report is quite challenging, to use one of the words used by Senator Higgins. It points out what worked, where the fault lines are and what can be done to rectify these.

Let us look at the overall project and the mood of optimism we should have about where Ireland is and was, particularly in 1999 when domestic funds financed this programme. A few years previously, we would not have had a chance to embark on such a programme as we would not have had the finance and were very appreciative to Europe of what it gave us for our plans in other years. It is good to be able to stand on our own feet. It was good that the country was doing so well that it could embark on such projects and have the money to finance them. In itself, that is an indication of the economic prosperity of the country.

To quote Senator Ross the figures released yesterday and reported this morning on this are good and better than we expected. The "steady as she goes" approach will bring us around the corner and on to sunnier slopes again. I am engaging in alliteration, having complained about it earlier.

Mr. Higgins

It is nice.

Ms O'Rourke

This bodes well for the future for us. The ESRI set out to look at where it had been planned to spend the money, what worked and, more important from the point of view of our evaluation of its evaluation, where it did not work or where there were fault lines. One of those related to project appraisal and evaluation, and hands-on project management. We are always being told that big brother should get off our backs, that we are free and should be allowed to manage our own affairs. This is a very agreeable scenario up to a point. An examination of the expenditure which has already been spent and the work still remaining shows that project management at a very tight managerial level has been the underlying lack in many of the programmes outlined in the review. The Department of Finance and the agencies it will engage have clearly stated that for the three remaining years of the plan, the Department will keep a hand on those projects because its job is to watch the money. In most cases the Department of Finance says "no". I never regarded that attitude as a bad thing in either a Minister for Finance or in the Department of Finance. That is their job. When I was in the Department of Education, I always said we had to say "no" first and then say, "maybe, we will look at it." I am in favour of the Department taking a micro management approach and keeping a close watch on expenditure, project management and evaluation and evaluation of the economic cost of disruption.

The evaluation is a good one. Obviously other Senators will be interested in what happened their pet projects. The policy document is worthy of close study. There has been much debate about the review on television and radio programmes. The economic cost of disruption was one of the points raised which was not included in the costings. I am of the view that disruption is a necessary evil in the completion of a project. If there is disruption, it is the means to an economic and social end and must be endured before a project can prove its value to those who use it.

When there is a discussion about buses versus Luas and Luas versus rail, we must acknowledge that we are quite far behind in the provision of public transport. Cities such as Paris and London had underground rail systems over 100 years ago. We had buses and trains—

Mr. McDowell

We had trams as well.

Ms O'Rourke

—and trams which were uprooted, which was unfortunate. We have a very feeble public transport infrastructure. We are now only beginning and that is acknowledged in the ESRI review. We are beginning the great adventure to provide a similar service such as exists in other capital cities. The review strongly recommends the use of bus lanes. Luas and metro are all part of a proper provision of public transport services; none of them is a solution in itself. We are only beginning those journeys and we have a long way to go before we will ever have a proper national public transport system. We are beginning to provide a proper roads infrastructure but it is freely acknowledged in the review that much more has to be done. The review will help to focus minds and finance on the gaps in our system.

The review discusses the advantage of buses and bus lanes over fixed line rail but I do not think it should be one or the other. It has to be a complementary system of full provision, which suits various situations. The QBCs are in place. People may think it is easy to whistle up a bus lane overnight but the officials in Dublin City Council know how difficult it was to organise bus lanes, obtaining agreement from traders in particular who feared for their business. It should not be regarded as a case of buses versus trains because each is necessary.

Senator Higgins spoke about the areas in the review where the ESRI believed that expenditure should be reduced such as forestry, islands and harbours. It would be a foolish report that recommended more money should be spent in all areas. Clearly the review prioritised projects. I am sure various Ministers protecting their bailiwicks and funding will fight the just cause with the Department of Finance and at Cabinet to get their share of what is outlined in the national development plan.

I welcome the emphasis in the review on the BMW region from which I hail. Some people have an idea that there are jam jars filled with money for the BMW region and they question why that money is not being spent on the region. There is no jam jar filled with money. The money is drawn down when a project is ready to go forward and when finance is required. Planning has been slow in this regard. I have in mind the road from Dublin to the west through Athlone or Kinnegad. The road project has commenced and the plans for the Kinnegad bypass are visible. The planning for this road was slow. I suppose people have the right to object. I wish the Minister luck with the proposed Bill. It will streamline this process but I wonder what will happen the snails and the fens and the people who have objections. I hope when Senator Higgins gets into Europe he will not take up the cause of the snails crossing some by-road and argue they are the most important snails in the world. I never really met or saw a snail that was very important—

Mr. Dooley

Or toads.

Ms O'Rourke

Or toads, as Senator Coghlan said this morning. I welcome a more accelerated method of obtaining planning approval for projects while allowing proper regard for heritage. Absurdities occurred in the case of some of the main roads. The Taoiseach referred in the Dáil to people swinging from trees, the tree ambushers on the N11. We will have to take proper account of people's reservations but surely not to that extent where major projects have been held up for two or three years because there was supposed to be an endangered species. What about the citizens of the land who will become the endangered species if we do not get moving on these physical infrastructural problems?

This is a very fine evaluation. No Government willingly wishes to display something warts and all but warts and all are displayed here in full. In many instances, it points the way forward correctly in a much more focused manner. I commend the ESRI for its care and thought. I am confident that Government plans and projects will be all the better for it.

Mr. Quinn

I welcome the Minister of State to the House. I wish to stretch the debate a little further.

Last week, within a day or so of the publication by the ESRI of its mid-term evaluation of the national development plan, another publication appeared that is highly relevant to this discussion. The annual rankings of international competitiveness contained news for Ireland that was nothing short of shocking. Will the Leader tell me if this is alliteration?

Ms O'Rourke

No, not really. It is not as alliterative as me and Senator Higgins.

Mr. Quinn

I will do my best to improve. Two years ago, Ireland stood at 11th place in the competitiveness rankings, which was a highly respectable and desirable position. Last year we plunged from 11th place to 24th place. That was a warning, if ever there was one, that our chickens were coming home to roost. Last week's figures show we have taken another fall. We are now in 30th place. Our international competitiveness fell from 11th to 30th place in just two years. Some 29 other countries are more attractive places in which to do business. These countries will be more effective in attracting the highly mobile foreign investment on which our future economy so critically depends.

Some years ago we would not have been concerned at being ranked 30th, but to drop from 11th to 24th to 30th place almost sounds like free-fall. These figures illustrate just how quickly things can change in today's highly volatile world. In a short space of time one can go from a place in which everyone wants to be to one that is so far down the list that it never gets chosen at all.

I cannot make the point strongly enough, loudly enough or often enough that regaining our international competitiveness is the single most important factor in determining this country's future. I am not just talking about our economic future, as so much else depends on our economic well-being. We have engaged in the temptation of living on the laurels of the Celtic tiger long after the rest of the world has passed us and gone on to other things. If we allow this precipitous decline in our competitiveness to continue, we are digging our own economic grave.

It is not so much that we are now in 30th place but that it happened so quickly. This is the context in which we should approach the mid-term evaluation of the national development plan because one of the central aims of that programme is to maintain and enhance our competitiveness. I accept that it predates the publication of these figures but evidence existed that this was likely to happen.

Although it is not a matter that excites a great deal of people, the success of the national development plan will affect the lives of everyone in this country over the years ahead. By any measure, it is a vast undertaking which involves the spending of about €65 billion over a seven year period. The vast bulk of that enormous sum is our own money, as only a small and dwindling proportion of it comes in the form of handouts from the EU. We should look carefully at how this money is spent because of its size alone, quite apart from its importance to our future.

Most public attention so far has focused on the recommendations which the review makes for reallocating some of the spending during the remainder of the programme. Some of the proposals have so incensed a few Government Ministers that they set out to rubbish the entire review. This controversy has tended to take attention away from what the authors have to say about an equally important matter, the question not of where the money is spent, but of how well it is spent. What they have to tell us in that regard is, to say the least, disturbing.

One would have thought that, with such vast amounts at stake, the evaluation and choice of projects and their management and control as they proceeded would be of the highest possible standard. The review, unfortunately, shows that this is far from being the case. In some respects it seems that we are going backwards. One of the benefits we gained from the EU-supported spending of the 1980s and 1990s was a move away from the stop-go of annual budgeting to the more cost-effective multi-annual funding approach. The review highlights the fact that under the NDP we seem to be reverting more and more to annual budgeting. This gives our friends, the mandarins in Merrion Street – I hope they do not mind being called mandarins as it is a term that is in common usage – more control over the spending. It does so, however, at an unacceptable cost. They should not be allowed to get away with this backsliding. We should insist that they adhere to the lessons so patiently taught us by the EU, even though its input in spending is decreasing.

A regular theme of mine is the apparent lack of interest in the Department of Finance in the concept of cost-benefit analysis. It seems particularly averse to the discipline of evaluating the costs and benefits of a proposed project as a decision making tool. Reference was made to this recently in the Companies (Auditing and Accounting) Bill in terms of ensuring the regulatory assessment was being done, which it clearly was not in that case. More importantly, it does not apply a cost-benefit analysis when circumstances change during a project to see if it is still worthwhile.

The authors of the review draw attention to the impact this approach has had on what the Leader and Senator Higgins referred to and what I am tempted to call the ill-fated Luas project. It appears to have encountered many more problems than appeared would be the case when it started. They tell the story, which would be quite amusing if it was not so tragic, of how the project started as one thing at one price in 1993 and then went through a succession of changes as the years wore on. What all these changes had in common was that they greatly added to the bottom-line cost of the project. We have ended up with a still-unfinished light rail system that will cost at least three times its original projected cost.

Whether all these changes were for the better is not the point. At no stage were they subjected to the rigours of a cost-benefit analysis. The project was just allowed to grow and grow, to lurch blindly from one thing to another, without anyone putting up their hand and saying: "Hold on a minute. At this cost, is this still a good idea?" One of the most important recommendations in this review is on page 12 of the summary, where it states that consideration should be given to the establishment of a unit in the Department of Finance devoted exclusively to the conduct/commissioning of cost-benefit studies on major projects. I add my hearty support to this recommendation. For a long time I have found it totally incomprehensible that Government spending, especially our capital spending, does not use the cost-benefit concept. If any company in the private sector, and I know those of us in the House who are involved in such, failed to use that discipline in its spending decisions, it would be out of business very quickly.

Let me give an example of the starkness of this issue. The National Safety Council produced figures based on international experience which show that money invested in promoting road safety pays off at a rate of seven times what is invested. It is not a case of putting a price on the benefit of being alive rather than dead as a result of a road accident. We are talking about hard money figures in respect of the benefits which accrue directly to the State in terms of road safety. When challenged at a recent Oireachtas committee, officials from the Department of Finance admitted there was no room in their approach for a consideration of such cost-benefit analyses. In this day and age, that is a shocking admission. In the absence of a proper approach to costs and benefits, we can be sure that a great deal of the money invested by the State is badly spent and that some of it is wasted entirely. I would be a great deal happier if the energy generated by the publication of this review was directed to achieve better value for money than all the spending on the national development plan. Money has been dissipated on turf fights for a share of the cake. The danger is that the focus of attention is on such fights. While the Minister's heart is in the right place and he has to battle this problem, there is a challenge for us. We must ensure that we see the larger picture and grasp the opportunity to do something about it.

Dr. Mansergh

I welcome the Minister of State at the Department of Finance, Deputy Parlon, and his officials, one of whom is a former colleague of mine.

The report of the Economic and Social Research Institute is of considerable value. I am an admirer of the institute which provides independent analysis from which we can learn whether we agree with every recommendation it makes. Even if we do not agree with its recommendations, the ESRI stimulates debate and asks questions which is a good thing. Obviously, the Government will make decisions as in some, though not all respects, it has more information at its disposal.

The tone of the report is positive overall. It is clear that substantial public investment has taken place and will continue to be made at unprecedented levels. The report makes the point that public investment not only makes a short-term contribution to sustaining activity in the context of an international downturn, it also has a long-term input into competitiveness. According to a phrase used in the report, public investment is a stepping stone to realising our full potential. Undoubtedly, this is one of the keys to handling our deterioration in competitiveness. The ESRI argues that the macro-economic returns from the national development plan are higher than anticipated with 7% added to GNP from 2000 to 2002 and a 3% long-term contribution to growth.

While I would be the last to dispute that we could do better in certain respects, there is no basis for agreeing with the Fine Gael spokesman, Senator Higgins, that this report is a serious or damning indictment of the Government. That is a gross exaggeration of the measured and constructive critique in the report. Senator Higgins spoke about the importance of the EU to the west at the time we joined. When Padraig Flynn was a Minister and, subsequently, a Commissioner he did his bit for the west as did Senator O'Rourke when she was a Minister.

Senator Quinn mentioned the national competitiveness report which we should note and consider seriously. However, it must be remembered that it puts countries like Germany, which has three times our rate of unemployment, ahead of us. We must look at these things in perspective. We have a much better employment rate and financial situation than Germany. With all due respect, the national competitiveness report represents a businessman's perspective. While that is important as businessmen are the people who make investments, we should not adopt a completely trusting attitude to the report. I do not wish to accuse Senator Quinn of being naive. It is a useful measure like an opinion poll. The report has certain value but that value is not unlimited.

My experience of the Civil Service tells me that Senator Quinn is completely wrong about cost-benefit analyses. Most infrastructure projects are subject to detailed cost-benefit analysis. I have attended the Government's sub-committee on infrastructure and I know that practically everything is subject to a cost-benefit analysis. I accept that there are criticisms to be made of changes we have made, but to demand a cost-benefit analysis for each is to support the stop-start attitude which has been condemned. We have to get on with things and make decisions. It does no good to wonder in the middle of the Luas project whether it is a good idea. We must finish it.

Interesting points are made in the report and I will refer briefly to them. The ESRI draws attention to the fact that spending on investment is 27% of GDP compared to an average of 20% in Germany, France and the UK. That means on an individual level we have less per capita income because we need to invest more. This is interesting. We have built up the construction sector and our housing output last year was, in absolute terms, one third of that in the UK and a quarter of that in Germany despite their vastly greater populations. There is clear merit, as the ESRI report points out, in fast tracking major public investment and legislation in that regard will be published shortly. The report points to an interesting paradox whereby wage rates for the unskilled are rising relatively quickly while wage rates for skilled workers are dropping. However, this, to a degree, may be a temporary phenomenon. The ESRI report suggests that returns on infrastructural investment are higher as a result of the growth in the 1990s and the success of our economy than they would have been previously.

Comments are also made in the report in respect of regional balance. While the report states that the regional balance is better as a result of the national development plan than it would otherwise be, the ESRI is not happy. I am not happy either with the balance of investment between the southern and eastern region, which is not the same thing as the south east region and the BMW region. One of the problems to which the report refers only in passing is that there is insufficient disaggregation in the southern and eastern region. The south east region has done quite poorly in recent times and I draw the attention of the House to the limitation of an analysis which only divides the country into two regions.

The report points out that the returns on education are substantial although they are longer term than returns on infrastructure. I regret that the report has little to say about the value of investment in schools. The ESRI report states that the more rapidly we invest, the higher the cost. The report also suggests that the Berlin Agenda 2000 was front-loaded particularly as far as the southern and eastern region was concerned. Although this suggestion is new to me, it makes sense. The ESRI is complimentary about the progress on non-national roads and water projects and positive about the roles of culture, recreation and sports in regional development. I agree entirely.

Like Senator Higgins, I disagree with the ESRI on agricultural development and related matters. The institute does not seem to appreciate that investment is needed to sustain what is there. Agricultural investment must be made at a level which allows the same jobs to be done, improves productivity and provides the freedom to contribute in other ways to the economy. That aspect of the report is disappointing and superficial. The ESRI has had a blind spot in regard to public transport for a long time. It opposed the DART when it was proposed and has reservations about practically everything other than buses. Senator Higgins asked from where the character of the report comes. There is a touch of leafy Dublin 4 about the ESRI, which shows itself in its attitudes to agriculture and public transport, since one probably does not need public transport to reach many parts of Dublin 4.

On my way to a funeral outside my constituency this morning, I passed through the Glen of the Downs project on the N11. The speed limit on this beautiful new dual carriageway is now one third lower than when it was a twisty single lane road. I do not understand why the public must be deprived of the value of expensive investment, not to mention battles with folks in trees. Why must we now crawl where, at least at some times of the day, we used to be able to travel at 60 mph? Presumably, the point of public investment is to save time. However, I do not see how that is the case in regard to the N11.

The ESRI is correct to ask why we spend money building hospitals which we cannot subsequently bring into service. We must have a better match between current and capital expenditure. This is a positive report in that it supports public investment and I hope and am confident that we will not see public investment slashed for budgetary or financial reasons as happened in the 1980s.

Mr. McDowell

I am pleased to comment on this good report which is part of an important process. Senator O'Rourke complimented the Government on having commissioned the report even though it is a requirement of the national development plan, at least in regard to the CSF element. Nevertheless, the Government also correctly chose to evaluate domestic spending.

It is difficult to avoid the temptation of scoring a few party political points and I would have been inclined to do so had the Government not popped up and invited us to kick it down. This is a serious report which makes serious recommendations and for four Ministers to rubbish it in quick succession, a matter of hours after its publication, makes a nonsense of the whole process. The situation is not helped by the Taoiseach's typical blather which seems to mean nothing at all. The Government should have observed the dignity of giving a serious and considered response to the process of evaluation. Not to have done so does considerable disservice to the ESRI, those who drew up the report and the whole process. I am sorry that is the case.

The report states that the priorities and concept of the national development plan are good but that delivery has been poor. It has been behind time and over budget in most cases and there is no system in place to properly prioritise projects. These are serious complaints about deficiencies in the way in which we are progressing the plan, resulting in projects being delivered late and over budget and priority projects not necessarily being delivered first. This is a serious reflection of the status quo.

If we were still enjoying the economic circumstances we did two or three years ago, when we could afford almost anything, it would not matter so much. However, the inevitable result of the current state of the economy is that some of these projects will not happen at all and many others will not be delivered for many years, which is regrettable. If that is the case, we must examine how we prioritise projects.

The report states that infrastructural expenditure is important and should continue irrespective of economic circumstances. However, the Government and, in particular, the Department of Finance have indicated that they propose to cut back on capital projects because it is easier to do so. While yesterday's numbers were good, they indicate that Departments are taking the easy option by cutting back on new spending for capital projects. The ESRI states that we must accept the basic premise that such projects are necessary to sustain and improve economic activity and that it is short-sighted to cut back on them because the economy is not performing as well. The Government is headed towards this easy route and the Department of Finance should exercise its management role and state that this should not happen. We will keep a close eye on what happens on budget day to ensure that the 5% minimum for capital expenditure is maintained.

I was fascinated by the measure of the returns which the ESRI calculated. The report states that GNP was 7% higher in 2002 than it would otherwise have been and that the overall return is around 14%. I am not sure how the ESRI arrived at those numbers, since the methodology is not that clear in the report, but they are persuasive. The figures should be highlighted and it is important that expenditure is maintained and projects are delivered in good time.

Senator Mansergh stated that there is a touch of Dublin 4 about the ESRI, which I accept shows itself in some of the prejudices with which we are familiar, such as the anti-rail bias, the support for water charges and the commercialisation of the waste water infrastructure and so on. From an economic point of view, I understand why the ESRI makes such recommendations. However, from a political point of view, I understand why the Government does not touch them and that if the Labour Party was in power, it would not do so either. We must accept and expect that the ESRI will state such things. However, the economic benefit would be outweighed by the political disadvantages and no one will deliver on them.

The national development plan sets out a strategy which is intended to increase competitiveness, improve access to markets and improve inter-urban transport. However, our roads strategy has done none of this and is no longer designed to do so. Rather, we have improved suburban routes around Dublin. Virtually all the big expenditure has been focused on the Dublin region through, for example, the Dublin to Kildare route, the Dublin to the Border route through Meath and the improvement of the N11 through the Glen of the Downs, to which Senator Mansergh referred. All of this is intended to improve access to Dublin for commuters more so than for business. I accept this is necessary, but public transport would be a better means of achieving it. It means we have lost sight of the other principle aim of the roads project which was to improve access for business and individual passengers to the regions.

It is clear from the recent noises made by the Government in regard to Waterford that its priority is not to return to such original principles. The ESRI report states that the specifications for the Portlaoise to Cork road and the N9 south of Kilcullen, for example, are too high. If they are built to motorway standards they could take 55,000 vehicles a day, whereas at present they take about one third or one quarter of that figure. What is not spelled out is that if it falls to below dual carriageway status to wide two lane roads, it will only comfortably carry approximately 2,000 vehicles a day, which is well within the current usage. Within five or ten years, it is virtually certain that on the Waterford road, including most of the other major national primary roads, we will be above that usage.

The choice is quite stark. There are motorways and segregated dual carriageways which can carry a lot of vehicles – in some cases a lot more than they currently carry – and there are wide single lane roads that can carry much fewer. One can easily mess up the main road by having a few trucks travelling at 40 or 50 miles an hour. It does not matter how many cars use the road per hour, if a couple of trucks are travelling slowly, it will encourage people to overtake in dangerous circumstances and slow up people a lot. Irrespective of the usage numbers at which economists inevitably look, there is merit in building to a higher specification if people are to travel relatively quickly from our major cities. I agree with the Minister, Deputy Brennan, that in looking to the future we must consider what is appropriate not just now but in 20 or 30 years' time. Our experience with the M50 in Dublin would tend to bear out these sentiments.

Before leaving the roads issue, I would like to comment briefly on part of the Indecon report to which Senator Higgins referred. I have not had an opportunity to do so since it was published during the summer. It suggested that the savings in terms of time between the major urban centres would not be huge. For Galway, it referred to a saving of 36 minutes, that is, from 157 minutes currently to 121 minutes. Some of the figures are bizarre. It outlined current travelling times from Dublin to Galway of 157 minutes; Dublin to Limerick, 145 minutes, or just over two hours; Dublin to Cork, 205 minutes, or less than three and a half hours and Dublin to Waterford, 125 minutes, which is just over two hours. I do not think I have ever managed to travel between Dublin and any of these centres within these times. I travel regularly to Lisdoonvarna, in Senator Dooley's county, from where my wife comes and it rarely takes us less than four and a half hours, even on Sunday morning. How one can get to Galway in just over two hours is beyond me. We must sometimes treat what economists say with a certain measure of scepticism.

Public transport is one of the interesting issues to which the report refers. It specifies that the moneys allocated are being under-spent and that priority is not being given to public transport by the Government. It goes into some detail about the total farce of the Luas project. I have no doubt that in a year's time – assuming it is built – the Luas will provide a decent comfortable service for those who use it along the two lines provided. There is no doubt that if one had carried out the cost benefit analysis when the money was ultimately committed, the argument that it was good value for money would not stand up. In terms of the number of people it will transport per kilometre, the Luas does not stand up to any reasonable examination. As Senator O'Rourke said, the point is made in the report that we never factored in, not just in that project, but also in the port tunnel, the economic costs of the disruption caused.

This is an important factor as we again consider whether there is to be a metro service in Dublin. The fact is that a metro would not have cost a great deal more than Luas has cost already. The on-surface disruption would be a great deal less because the project would be carried out underground. My party's spokesperson, Deputy Shortall, has not completed her consideration of the whole metro project. It is right that we should take our time to do it and look at the cost benefit analysis. My view is that the project is worth doing. It may take 20 or even 30 years to complete, but it must be done.

I do not buy the bus argument. There is a limit to the number of QBCs one can allow in Dublin. They are cost effective and they have delivered a better service where they exist. However, the usage of public transport generally is higher in the areas served by both bus and DART. There is a demand for rail which will never be met by bus. We should acknowledge this and get on with improving the rail service in Dublin.

I want to refer to the health service to which Senator Mansergh referred. There has been a certain amount of distortion about what the report said about the service. It does not state that we should not have 3,000 more acute beds although clearly we should. A host of reports, including the recent Hanly report, states that we must have at least 3,000 more beds. It states that doing this last year when 250 to 270 beds were closed at any given time was stupid, and to do it at a time when one has allocated in a preordained way 20% of beds in public hospitals for private use is also stupid. I endorse and accept both these sentiments.

We must sort out the public-private mix which is ingrained in our system at this stage. I am interested in the recommendation that we should discontinue tax breaks for private hospitals. We must sort out this matter. We must bring the closed beds back into use but this should not take away from the fact that everyone accepts we need to replace the beds that were taken out of the acute hospital service at the end of the 1980s. We have 3,000 more acute hospital beds now than we had then. These must be replaced, otherwise all the talk of reform and all the reports over the last 16 to 18 months will be as naught.

This is a good report. It deserves serious consideration, not just by Government but perhaps by the committees of this House. It ranges so widely that we could merely touch on the issue today. I am pleased we have had an early opportunity to do just that.

Dr. M. Hayes

I welcome the report, which is a very useful and necessary exercise. Nevertheless, it is useful for one to cast a cold eye over what has been done. I do not think it is necessary to be in any way thin-skinned or defensive about the conclusions in the report. They are conclusions and not necessarily writ. Sometimes economists have a way of looking at things through an economic lens, which is difficult to translate into the world of political reality, because political and other judgments must be made at the same time.

The report points out the importance of cleaving to the policy of capital investment in infrastructural projects. It would be extremely counter-productive not to make the investment now. Most Departments with which I have dealt over the years have a tendency to scale back on projects in order to meet current financial stringencies. This has almost always been a mistake. When projects are scaled back – the M50 was mentioned as a case in point – they require even more expensive remedial works further down the line. It is necessary to relate these things to the capacity to provide current expenditure support for them, particularly to link it to training and other policies to ensure people are there to carry out the work.

It is important to try in some way to demagnetise the Dublin area. The national development plan dilutes this somewhat by calling all sorts of places growth points. To do this, one must have a small number of quite large counter-magnets in other places to provide the full gamut of urban living. One should ask why young people must move to these places and whether it has to do with the quality of life, the quality of choice, the scale of things and so on, which is important.

I wish to refer to an area in which I have a good deal of experience, namely, hospitals. The report states that there are sufficient hospital beds. That may be true but they are not much use if they are in the wrong place. One cannot count these just as bed spaces and expect them to work like clockwork. Investment is needed. I would argue that it is necessary to justify the claim that 3,000 is the right number. It may be that investment in primary care and in continuing community care would change the context in which acute hospital beds are necessary. I carried out a review of hospitals in Northern Ireland a couple of years ago and we formed the view that anything up to 15% or 20% of people in acute hospitals would be better off if they were looked after somewhere else. One might get a better investment that way.

It is ludicrous to talk about a shortage of acute beds when such a large proportion has been committed to private beds, an issue to which the report refers. I have no problem with people practising or availing of private medical treatment, but they should do it in private hospitals. This is an aspect that needs to be examined.

As we live and work in a changing international environment and any programme is only as good as the premises used and the assumptions made therein, these programmes have to be heroic if one is looking forward seven or ten years. The great advantage of a mid-term review is that it provides an opportunity to review and to tack. There are two international movements, which were probably not anticipated to be as strong as they turned out to be when the national plan was being formulated, namely the movement of manufacturing capacity from the west to east globally – movement into China of service industries particularly and back-up industries to India, for example – and the likely impact of the extended European Union. While not wishing to decry or stop this, we have to consider what we have to do to replace those jobs. There is no point in bidding in the world for low price or low level employment. We have to find the means of upgrading skills, upgrading our workforce and getting added value. That requires an acute examination of the education system, particularly at third level.

In the pursuit of a degree-led culture, we have lost sight of much industry-based operations. I consider this in terms of Northern Ireland. We lost an extremely good polytechnic for questionable value. The same is happening in the regional technical colleges or centres, which were the drivers of economic change and were hugely important. The number of people who are now going into soft degree options must be examined. We might also look, rather more than this report was capable of doing, at the all-island capacity to discover to what extent scarce resources can be used to complement each other. There is a tendency among the economists to look for organisation and control. That is important. There is no point in throwing money into black holes.

The health service is such a black hole. Until the capacity to deal with these issues is developed, and that requires implementation of some of the reports that have been put before us, I am glad the Government has introduced a means of following up on great projects. I stand before the House as a person who had to defend at the Committee of Public Accounts a hospital project which started out at a cost of €7 million and finished at €74 million. I know a little about these issues. It would be helpful if those cases referred to in the Comptroller and Auditor General's report were used as case studies. In all cases these were cumulative decisions and I am satisfied that everybody made a decision for what appeared to be a good reason at the time.

I am glad the Government has resisted the temptation to be as dirigiste as the report would recommend. It is important that agencies carry out this work and that it is not all driven by the centre. This should be regarded as a useful report, as a tonic and as a means of trimming the plan. Its general direction is endorsed and I commend the work done.

Mr. Dooley

I join with my colleagues in welcoming the Minister of State to the House and the opportunity to discuss this report by the ESRI. It is timely that we have an opportunity to discuss it so close to its launch. I recognise the input of a number of other important consultants into this report. There has been much comment and interest in the observations of the report's authors, particularly in the areas where they are critical of elements of the projects associated with the national development plan and the management of those projects and also where a number of policy changes have been identified and where there has been a negative reaction from the Departments and Ministers concerned. As a result, there is a perception that the NDP has not been delivering. It would be sad if that were allowed to continue. It is important to recognise that the broad thrust of the report is complimentary of the NDP. It recognises the importance of the initiation of the NDP and of moving away from the methods of the 1980s where projects were funded purely on a year by year basis. As I read it, the report recognised the importance of the current position evidenced by the achievements of the past three years.

It is worth noting that there has been significant progress despite the changes in economic circumstances. When the NDP was compiled in 1999, there was a different set of economic circumstances. Despite the dramatic changes that have occurred, the report suggests that the underlying strategy of the plan is as valid now as it was then. There is no doubt that the plan is delivering, particularly through the operational programmes, to which the Minister has referred, on sustainable national economic and employment growth, consolidating and improving Ireland's competitiveness and in terms of social inclusion.

The area about which I would be concerned, where the NDP may not be delivering to the extent originally envisaged, is that of balanced regional development. It was heartening to hear Senators from all sides, particularly Senators McDowell and Maurice Hayes, identify the importance of balanced regional development.

There has been major investment in the key areas within the regions. Regional development is critical for a number of reasons, not only for the sake of the development of the region concerned but, as Senator Maurice Hayes said, in terms of easing the pressure points of the east coast and, in particular, Dublin. That should be a critical part of the development plan. I do not want to appear parochial but as Senator McDowell has identified, there is a lack of investment in infrastructure in regions such as Clare and the west. That, too, needs to be addressed.

The report also notes that despite both the world and Irish economic slowdown there has been no positive effect on the pressures on infrastructure. This relates to the east coast, particularly Dublin. It also indicates that there is a high rate of inflation in wages and the cost of housing despite the downturn in the economy. Both of these negative elements are clearly identified as affecting our competitiveness. Something must be done about this.

The answer lies in an accelerated programme of regional development, which the NDP alone will not deliver. We must, therefore, turn our attention to decentralisation on which the NDP has the capacity to deliver. Unfortunately, the report does not prioritise the projects I believe would have the capacity to deliver on regional development. The focus seems to be on Dublin and the eastern region.

The report recommends an increase in investment in urban public transport. The focus is not on places such as Ennis, Ballina or Midleton, but on bus corridors and light rail infrastructure within the city of Dublin. The report also mentions lowering the priority of mainline rail which does nothing for the concept of regional development. It states that we must recognise that improved public transport will require a major increase in urban density in order to operate efficiently. This will be difficult in Dublin, which is a low-rise city. The capacity for greater density within the confines of the city is virtually impossible. There is talk of an increase in spending on urban transport while at the same time an attempt is being made to increase the density within the city as it stands. If an increase in density is needed in order to deliver a viable public transport system, the plan is not viable. Dublin is no longer a greenfield site and there are no more green or brownfield sites in the city. The concept of increasing density is a flawed approach. It would be better to prioritise projects that would encourage commercial and residential development outside of Dublin, in the eastern region in particular.

The report also recognises that second houses and holiday homes have created an inflationary pressure on the construction industry and proposes the taxing of these homes, a proposal with which I would not agree. If we made it easier for people to live and work in the regions in which they want to live, they might not need holiday homes. Obviously, the west and mid-west would feature strongly in this regard and we would be delighted to accommodate people.

This report recommends greater investment in national and non-national roads, which would be beneficial. It is important to ensure that links between the capital city and other towns are continually upgraded although they may not need to be upgraded at the pace identified in the plan. It is more important to examine and upgrade pressure points within the regions. We could talk about areas such as Limerick, Ennis and Galway. We can recognise that when the link between Dublin and Portlaoise is complete, the NDP still envisages building a motorway from Portlaoise to Limerick. However, in my view there should no longer be as great a priority on that project because there are much greater pressure points in and around Limerick and on the link between Limerick and Galway. I do not mean the Ennis bypass because it was identified earlier and is going to go ahead next year. I am heartened also that the fourth river crossing in Limerick is being accelerated. There are pressure points within the regions, as identified in the national spatial strategy, which are causing a kind of noose around the neck of prospective development therein. It is about time these projects were brought about.

The difficulty with the national development plan is that it preceded the national spatial strategy. If we were working from a greenfield plan, it would probably be better to have the national spatial strategy first and have it followed by the national development plan. This would make it easier to prioritise the investment potential and needs in these areas.

It is necessary to look at rail infrastructure in the regions. The report tends to move away from rail but the western rail corridor and the Shannon rail spur are two fundamental elements of growth in that region.

One other issue raised in the report is finance. There seems to be a question mark over whether finance should be raised through taxation or borrowing. As most of these projects are capital projects, it is critically important that the Minister looks more towards borrowing. Future generations will benefit from the effects of this development. My attitude is that we should let them pay their share.

Mr. McHugh

I welcome the Minister of State to the House. From the point of view of my constituency and its general hinterland, the BMW region, the ESRI report does not really affect us. The people in this region know there is wastage and that there are problems regarding value for money and general spending. General expenditure is tilted towards the east of the country. We did not need the ESRI report to prove that to us, nor did we need any consultancy review. We know there is an imbalance.

One of the key priorities of the national development plan was balanced regional development. I remember that balanced regional development was a main issue for the Minister of State during his election campaign. However, as matters stand, the BMW region has lost out. We have lost in terms of infrastructural investment, be it broadband services or roads. I will highlight some of the figures later.

The south-east of the country has gained considerably with regard to broadband and information technology investment. It has attracted high-value, high-tech companies, such as pharmaceutical companies, from America. An €18 million information technology project was launched quite recently in that part of the country. This can be compared to an investment in Donegal of €4 million. There is a considerable difference. I acknowledge and commend the €4 million spend in Donegal. It is important because it will be instrumental in attracting high-tech companies to the county –€3 million will be spent in Letterkenny and €1 million has been spent in Gweedore. The Tánaiste has been talking about change and transition from a manufacturing technology base in Donegal, from a low skill labour force towards a high skill information technology one. If she is to put the money where her mouth is, she must come on board and consider all the people who have lost their jobs in the Fruit of the Loom and other textile industries in Donegal. The Gweedore industrial estate is now barren. There is no point in expecting an investment of €4 million to address the infrastructural needs of that part of the country.

The BMW region has the figures to prove that tourism is down in the region. Flagship projects have been touted over the past four or five years, since I joined Donegal County Council in 1999. According to the national development plan, the flagship projects for Donegal will not happen because an area must have in excess of 100,000 visitors annually in order to get one of these projects. There is a serious problem if we are restricted under this plan in terms of numbers. It is a case of the cart and the horse – we do not have the numbers at present and that means we do not get the project. That matter must be addressed also.

The National Roads Authority payment in 2000 was €19 million, but the actual spend in 2002 was €9 million. That is a dramatic drop. We have one of the most modern design offices in Donegal town, which also serves parts of Leitrim and Sligo. Engineers have designs and plans and are ready to spend money on projects, such as by-passes in Donegal, but that has not happened. Payments to date in 2003 by the NRA to Donegal amount to €2.9 million compared to an actual spend of €19.8 million in 2000. One does not need to be a rocket scientist, have an ESRI report or employ an expensive consultancy company to tell the people in the north west that they are playing second fiddle in a country that is completely imbalanced. This must be addressed in the mid-term review of the national development plan.

In 1999, some 85,500 jobs were created by small enterprise in the BMW region, which includes Donegal. That went down in 2002 to 36,000 jobs, which is less than half the amount of jobs created by small to medium enterprise. I take on board Senator Maurice Hayes's point. Perhaps we are becoming too reliant on university based education and are attempting to involve people too much in the literary side as pen pushers. There is an opening in the north west for tourism projects, based on crafts and skills. Opportunities exist and this was proved in 1999 when people set up businesses. However, these businesses are not sustainable because the infrastructure is not there to maintain them.

I know the Minister hears this day in and day out and that Ministers throughout the country are fighting for their own regions. However, the BMW region has Objective One status. It is acknowledged as an Objective One area and, as Senator Higgins acknowledged in terms of the European Union, it has been discriminated against. It needs urgent funding for roads, broadband services and any other type of investment that will help to create jobs in the first place, never mind sustain them.

Donegal is in a unique position because it has 144 km. of border between Derry, Fermanagh and Tyrone, but we have been creating and sustaining our own funding on a cross-Border basis. We have received money under INTERREG as well as from the International Fund for Ireland, but we are not receiving our share of the national spend. The people of Donegal cannot rely solely on cross-Border funds. Those who want to create and sustain jobs cannot rely on Brussels. We want money collected in tax in the region returned and we are entitled to it. It is not too much to ask.

Yesterday, the International Fund for Ireland invested €1 million in a broadband wireless project between Derry, Letterkenny and Strabane. This should be commended and I acknowledge the great funding provided. It will involve a community led approach with groups from Tullyarvan and Buncrana to Convoy. It will be cost-effective because the fibre optic broadband that is being installed in Letterkenny is not cost efficient. It is very disruptive to traffic flow. There are alternatives to putting fibre optics underground.

The Tánaiste and Minister for Enterprise, Trade and Employment, Deputy Harney, talks the talk on Donegal and mentions taskforce documents. She discusses what will be done and how we will manage the transition from a manufacturing base involving textiles to a more advanced highly technological base in terms of attracting high-tech, high value companies into the region. However, that will not happen unless it is addressed in the mid-term review.

People in the BMW region want a review of broadband investment in 2004 because we are not happy with the €4 million provided. We acknowledge it and it will be spent wisely in Donegal. However, we want a second round of funding for more cost efficient broadband. The man in the street knows that putting fibre optics underground will be costly. The businesses involved in the chamber of commerce in Letterkenny will lose out coming up to Christmas. Wireless fibre optics are cost efficient, involve minimal disruption and can be put in place very quickly. Looking at alternative and cost efficient ways of introducing broadband will be key for the region in 2004. We have lost out in the past, but we do not intend to lose out in the future.

Mr. Morrissey

I welcome the Minister of State, Deputy Parlon, to the House for the debate on the mid-term review of the national development plan. This report is one of the most important to come before the Houses of the Oireachtas for some time. The national development plan is the Government's investment programme for the period 2001 to 2006 and covers most major investments in physical infrastructure by the State. Infrastructure is the major priority of the plan and the report acknowledges the importance of tackling the country's infrastructural deficit so that we can reach our full economic potential.

The report's recommendations are very welcome in critically evaluating our spending performance and the delivery of our infrastructure. The report highlights the need for value for money audits on all projects. If we fail to take heed of this criteria it will lead, inevitably, to further delays and cost overruns as evidenced in some of the major projects currently being constructed, such as the Luas and the Dublin Port Tunnel.

For the remainder of the plan, project selection will have to be rigorously enforced. Otherwise, some projects will be undertaken to the detriment of other, more worthy projects. We need to reappraise our spending on project selection at this mid-term point as the capital to complete all projects as envisaged in the original plan is now not available. This is due partly to previous construction inflationary price rises and also because of lower revenue accruing to the State's coffers.

The cost of future road building must be seriously addressed from a design perspective. Design of roads must be assessed on traffic needs and future growth patterns. If this was to happen, the requirement for full scale motorways from end to end to our main cities may not be necessary, although it may be accepted that major grade separated interchanges will be required on the edges of cities. We must ensure that we keep our prospective demand in sight. Otherwise, we may continue to spend unwisely.

Concerning future public transport provision in Dublin in particular, we must be cognisant of the fact that Dublin is a low density city and, consequently, the performance of the public bus may be a less costly alternative. This is because, first, it is relatively quick to implement a bus route and order buses and, second, it is very versatile in terms of reaching the outer suburbs.

Other Senators mentioned greenfield and brownfield sites around Dublin. Some were dealt with recently by Fingal County Council, including the Phoenix Park racecourse in my area. This included a plan for 2,500 houses and if the DTO had its way, up to 5,000 houses might have been involved. It is on a main corridor. It has 275 buses passing the site each day and it has an under-utilised railway line, yet some politicians from the area, for local political reasons, opposed it. However, they are the first to cry out for a DART style service or a suburban rail system or call for the metro to be extended to the area. If the metro, or a DART style system, is to come to west Dublin, or to the Kildare area, our densities will have to increase dramatically and people will have to accept that point.

The Luas system as now constructed raises serious questions about further extensions. Some critics would see Luas as a QBC on rails, at a very high price of €800 million. A proper cost benefit analysis needs to be undertaken for future transport projects. We should double the costs and halve the benefits for all future cost benefit analysis to see whether a project stacks up for investment and whether it is worth doing. This has been our experience with the major infrastructural projects in this city; when one considers Luas one sees that the benefits are not those we expected and the costs have almost trebled.

The report refers to weaknesses in project management. This is its major understatement. In many cases such as the Red Cow roundabout and the port tunnel, we have under-engineered. Today at the Oireachtas Joint Committee on Transport, directors of the RPA briefed us on some of the reasons for the delay in Luas. It is clear to me and other Senators that poor contractual arrangements are in place and no financial penalties can be imposed by the RPA to force the contractors to complete the works on time. We must look to European experience, such as that which the Madrid metro experts outlined to us in their visit and presentation last June. I can only conclude that when one evaluates our performance against best European practice, we are found wanting.

This is not because this Government has not made resources available but rather that we have been too lax in our approach to project management. In conclusion, I hope that the Cabinet will examine the many recommendations on project evaluation, selection, design and cost so that this country will be able to compete with the best in the world in terms of infrastructure and our competitiveness will not be hindered.

Mr. Ryan

I suppose having a national development plan is better than not having one. That is a positive note on which to start. I wholeheartedly and enthusiastically agree with Senator Morrissey that it appears that our national capacity to manage projects is more akin to a Third World country than a country that has aspirations to be a leader of the modern technological revolution. This morning I read the league table of competitiveness on the World Economic Forum website. I share with Professor Paul Krugman, a healthy scepticism about the concept of national competitiveness. Professor Krugman was for many years a professor of economics in the Massachusetts Institute of Technology and is now based in a university in New York. One runs into all sorts of problems if one looks deeply at competitiveness, but everybody uses it. The World Economic Forum provides reflective assessments, if nothing else.

It is worth noting that notwithstanding much that is said and written here, the most competitive economy in the world, according to the World Economic Forum, is not the United States, but one of the boring Northern European social democratic countries, Finland. Up there well ahead of us in the top ten are Sweden, Norway, Denmark and The Netherlands. If we are to have a plan that will make us able to be, in the jargon of the day "growth competitive", we would do well to reflect on how those countries conduct their business. They do it with real pragmatism. They have a strong record of trying to find out what works best and doing it, and they have faith in the future.

I do not know whether we need motorways from Dublin to Waterford. There is a good case for saying that we do not need separate motorways to Waterford, Cork and Limerick. That is a second argument. The road and transport infrastructure of countries such as Sweden, Denmark, Norway and The Netherlands, which has a population of 14 million in an area the size of Munster, is very efficient. Any problems this country has in land acquisition for infrastructural development must be multiplied four or fivefold in a country such as The Netherlands, given its population density and size.

I would love the Minister of State to tell us what is the average compensation being paid by the National Roads Authority for agricultural land per acre and what multiplier of the current use value it represents? There was a great kerfuffle when the Minister of State was in another role and then all was sweetness and light. When I hear one half of a conflict suddenly going quiet I smell a good deal for the now silent parties. How much has that cost?

There is good reason to review the national development plan although I share part of the scepticism of some Ministers about the conclusions in the ESRI report. The problem with economists is that they are much better at analysing the past than telling us what will happen in the future and they make the mistake that foolish investors make of assuming that the past is a good guide to the future. No economist forecast the 1997 to 2002 boom. Some, including the ESRI, forecast fairly good growth rates of 5% or 6% but most economists would have told us that average growth rates of 8%, 9% or 10% over a sustained period of six or seven years were impossible. When this plan was first launched, it looked as if we would have a network of motorways in three years but suddenly everything fell behind, costs increased and went out of control.

This echoes Senator Morrissey's point with which I agree, that this country does not seem to have assembled the project management skills that exist in other countries. It is worth saying that the small European countries that are ahead of us in the competitiveness league built transport infrastructure, road, rail and other, at a time when they were poorer than we are today. They made a policy decision not to cut taxes across the board when they got rich but to sustain in some cases moderate, and in the case of Denmark, high, levels of taxation. We are not likely to reach Danish levels of taxation but moderate to high levels of taxation could generate resources to build the capital infrastructure that now sustains those countries. Finland underwent a severe economic shock with the collapse of the Soviet Union, as did Sweden in the 1980s but both countries have readjusted. They have not destroyed the things they value, particularly the welfare state. They have adjusted to a new economic reality and have done so because they have managed to continue to invest in infrastructure in the areas of road, rail and human resources. They have some of the best education systems in the world and some of the best health services, although there are waiting lists. I read an article in recent months to the effect that there is considerable controversy in some of the Nordic countries about the health services, because there are waiting lists. As some people have to wait more than six weeks for a major procedure, it is a matter of great concern. Our definition of having no waiting lists is to have nobody waiting more than three months, which is twice that length. Our definition of zero waiting lists is twice as generous and that is one of our problems; our own sloppy standards are those against which we choose to measure ourselves.

I have no idea how the national rail procurement agency got the figures for some of its projects. I have no idea how they were suddenly halved and indeed, halved again, when the RPA got one piece of advice about the Madrid figure and another on the Dublin figure. I am sceptical about both figures. I do not believe any more that the necessary expertise and competence exists. It is probably available, but it is most assuredly not being used in this country. The only public body I know that seems to be able to deliver major capital projects on budget and on time, is the ESB. In my wilder moments, I suggest we should engage the whole ESB to become project managers for the country. It seems to be able to manage projects much better than anybody else when it is allowed to and is not subjected to political interference.

What concerns me in this review is the fact that the instinctive reaction appears to be that since we did not do things very badly in the past, we must therefore stop doing things in the future. Therein lies disaster. I would challenge anybody, whether they are Greens or anything else, to say that we currently have a decent road infrastructure. We could argue forever about motorways here or there, but it is universally accepted that the quality of our road infrastructure is abysmal. When The Irish Times did a little survey on the activities of the National Roads Authority for the last couple of years, it found the most it had done was reduce one journey time by 20 minutes. I suddenly had an insight into how remote from reality that body is because it reacted very angrily and said that the Watergrasshill bypass, quite near to where I live, had eliminated a notorious black spot. I have travelled through Watergrasshill, perhaps 1,000 times, in the past 30 years – driving from Cork to either Kildare or Dublin. I have been held up in Kildare, Monasterevin, Cashel, Fermoy and Mitchelstown. I was never held up in Watergrasshill, yet the body responsible for developing our road infrastructure told the nation it was a notorious black spot. It happens to be 150 miles from Dublin, so perhaps the NRA does not know much about it, but it does not say much for the sort of information on which it is basing its decisions nor does it give me much confidence in its capacity to make decisions.

Quite simply there is still a huge need for infrastructural investment. The solution to our poor performance in the past is not to reduce our investment, but rather to change part of it to investment in efficient project management. I do not care whether this is done by the public or the private sector as long as it delivers value for money. I am sceptical about public private partnerships, incidentally, as we have learned to our cost in Cork, when a €13 million school of music ends up costing the taxpayer €200 million. It strikes me as a very good bargain for the private sector, but not much in terms of efficiency. We need project management skills, cost evaluation and control as well as project control and not a retreat from the necessary investment.

Ms White

The publication of the ESRI's mid-term evaluation of the national development plan and the community support framework has attracted much attention. As the Minister of State said in his comprehensive speech, those who take the time to read the evaluation will see that it is a broadly positive account of the plan's performance to date. The resilient performance of the Irish economy in the face of the global slowdown is most encouraging and has surprised many. Our unemployment rate remains at almost half the European average. Some 95% of our people are in employment. While growth has been subdued compared to the standards we enjoyed in the 1990s, we can still derive confidence from our performance.

It is clear from the ESRI's report that the NDP has contributed greatly to this resilient performance over the past two to three years. The four key objectives of the plan were continuing sustainable national economic and employment growth; consolidating and improving Ireland's economic competitiveness; promoting social inclusion; and fostering balanced regional development.

The ESRI authors, including renowned economists John FitzGerald and Conor McCarthy, make clear that the NDP has thus far made significant progress towards its objectives of continuing sustainable national economic and employment growth and consolidating and improving Ireland's economic competitiveness. Competitiveness is a big issue at the moment, so it is encouraging that the plan is having a positive effect in this regard. The NDP's underlying strategy remains as compelling and relevant as it was when it was first devised. The research in this ESRI report highlights the importance of tackling our deficit in physical infrastructure as a crucial component in reaching our economy's, and consequently society's, full potential.

We heard many negative comments on the report last week. We heard criticism from politicians on all sides. I believe this has masked one very interesting conclusion on the part of the authors, namely that "the macroeconomic returns from investment under the CSF/NDP are significantly higher than previously estimated." This is very encouraging news and it underscores the continuing importance of the Government's commitment to tackling our infrastructural deficit over the coming decade. Expenditure under the plan over the first three years raised the level of GNP by over 7% above what it would otherwise have been in 2002. A proactive and interventionist approach kept the economy in growth. A long-term strategy had a significant short-term gain.

In the case of social exclusion, the NDP has made a real impact, both specifically and also through the impact of all the programmes taken together. The single biggest item of expenditure has been social housing. The considerable investment in this area has had a major impact on promoting social inclusion and a positive effect on socially excluded groups. A dramatic increase in resources has been devoted to this priority – in 2003 the resources were roughly double what they were in 2000.

The report states there is evidence that the investment in education and training has significantly reduced disparity in earnings, with positive implications for social inclusion. In the case of balanced regional development the evidence suggests that the NDP has made a positive contribution. Without it the regional imbalances we all wish to see rectified would be greater than they are. A good politician has a vision and the drive to implement it. We are not here to be accountants, but to have a vision for the development of the State. When the DART was being built in the early 1980s, there was controversy day and night, as there is now about Luas. Everyone said that only the rich would benefit, coming from Blackrock through Dublin 4 to the city centre. Where would we be today if politicians had not had the vision to build the DART? Mr. Charles Haughey displayed the vision to build the Irish Financial Services Centre and there was constant opposition on the part of the Labour Party to that concept. There is a small minded attitude to many projects undertaken in this State. We are building for ourselves in order to deliver our own future and that of generations to come. I expect politicians to have vision. Naturally, projects must undergo cost benefit analysis but we must imagine where we want the country to go. A lack of vision aborted the railway line from Sandyford to Harcourt Street, a major mistake.

I attended the meeting of Dublin City Council on Monday that was addressed by the Minister for Transport. He had already criticised the ESRI in his reaction to its report, saying it had not done its homework on Luas. He said that the project that is near completion is significantly different from that in the original plan. At the council meeting he stated that the infrastructure of Luas today is within budget and will be achieved within a three year timeframe. All the fudge and exaggeration of the issue is amazing. There are those who speak in the Oireachtas on these matters without doing their homework first and they say what they like.

This evaluation is broadly positive. I welcome the dynamic growth in our economy and continuing growth in our population.

Mr. Browne

This debate on the ESRI report is premature because we do not yet have the full document. What we have seen so far contains good and bad news on which we should reflect. When we get the complete report we can examine it in greater detail and the Minister of State might return to the House when we have had more time to go through it. The reaction of the Government to the report, however, was laughable, as Minister after Minister queued up to rubbish the report and then the Taoiseach, in his normal style of leadership, undermined his Ministers by saying the report is not nonsense.

The report makes interesting comments on housing. If the founders of this State returned and saw the mess politicians as a whole have made of housing, they would be appalled that they fought for freedom to end up in this position 80 years later. There is a choice between having two or three properties or none. I have nothing against those who have two properties; they have worked hard and deserve their own home and a holiday home or second property and I admire them. It is totally unfair, however, that we have created a system where people cannot afford to take the first step on to the property ladder because of investors, tax breaks and holiday home construction taking up builders' time. Those holiday homes are often occupied for only one week in the year. In some tourist towns, holiday homes have been beneficial but they have also been an unmitigated disaster in many cases, putting huge pressure on local authority services.

It is time to reflect on housing policy. Section 23 tax breaks will be phased out within the year. The original idea behind them was to regenerate areas but they have been taken over by investors who have driven the first time buyer out of the market. That person is then forced to rent the house, which he or she cannot afford, so he or she goes to the health board for a rent subsidy, beginning a vicious cycle. We must take on some of the points made by the ESRI about the property market and I look forward to examining this area in depth when the full report is published.

Transport infrastructure is a key area, as it should be when it makes up the bulk of NDP expenditure, but the Government does not have a good record in this area. In spite of his fantastic record in the IFA, as soon as the Minister of State was elected, the Government imposed capital gains tax on those who had land compulsorily purchased for the building of motorways. That was not explained to those people before the election. I have written to the Minister for Finance on behalf of people affected by CPOs and the responses I received are far from satisfactory.

The Progressive Democrats are in turmoil in the south-east over the construction of a motorway. Senator Dardis made a clear commitment in south County Kildare during the last general election campaign that if the Progressive Democrats were returned to Government, the motorway from Kilcullen to Waterford would not go ahead. The PD councillor in Carlow, however, is in favour of the motorway, as was the PD candidate in County Waterford in the general election. The Tánaiste is on both sides of the argument. I made a freedom of information request of the Minister for Transport lately and was amazed to find there is no record of any correspondence between the Minister and the Tánaiste apart from general letters referring on other correspondence. I call on the Minister of State to clarify the stance of the Progressive Democrats on the motorway project. Does the party have one? It is split down the middle on the issue.

It has been said that the motorway to Waterford might be scrapped as a result of funding casualties if the fast tracking of the motorway from Cork to Galway goes ahead. The thinking is that the Waterford to Kilcullen road will be the first to suffer. Millions of euro have already been spent in planning and preparing for that motorway, even going as far as signing CPOs for the road. The matter is now with An Bord Pleanála, where it might stay for 18 weeks. Once An Bord Pleanála gives a ruling, the NRA must buy the land in question, even if the Minister announces in December that he is not proceeding with the motorway. The ludicrous scenario would then arise where the NRA would be stuck with land it cannot develop.

The uncertainty about the motorway is unfair to those affected by it. In Paulstown, the motorway goes through the middle of a dairy farmer's land but he has accepted this. If people know what is to happen, they can plan ahead. It is not satisfactory that the Minister is fast-tracking some projects at the expense of others. Projects should not be scrapped but we should realise that certain sections of the road network are better than others. We must learn from the mistakes of the past where we built and improved parts of some roads, leaving the rest like a narrow funnel afterwards. We must prioritise building the bad sections of the road network as mini sections to be joined up to the network at a later date as proper motorway standard dual carriageways. The Minister should consider this.

In the case of the motorway between Waterford and Kilcullen, there are obvious blackspots in Castledermot and Carlow. There are other bad patches between Waterford and Kilkenny. These sections must be prioritised. People accept that the road south of Carlow town to Gowran is a good one and will last for some more years. We should be looking at these in realistic terms and not scrapping or indefinitely delaying projects. When I was nine years of age, I saw the plans for the Carlow by-pass that have never been realised. It is now renamed the outer relief road for Carlow and, more than likely in a few years' time, it will be renamed again as the Carlow inner-relief road because the town will have expanded so much. It is time we put our plans into action.

The ESRI report was mistaken on the group water schemes and the obligations of local authorities in upgrading sewerage and water works. Senators from rural areas will appreciate that local authorities had no choice but to do so. Otherwise, they would have been heavily fined by the EU.

This mid-term review is a discussion document rather than a full plan. However, there is plenty of food for thought in the report. There should be no knee-jerk reactions and rejection of the criticisms of the document. We must look at the criticism, see if it is fair and see how we can improve the NDP. The NDP is funded by taxpayers' money and is not a Fianna Fáil slush fund. It is important that the money is appropriately spent. As spokesman on transport and a member of the Oireachtas Committee on Transport, I do not have much confidence in many of the State transport agencies. We have had a number of stormy meetings at the committee.

I urge the Government to look at some of the issues raised by the ESRI report on housing. It is time we reflected on this issue. It should not be an unrealistic aspiration for people to own their own houses. We should be assisting everyone to be a homeowner. The Government has scrapped the first-time buyer's grant and increased development levies in every local authority. The first-time buyer's grant has now been replaced with a first-time buyer's tax. In County Carlow, the charge for planning permission applications has gone from hundreds of euro to thousands.

Rather than chopping and changing plans for the road network, we must stick to some coherent plan. If necessary, we should prioritise building the bad sections of the road network in such a way that they can be joined up at a later stage to complete the project, whether it is from Dublin to Galway, Cork or Waterford. Will the Minister of State clarify why the plan was changed to have one road going from Dublin to Cork with a spur off it for Waterford? What was the explanation for that decision? I am aware that the EU Commission has expressed surprise at it. It will be helpful to all those involved if the Minister clarifies the position.

Minister of State at the Department of Finance (Mr. Parlon)

I thank Senators for the well-informed and positive contributions to this debate with the exception of Senator Browne who obviously has not seen the plan. It is on the Internet and—

Mr. Browne

There are 1,400 pages.

Mr. Parlon

It is a mid-term review. We have not begun to build the Waterford road. To sort out Senator Browne's confusion, he should sort out where the road may go in his area. The ESRI plan—

Mr. Browne

That is factually incorrect. The road's location has been decided. It depends on funding. This is disingenuous of the Minister of State.

Mr. Parlon

It is appropriate to report on what has been already done. The ESRI report is broadly positive about what the plan has achieved. There are some comments about overruns and price increases that cause concern. This gave rise to some Ministers expressing their concerns as they have their own bailiwicks to protect.

Some of the reasons for the overruns must be taken into account. However, there are genuine reasons in many cases. Construction cost increases have been a factor. The ESIOP projected deflators of 6% per annum for the period 2000 to 2002 are 19% cumulative. Serious inflation of construction costs have been a factor. There was also some initial underestimation specifically identified in the Fitzpatrick road evaluation where the 1999 estimated costs were based on a plus 10% update of the 1996 roads needs survey. There was a 10% underestimation of the true costs increase between 1996 and 1999.

The cost of land has also been a factor and not just for the agricultural sector. Senator Ryan was concerned with the deals that were done and why people were so satisfied with it. Senator Browne also made some reference to these. People are reasonably satisfied with the deals because they are fair, taking into account the actual value of the lands and making allowances for the severance caused. Senator Browne referred to farms being cut in two. However, this is taken into account and compensation is paid for such severance. There is a further bonus, designed to expedite the whole process, when landowners conclude the deal quickly. This is working well.

Mr. Browne

What about the capital gains tax on these transactions?

An Cathaoirleach

The Minister of State to reply without interruption.

Mr. Parlon

As we tend to be parochial in the Houses, I have not had one complaint from landowners in my constituency about this process with the Monasterevin by-pass.

Mr. Browne

They must be very wealthy there.

Mr. Parlon

They are satisfied that they have received a fair deal from the NRA. Concerns were expressed by Senator Higgins about the BMW region and why it has not caught up with the other regions. The Senator will agree that if we were to improve the infrastructure between Ballyhaunis and Dublin, one could start on the Ballyhaunis side with the first 50 km. of motorway. However, this would not be the sensible way. In the first part of the plan, we have majored in working the five spoke wheel out from Dublin. Whether one is travelling from Ballyhaunis, Cork or Dundalk, 50 miles from Dublin there are either recently completed motorways or works in progress. The BMW region will catch up quickly in the second phase of the plan.

Senator McDowell was concerned for our competitiveness. The recent report on this raises some concerns. He stated that our ranking has dropped from 11th to 24th to 30th place, respectively. I thought he was referring to the Fianna Fáil popularity poll. It really is not funny, but when one gets into the competitive premiership league the criteria are strict. We have lost some ground but we are still in the premiership league for competitiveness. We must watch our Ps and Qs. The successful completion of the national development plan, taking into account the very positive and far-reaching recommendations from the ESRI report, will show that the position we have taken is correct.

Clearly the report suggests prioritisation of investment based on cost benefit analysis. This may be an issue for the Waterford road considering the prioritising of further investment in the national development plan and the massive moneys that are still to be spent. A decision will be taken on that basis.

Mr. Browne

So the Progressive Democrats are in favour of a motorway.

An Cathaoirleach

Order please.

Mr. Browne

We have been waiting six months for the answer.

An Cathaoirleach

Senator Browne, I will have to ask you to leave if you do not keep order.

Mr. Parlon

Based on the contributions of Senators, there is acceptance that the overall trend is very positive. Individual recommendations, particularly relating to transport and health infrastructure, need to be considered by Ministers and their Departments. The ESRI is giving the Department of Finance and the Government a clean bill of health and recommends carrying on and keeping a very strict line for future priorities.

Sitting suspended at 5.40 p.m. and resumed at 6 p.m.

Seanad Éireann díospóireacht - Wednesday, 5 Nov 2003

National Development Plan Mid-Term Evaluation: Statements.

Seanad Éireann díospóireacht -
Wednesday, 5 Nov 2003