The new national development plan Project Ireland 2040 could very well be a game changer in terms of Ireland’s future economic prospects. Historically, the stock and quality of this country’s infrastructure has lagged behind our international peers. Poor quality infrastructure in areas such as roads, water and telecommunications has diminished the quality of citizens’ lives and limited the economy’s capacity to grow. By committing €116 billion over a ten-year period the new plan has the potential to address these issues. However, the outcomes will be heavily dependent on how infrastructure policy is implemented and managed. Transparency will be vital in this regard.
Shortcomings in public infrastructure management have undermined the performance of the Irish economy for years. This has been illuminated in a recent report on public investment management by the IMF. Although the IMF finds that the standard of management of public infrastructure in Ireland is stronger than the global average it falls short of the average for the advanced G20 countries. The IMF therefore makes a raft of sensible recommendations for addressing weaknesses in the management of Ireland’s infrastructure that must be implemented if the Project Ireland 2040 is to achieve its goals.
Overall, the IMF makes 27 recommendations aimed at improving how sustainable investments are planned, appraised selected and implemented. A persistent theme across many of these recommendations is the need to improve the collection and use of information about public investment. Critically, there is a strong emphasis on transparency and making this information publicly available.
The information and transparency-related improvements recommended by the IMF include the establishment of a ‘Capital Tracker’ database as a tool for informing many aspects of infrastructure management. Such a database should provide comprehensive information on the annual cost profile of projects and data on adjustments to project design and costs, implementation and delays. It is striking, to say the least, that this type of database has never been established especially when one considers that Project Ireland 2040 is the sixth national development plan published since the late 1980s.
The IMF also recommends improvements to how projects are appraised. The standard of appraisal methodologies like Cost Benefit Analysis (CBAs) is considered good but the IMF recommends improvements including the publication of project assessments including key performance indicators and underlying assumptions. This might seem like a no-brainer but the fact is that appraisals such as CBAs are rarely, if ever, made public. It was interesting to hear Professor Edgar Morgenroth recently tell the Marian Finucane Show that the original plan for Metro North was subject to 3 different CBAs nevertheless none of these were made publicly available. This lack of transparency raises suspicions about how decisions are made about investments costing billions of euros. It protects the politicians and civil servants who make the key decisions from scrutiny and makes them less accountable.
Other recommendations include the strengthening of the ex post assessment of major projects and the publication of such reports. In addition the Comptroller and Auditor General should carry out more performance audits of major investments. These reforms will require commitment by government to invest resources in ensuring public money is well spent. But will politicians and civil servants be sufficiently incentivised to make such investments? Past experience suggests the answer is ‘No’ and this explains why these institutions and structures have never been established or properly resourced to date.
In the context of a €116 billion expenditure plan, the implementation of these recommended measures will involve relatively small changes that can yield considerable benefits. The task of ensuring the implementation of these measures could be allocated to a newly established Infrastructure Commission. The establishment of such a body has been suggested by a number of commentators including the National Economic and Social Council. The general idea is that an Infrastructure Commission should be charged with responsibility for developing long-term infrastructure needs, identification of priority projects and options for funding and financing investments. An Infrastructure Commission would constitute an important institutional development. If it is to succeed however it is important that it is not subject to capture by vested interests and has a degree of independence such as oversight by an external board.
Calls for an Infrastructure Commission highlight wider recognition that the successful implementation of Project Ireland 2040 and the National Planning Framework will require accompanying institutional change. A good starting point would be the adoption of recommendations in the IMF’s Public Investment Management Assessment.
(This article first appeared in the Irish Times)
Eoin Reeves is head of the Department of Economics at UL and Director of the Privatisation and PPP Research Group. His research interests lie primarily in the economics of infrastructure and the public-private mix in public service delivery. This includes issues such as privatisation, liberalisation, and different forms of private sector participation in the delivery of public services.
Eoin has published a number of economic studies of such reforms in edited books and international peer-reviewed journals. These include analysis of the privatisation of state owned enterprises (Annals of Public and Co-operative Economics, Telecommunications Policy), employee share ownership in the context of privatisation (Economic and Industrial Democracy, Employee Relations), contracting out public services (Economic and Social Review), PPP in schools (Public Administration, Public Money and Management) and PPP in Water Services (Economic and Social Review). He recently co-authored a book titled Privatisation in Ireland – Lessons from a European Economy.