Speech by Minister Michael McGrath at the National Investment Office Second Annual Conference: Nation Building: Ireland’s Infrastructure Priorities, 14 May 2021

Thank you for the welcome. I am delighted to be here to speak to you on something of deep personal interest to me and of great policy importance to the Government – Nation Building: Ireland’s Infrastructure Priorities.

I would like to begin by acknowledging the work of the National Investment Office in organising this event. Since its inaugural annual conference in January 2020, presciently titled “Infrastructure in an Era of Uncertainty, through InfraNet, the NIO has brought together policy-makers, delivery agents, external experts and senior academics to consider topics such as regional balance, housing, climate change, and promoting value-for-money in capital project appraisal. They have also engendered a new network for delivery professionals who have been enabled to hear and learn from each other, ensuring that excellence in infrastructure delivery is embedded across the public service.

Continuing on this theme, our speakers, chairs and panellists today are among the best and brightest in their fields.

First this morning, we have Ronnie Downes. Ronnie heads overall Central Expenditure Policy and Reporting in my Department. His responsibilities include: managing the annual Estimates, overseeing national infrastructure investment strategy, promoting budgetary reforms including budget transparency and gender-responsive budgeting, as well as public financial reporting and accounting. He will present to us today on the recently published Phase 1 report which sets the scene for the important decisions to be made as the National Development Plan Review process reaches completion.

Following Ronnie, we will have the first of two panel discussions. Chaired by lecturer, practitioner, columnist and public servant, Conor Skehan and titled ‘Insight and Engagement: hearing from our stakeholders’ it will feature;

• David Minton, Director, Northern and Western Regional Assembly
• Gerard Brady, Chief Economist, Ibec
• Deirdre Garvey, CEO, The Wheel
• Larry McCarthy, President of the GAA and
• Jeanette Mair, Head of Economic and Policy Research, CIF

Our keynote speaker Jaana Tapanainen-Thiess, Secretary General, Government Foresight Group in Finland will give us an overview of the advancements Finland has made in strategic foresight and draw potential parallels between Ireland and Finland.

One technique which supports strategic foresight is the analysis of megatrends and accordingly our second panel session: ‘Megatrends: What does success look like in 2030?’ will explore several major economic and social patterns identified for Ireland and how we might seize new opportunities for growth and innovation in the decades to come. The session will be chaired by Deiric O'Broin, Professor of Public Policy Practice in the School of Law and Government in DCU, and he will be joined on the panel by Professor Gerard Mulally of UCC, alongside Anne Graham, CEO of the NTA, Volker Ziemann, Public Economics Division, OECD and Andrew Forde, Head of Rural Strategy and Social Enterprise in the Department of Rural and Community Development.

Event Theme

Moving to the theme of the event, Robert Frost said, “What makes a nation in the beginning is a good piece of geography” Even within our own country we have geographic variation and sometimes rivalries, East v West, Cork v Dublin and so on. The truth is we are all linked and interdependent, particularly on this relatively small island, and we need to plan for an Ireland that can bring opportunity and prosperity for all, rural and urban.

We are emerging from a global pandemic unprecedented in living memory. At the same time, our nearest neighbour has drastically altered its relationship with the EU and accordingly with ourselves. In common with nations throughout the World, we are in the grip of a climate emergency. Domestically, we continue to grapple with the dual challenges of housing and homelessness.

Considered in isolation, any one of these issues would be challenging. To tackle these simultaneously, we need a careful programme of evidence-based decision-making, sustained investment in both cities and regions and creative thinking in the national interest; or more succinctly, nation building.

Our country stands at a critical stage of its development and it is my view that we should embrace nation building as an opportunity to create the foundations for long-term, sustained economic growth and personal wellbeing. That is why, on taking office last July, I instructed my officials to bring forward the review of the National Development Plan

Economic Context

Our population is projected to grow by 1 million people by 2040. The infrastructure implications of that alone are enormous.

Additionally, the Programme for Government characterises the Climate emergency as the single greatest challenge facing humanity. Ireland must play its part in tackling this head on. In essence we must transform our industries and personal lifestyles to be less carbon intensive. National infrastructure will have to be cleaned up and re-tooled for the future. Everything from public building to private housing, transport and food production will have to be re-assessed with a truly green perspective. Above all else we must ensure economic growth and environmental action are not mutually exclusive.

Amidst these huge challenges there is good news. Ireland's economy was the only one to grow in the EU last year. The European Commission expects Irish GDP to grow by 3.4% in 2021 and marginally faster in 2022. These are solid numbers considering the global challenges we're facing.

We have many other grounds for optimism. We have a highly skilled and educated workforce, we are the only English-speaking nation in the EU and an excellent track record of attracting foreign direct investment. The Capital budget has been ramping considerably in recent years and in 2021 we have an allocation of €10.8 billion inclusive of capital carryover available to invest.

However, as the Minister with responsibility for investment I have to be realistic and acknowledge we are experiencing capacity constraints which have the potential to hold our economy back.

Last year’s BUILD 2019 Report noted an increasing level of investment and output from both the public and the private sector in terms of infrastructure, housing and commercial buildings. However, the report also pointed to elevated tender inflation in the non-residential sector, below optimal levels of students in construction training and education, and employment levels in the sector which were below the EU average at a time of close to full employment in the wider economy.

If current trends continue, with the average construction sector worker getting older, the availability of labour in the construction sector in Ireland is likely to get significantly tighter in the medium to long term as more workers reach retirement age. Large increases in productivity along with increases in the numbers entering construction employment either from the education system, immigration, or some combination, will be required for Ireland to meet our desired level of capital investment.

Through the Construction Sector Group and other fora, we are engaging with Industry and relevant stakeholders, considering wider developments for the sector including digitalization, innovative technologies and new construction techniques that will strengthen economic growth and enhance job creation, efficiency, productivity and competitiveness.

Value for Money

To progress our Nation Building strategy we need to ensure that the right policy setting framework is in place. Rigorous cost-benefit analysis is essential, particularly in the current economic climate. As part of the ongoing reform of Ireland’s public investment management system, the Department of Public Expenditure & Reform has reviewed and updated the Public Spending Code. The review was informed by an extensive consultation process involving engagement with public officials and an examination of international best practice. Importantly, the Public Spending Code also incorporates learnings from capital projects here in Ireland on a wide range of projects including the National Children’s Hospital.

The update to the Code specifically strengthens the existing guidance to better reflect the realities of project delivery with a particular focus on financial appraisal, cost estimation and risk management.

In March I received cabinet approval to enhance capital project governance through an External Assurance Process helping to strengthen projects valued at over €100m, reforms to the Project Ireland 2040 Delivery Board, and ensuring that the public service has the capability to deliver on the National Development Plan and I published a report undertaken for my Department by EY entitled Supporting Excellence: Capital Project and Programme Review Delivery which has important recommendation regarding the capacity within the public sector to deliver major projects.

Planning and Regulation

As you know, nation building depends on more than just money.

One of the key themes to emerge was the need to move towards a more holistic approach to planning regulation. The National Planning Framework was given full legislative support within the planning system and with the establishment in 2019 of the Office of the Planning Regulator is independently monitored. In addition work is ongoing on introducing an online planning application system to streamline and increase efficiency in the planning application process.

Project Ireland 2040 and the National Development Plan

Project Ireland 2040 represents a dramatic shift in national economic policy linking planning and investment for the first time in Irish history, balancing rural and urban investment, and avoiding the mistakes of the past.

Infrastructure projects are now determined by the nation's economic needs — not short term political interests.

In committing to the early review of the National Development Plan, I sought to engender public discussion on how we can improve planning and investment in infrastructure.

We received 572 submissions to the public consultation process. Today we are joined by a cross-section of stakeholders, academics and external experts. I am hugely looking forward to hearing from you all. It is ideas from people like you that will help guide the future investments we make under the NDP.

Conclusion

Let me leave you with these points:

We know genuine nation building means lifting the entire country, every region and community, enhancing our cultural and social wellbeing.

I firmly believe the only long term strategy is genuine nation building and substantial investment in future sustainable growth.

That's our commitment and we ask for your support, advice and constructive challenge as we review our National Development Plan and together build a more prosperous future.

Thank you