[Article] State 'has only itself to blame for huge overruns'

Victor

State 'has only itself to blame for huge overruns'
From:The Irish Independent
Tuesday, 25th March, 2003
Brendan Keenan

http://home.eircom.net/content/unison/national/419507?view=Eircomnet

THE Government's own policies are partly to blame for the huge cost overruns in the National Development Plan, according to one of those who helped draw it up.

John FitzGerald, a senior analyst at the Economic and Social Research Institute (ESRI), says policies such as tax breaks for private building and widespread hiring in the public sector all contributed to rampant inflation in construction costs.

Government ignored advice from bodies such as the ESRI that private sector demand for construction outside key priority infrastructure should be curbed. It also failed to increase prices for existing infrastructure in short supply, like urban street space, so as to ease the pressure on it.

"The remedial measures suggested in the ESRI report in 1999, if adopted, could have significantly reduced this inflationary problem. However, these supplementary measures were not implemented," he says.

Writing in the current issue of the Irish Banking Review, Prof FitzGerald also queries the addition of new road projects since the plan was published, and whether they were assessed as thoroughly as those in the NDP.

"It does not appear these additions have been properly justified. The additional expenditure they will require may not be warranted."

Prof FitzGerald says housing, rather than roads, remains the most serious infrastructural deficit. He sees no chance of house prices falling back before the end of the decade, when the shortage of housing will start to ease.

He thinks around 35,000 new dwellings a year will be needed from now to 2011. This extra housing makes it essential that other infrastructure is provided where people are going to live.

"Transport networks - whether bus, tram or rail - cost a large amount to implement. Getting full value out of them will require a major change in physical planning. This should mean that new developments cluster around new, expensive networks, ensuring an adequate return on the funds invested," he said.