Engineers urge use of pension funds for roads

THE Institute of Engineers in Ireland (IEI) has urged the Government to spend the money hoarded in the national pension fund on road and other vital infrastructure.

In its pre-budget submission the IEI wants the National Pension Fund cash to be used in an expanded capital programme next year to accelerate development of key infrastructure so that Ireland remains an attractive location for overseas investors.

And if this is not used, it wants the Government to increase its borrowings, charges, development levies and Public Private Partnerships in order to fund implementation of the National Development Plan.

“It would be of serious concern, and a missed opportunity, if the current favourable construction industry and interest rate conditions were not used to increase the speed at which the country’s acknowledged infrastructure deficit is tackled,” the IEI pointed out yesterday.

The IEI added that while Public Private Partnerships have the potential to generate further funding for infrastructural development in the future, the current process was far too complex and also expensive.

The process should be made more user-friendly by developing a standard form of contract which would reduce the legal costs involved.

The IEI is also seeking a list of priority projects from the NDP identified and completed on time with the remainder pushed out to 2007/2009.

It also wants action on the Professional Services Withholding Tax (PSWT).

The PSWT enforces a mandatory deduction of 20% of the invoice value for work conducted for the public sector.

It pointed out that this amount can be held for up to 18 months until the service provider’s taxation liability is determined and agreed.

Urging a reduction in this tax in the budget, and making it an offset against payment of preliminary tax, the IEI says that since net profit margins are in the range 2% to 6%, the PSWT is a penal form of taxation, resulting in some severe cash flow problems for any professional services company that is highly dependent on public sector work.

On the issue of the number of students choosing to take engineering and scientific courses at third level, the IEI has urged the government to provide the resources to implement in full the report of the Task Force on the Physical Sciences immediately.