Planning for the long term to meet our future needs will pay dividends

Caroline Spillane says a focused and long term approach led by a single unit of government is needed to avoid the mistakes of the past and to properly plan and deliver the infrastructure required for a small open economy like Ireland.

WITH the economy on the turn, the challenge is how growth can be sustained.

In the past, boom and bust cycles have led to sporadic investment in strategic infrastructure, with Dublin often getting a disproportionate share at the expense of balanced regional development.

Usually, the public links infrastructure with roads, bridges, and railways. These components are critical but infrastructure covers much more, including areas like education and skills, energy and the environment, and health and the digital economy.

Investment in infrastructure has a direct impact on economic growth. It helps to build the productive capacity of the economy.

That means the enterprise sector is producing more goods and services more competitively, increasing exports, meeting domestic demand, keeping costs in check, and creating direct and indirect jobs.

As I begin my role as director general of Engineers Ireland, I know that Ireland’s engineering sector is emerging from a very tough period. Our sector was among the hardest hit in the crash. For example, in construction, still a fundamental part of engineering, more than 170,000 people lost their jobs between 2007 and 2012.

With the Government’s recent announcement that it will invest €27bn in capital infrastructure over for the next six years, the engineering sector is poised to expand again. In public transport and roads projects alone, the Government estimates that 45,000 construction jobs will be created over the lifetime of the plan.

This investment is good for the engineering sector and for the economy. But it is not enough to meet the country’s long-term strategic needs. How the Government is approaching infrastructure planning is part of the problem.

With macroeconomic forecasts being revised upwards, our capital infrastructure plan will not be enough to meet demand in the coming years. We are still investing too little, the timeframe for project delivery is too long, and we are not thinking strategically enough about long-term needs.

A recent report by the McKinsey Global Institute estimates that €51tn in global infrastructure investment will be needed between now and 2030 to keep up with projected global GDP growth. That will require countries to spend between at least 3% to 4% of gross domestic product (GDP) on targeted infrastructure development.

In Ireland, we are planning to invest just 2% of GDP over the lifetime of the capital plan. This is concerning for the long-term sustainability of our economic recovery.

In sizing the global infrastructure investment challenge, McKinsey believes that improving infrastructure productivity will depend broadly on making better choices about which projects to execute, streamlining the delivery of projects, and making the most of existing infrastructure.

Ireland’s consistent underfunding of our capital infrastructure, combined with delays in approval and land acquisition processes, are likely to hold back growth in the productive capacity of the economy. It will take at least a decade for Metro North in Dublin to start operating, for example.

Engineers Ireland believes a single Government unit to plan and fund the country’s long-term strategic infrastructure needs across the economy would support better, timelier decision-making.

The unit, sitting in the Taoiseach’s office, would be responsible for integrating investment in key areas, securing private sector funding, and streamlining project delivery. It would optimise the use of existing infrastructure, and take a longer term view about how the gaps in infrastructural development can be bridged. Ireland’s Strategic Investment Unit could work in a way similar to, for example, Infrastructure UK — a unit that sits in the UK Treasury and co-ordinates investment across departments.

In Switzerland, a country with one of the world’s most stable and robust economies, the national infrastructure strategy pulls together policy in all sectors, avoiding planning gaps, and setting strict targets for planning, delivery, and operations. This is a model Ireland should study. As a country, we must get better at learning the lessons of international best practice.

As well as having capital infrastructure able to meet economic demand, Ireland needs a skilled labour force ready to create and fill the jobs of the future. Part of Engineers Ireland’s work plan is to consistently help the development of engineers’ skills so that they are ready to solve global problems in areas like water supply, energy supply, and food supply.

Engineers Ireland will push for debate on future skills needs in vital scaling sectors like bio-pharma and technology, reflecting the changing profile of our sector.

Promoting diversity and gender balance in the engineering profession will be a key objective of my tenure. So, too, will driving Ireland’s contribution to a sustainable global future that involves real action on tackling climate change, and supporting improvements in water and air quality for a growing population.

Many of the resource problems that face Ireland, and indeed the world, can be solved by a collective, joined-up approach — inherently difficult in a modern globalised society, made up of independent actors with competing interests. But engineers across all disciplines, with the ingenuity and creativity that epitomises our profession, have a role to play.

We only have to look at the standard and diversity of the short-listed entries across the various categories of this week’s Engineers Ireland Excellence Awards to appreciate the huge contribution engineering can make to tackling many of society’s challenges.

All this needs must be be supported by a responsive and best-practice public policy framework. As Ireland emerges from recession, more money will be available for public expenditure projects. But it must be better targeted and coordinated to avoid the past mistakes.

To meet the needs of a growing economy, planning needs to be more concerted, not just mirroring the inevitable fiscal ebbs and flows of a small open economy.

This can be done. We just need a little more focus and ambition.

Caroline Spillane is the new director general of Engineers Ireland. The sixth Engineers Ireland Excellence Awards, in association with ESB, will take place on Friday.