Overview: Congestion and poor infrastructure are cited as huge barriers to economic prosperity, writes Tim O'Brien, Regional Development Correspondent.
The ESRI had three significant messages for the Government yesterday:
spending on infrastructure will pay real dividends in economic growth;
don't change big infrastructure projects once they have started, without properly assessing the cost; and
reduce your spending on subsidies for business.
Publishing its mid-term evaluation of the National Development Plan (NDP) and Community Support Framework (CSF) for Ireland 2000-2006, the ESRI stressed that congestion and poor infrastructure remained huge barriers to economic prosperity.
Investment in infrastructure should provide very significant returns - equivalent to a rate of return on investment of about 14 per cent.
The ESRI also stressed that the Government should "look before it leaps" in making changes to major infrastructural projects after they had begun.
Such changes should depend on strict evaluation but this had not been done in relation to major projects such as Luas.
The changes and lack of proper evaluation was principally responsible for delays and spiralling costs associated with the "physical delivery" of the project, said the ESRI.
The third message for Government was that it should reduce spending on support or subsidies for the business community.
One example in this area was the ESRI's contention that broadband infrastructure - essentially high-speed telecommunications - should be pared back in all but the more remote and poorer regions of the Republic.
The market should finance the roll-out of broadband, according to the ESRI, which contends that this spending is not an effective use of Government funding.
While the final draft of the report does not include the much-forecasted cuts in spending on social housing, water and waste treatment, the ESRI said yesterday that some of the costs of this should be spread among the beneficiaries of such services.
Mr Colm McCarthy and Prof John FitzGerald, two of the report's three co-authors, questioned what exactly was meant by the expression "demand level".
Mr McCarthy instanced St Stephen's Green at 8 a.m. on a weekday morning, suggesting that there was a "great demand for road space", but he predicted that if there was a charge in place for road usage, the demand for road space would decline, perhaps to the level where congestion could be effectively managed.
Prof FitzGerald recounted how a major water treatment plant was built in Copenhagen, Denmark, at considerable cost because the population had a great demand for water.
However, after it was decided to impose a water charge to pay for the plant's construction, people were found to use considerably less water and, as a result, the plant has never run on more than one-third capacity.
The lessons for the National Development Plan were obvious, he said.
Apart from charges, the review found the NDP strategy was "broadly correct" and was working.
It identified inflation as a serious problem, but one that might not be as severe in the second half of the development plan.
Recommendations for the reallocation of resources were made in a number of areas. These included the regional operational programmes and the rural development programme. Rural development outside agriculture was possibly the worst performer in the evaluations.
While the review remarks that "without the policies implemented as part of the plan, the imbalances would probably be greater than they are today", it recommends the regional plans be reformed to take account of the National Spatial Strategy.