Sunday, November 13, 2011

Reduced capital programme

I have written more than once about the major transport initiatives in the Dublin area, namely Metro North, Dart Interconnector and Luas BXD. With the publication the other day of the revised, and greatly slashed, capital budget it seems apt to mention them again.

It seems as though the only project that will now be completed will be the Luas extension from Stephen's Green through the city centre up to Broombridge Station. Of course, like all the big projects, it has been scheduled for the end of the time period of the project so it is the most likely to get chopped completely if there are further cuts required or other projects run over budget.

Two other projects in the North Inner City are worth mentioning. The Children's Hospital will go ahead with funding up front from the renewal of the Lottery license but the amalgamation of DIT onto the single campus in Grangegorman will not. It does seem odd that we will now have a Luas line missing its biggest source of passengers while we build a hospital without any mass transit to deliver patients, parents and visitors.

Slashing the capital budget is, in my mind, a short sighted and cowardly way to balance the books. By their very nature, capital investments are good for the country in that they provide employment while they are being delivered and then provide benefit to the community once finished. This is true of school building, hospitals, roads, railways and every other capital project. Borrowing for capital is good, and in many cases is to be encouraged.

It is far harder to hit the recurrent budget as it covers civil and public servants' wages and pensions as well as welfare payments. But it is the only real way to make long term savings that will close the gap between income and expenditure. With Croke Park freezing pay, it looks like natural wastage, retirement schemes and continued recruitment embargoes will be the order of the day.

The only other option is to increase revenue through taxation which sounds great to the Occupy brigade. Sure, tax the rich and make them pay. But the super rich will tend to up sticks and leave. The easiest target is the middle classes who are already paying at the higher rate. By reducing credits and bumping the top rate up a point or two more could be squeezed from this cohort (which includes me). And to be fair, we could probably take it. But we are also the very people who voted for FG and Labour so I'm not sure how politically astute it is to antagonize the very people who elected you.

Once I get time to trawl through some Revenue figures I'll come back to this topic. But for the moment let me finish by giving Minister Howlin's plan a 3/10 with a strong recommendation that he try a bit harder in future to make serious reform plans rather than tinkering at the edges.


  1. The children's hospital in the Mater is utterly mind-boggling to me. I have not heard a single argument for it. The families of regular patients don't want it, I would hate to try bring a child there in a hurry, plenty of doctors don't want it. Who does (apart from the Mater)?

    Have you any idea why that plan has survived?

  2. My understanding is the three main points in favour of the Mater site were

    1) The state already owned the land. In the height of the bubble and post Thornton Hall, purchasing a green field site near M50 would have been difficult.

    2) There are benefits to being adjacent to a general hospital in terms of access to theatres, specialists etc.

    3) Metro North along with the other rail projects would enable easy access to the site from all across the city.

    1 and 3 are now fairly moot - NAMA own lots of spare land and MN isn't being built. I guess they're following the sunk cost fallacy to its illogical conclusion.