National Development Plan - Is Cowen an accountant or a leader?

WHAT a pity it would be if, at the first time of asking, Taoiseach Brian Cowen made a significant U-turn.

This time last year he insisted that National Development Plan (NDP) objectives were sacrosanct.

Last May Mr Cowen said: “My priority is the NDP because you can’t have expansion without that.”

In his last Budget speech he promised: “In the past, governments have reacted to economic slowdown by stalling capital investment. I will not do so.”

This clarity is one of the characteristics that made his succession such a bloodless transition. He was welcomed because he seemed to mean what he said and plainly say what he meant.

What a pity then that he has signalled that some key election investment promises may be filed under “pending” as the economic chill threatens to blow an €8 billion hole in public finances.

Mr Cowen’s latest position would represent a complete reversal of all he has said for the past three years, and dismiss the advice of almost every economist.

Of course, government spokesmen insisted that there has been no change in policy, and though they did not use words like “readjustments” — as Charlie McCreevy did — to give a candy coating to broken promises and service cuts, the parallels are too close for comfort.

The Government also pointed out that the commitment to the €50bn NDP was based on healthy growth and that the NDP allows for “flexible re-allocations,” depending on the health of government coffers. This is understandable enough but has our economy really reached that stage where we must defer some of the projects needed to protect us from the swings and roundabouts of the international economy? If we have we are in real trouble as some heavyweight analysts have predicted oil will reach $200 a barrel this year. Yesterday it hit $130. Over 2007 the price averaged $72.

Reasons for cutting capital spending for national development may sometimes exist, but a temporary slowdown in spectacular growth is not one.

But why cut total spending at all? It’s daft that some more important aspects of the NDP are only possible during the good times. Mr Cowen should press on with the plan, whether the economy is growing at 5% or 1%.

Yesterday’s figures from the Society of Chartered Surveyors bolster that argument and show that tender prices have fallen by 4½% this year. This, in simplistic terms, means that it’s 4½% cheaper to build a road this year than it was last year so it may be easier to deliver some of these projects than it was when they were envisaged. Over recent years growth has been so strong that taxpayers have paid for all the new motorways, trains, buses, schools and hospitals out of their back pockets. There has been no borrowing to pay for any of these developments.

Therefore, it seems overly conservative to suggest that €9bn a year — 4.5% of GDP — cannot be borrowed in a country with virtually no public debt, to bring about badly-needed modernisation.

Despite the constraints imposed under the controversial Stability and Growth Pact, it is unimaginable that Brussels would oppose that level of borrowing to achieve such important objectives.

We have all bet on horses that fell at Beechers Brook at the first time of asking and lived to fight another day but it would be so very disappointing if Mr Cowen was really an accountant dressed up as a leader. By his statements earlier this week he has sent out all the wrong signals and should be encouraged to be more ambitious, to make the vision he spoke about so passionately real.