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Transcript
‘Investing in Jobs & Growth’
Jobs Conference – Ireland’s Way Out of Recession
Irish Congress of Trade Unions Conference
Thursday 26th November 2009
Gresham Hotel, O’Connell Street, Dublin 1.
Tom Costello
Managing Director
John Sisk & Son Ltd
1
IRELAND IS NOT UNIQUE
In 2007 - Site in Ballsbridge more expensive than Manhattan
- Salaries in construction 25% higher than UK and Germany
- Construction Industry 25% of GDP
- “This time is different”
• An Economic boom is great fun – nobody wants it to end
• Recessions do not last forever ….generally 1 to 2 years but some like Sweden,
Finland and Japan, last longer
IRELAND IS NOT UNIQUE
• Solutions that worked in other countries are likely to work in Ireland
• Most economies accelerate investment in infrastructure to reduce
unemployment and stimulate economic growth – it works
• Top class infrastructure is key to improve competitiveness and attract
foreign investment
• Construction Industry in EU 19 is average 10% GDP – Not 25%, Not 5%
3
Something to be proud of …… Lansdowne Road
4
Something to be proud of …… Lansdowne Road
• World Class Management and Construction Skills
-Planning – Complete end April 2010
-Health & Safety – 1.5m Accident Free Hours
23.06.07
-Quality
10.11.09
-Cost Certainty – Guaranteed maximum price agreed June 2009
• Country & Companies must preserve skills base at sustainable level
(10%-12% of GDP)
• Internationalize ……… Emigrate ……….Retrain
5
Outlook for Jobs
Direct
285
Indirect
115
Total
400
Aug 2009
155
62
217
Mid-2011
80
32
112
2007
¾ of all jobs lost



Loss of almost 100,000 jobs in 2010 when Government is predicting
return to stability
Assumes Government will deliver PCP of €6.6bn
Induced effect of construction employment is 1.4.
6
Correction has happened, now it is time to Stabilize for Recovery
December 2007
400,000
Overdue correction to sustainable level
December 2009
200,000
-





December 2010
100,000
Optimum Level
12% GDP
We are here
Output at 2000 level
Prices at 1999 level
Loss of 100,000 jobs (plus 40,000 induced) will cost the economy
in excess of €5bn in tax lost and social welfare payments
Essential to maintain viable industry at home to support
internationalisation
Major drag on economic activity
Erosion of economy’s long term productive capacity
Back to 80’s style ‘black economy’
Freefall or Stabilize
7
Do we need to invest in infrastructure
8
National Development Plan 2007-2013
2007 7-Year Government Capital envelope of about €80bn to tackle
economic and social infrastructure defects in Transport, Energy,
Housing, Water, Education and Health
2009 Time to revise plan – NOT scrap it!
PCP April 2009 – €31.4 bn 2009-2013
Prioritise
Cost Benefit Analysis – invest where there is proven
economic return
(ESRI – long term effect on GNP by infrastructure investment is that it stays higher
by almost one half of the investment)
9
Investment in Infrastructure
YES









Secure Jobs
Retain High Quality Skills
Value for Money – Deliver
25% more than in 2007
Increase Productivity
Increase Competitiveness
Attract foreign Investment
and create jobs
Improve Confidence
Support Economic
Recovery
Social Inclusion
No







Massive Unemployment
Loss of World Class Skills
Major challenge and cost
to rebuild the industry
when private demand
increases
Expensive Infrastructure
in the future
Delay Economic Recovery
Minimise ability to
internationalise Irish
Construction
‘LOST DECADE’
10
Job Intensity of the Industry
Project
Jobs / €1bn
School
11,800
Hospital
9,900
Waste Water Treatment
8,400
Inter - Urban Road
8,200
Average over 49m Man-hours sample
10,700
€1bn investment creates 10,700 jobs (Direct + Indirect)
and an additional induced 4,300 jobs in the wider
economy (TOTAL 15,000)
11
Timing is Right for Stimulus Package
• An investment of €1bn in infrastructure generates 15,000 jobs (including
induced)
• The Nett cost of €1bn investment to the exchequer is €480m when
Social Welfare and Tax Take is factored in.
• An investment of at least €3bn per annum (in addition to PCP) for 2010
and 2011 is essential to protect jobs, preserve skills and support return
to economic growth
• Right now infrastructure investment is the most effective way to create
jobs (including lower skilled workers/most vulnerable) and stimulate
economic activity
12
What Projects are Critical Now
1
EDUCATION:
•
•
2
Well Educated Workforce
All Primary and Secondary Schools to modern, high quality standard
3rd Level – “Knowledge Economy”
HEALTHCARE: High quality infrastructure will improve quality of service
•
Centres of Excellence – Oncology, National Childrens’ Hospital, North East, Private and Co-Located
Hospitals
3
NATIONAL ROADS: Complete Inter-Urban, Atlantic Corridor, Dublin to South-East
4
PUBLIC TRANSPORT: Metro North, Irish Rail Interconnector, Dublin-Belfast
5
WATER + WASTE WATER:
•
•
Maintain supply and comply with EU Directives
Flood Defences
6
SOCIAL HOUSING: O’Devaney Gardens, St. Michael’s Estate, Moyross, Southill, etc
Consider provision by Housing Trust
7
ENERGY: Renewable
Upgrade Public, Commercial, Residential Buildings to be
energy efficient
13
How will it be funded?



Exchequer – Public Capital Programme €6bn
Social Innovation Fund
National Recovery Bond
Infrastructure Fund
(ICTU)
(Farmleigh Forum)
(CIC)
PPP’S
(Off Balance Sheet)
14
Infrastructure Bond
Government
Agency
EIB / Banks
Concession
Debt
Special Purpose
Company
Infrastructure
Fund
Recovery Bond
Private Funds
Equity
Equity Investor/ Sponsor
Financial
Legal
Advisors
Diaspora
Pension
Funds
15
Why the Infrastructure / Recovery Bond must work
1. Currently 93% of Irish pension Funds are invested abroad
2 Pension Funds need new asset class (Long term liabilities matched
by long-lived assets)
3 Recovery Programme based on savings and investment rather than
consumption
4 Government cannot borrow to fund stimulus
5 Model will deliver value for money and transfer of risk to compensate
for the fact that ‘off balance sheet’ funding is more expensive than
Government Borrowing
e.g. Dublin Port Tunnel vs. Limerick Tunnel
16
All Recessions End


Future in exports – High Tech Industries (Singapore),
Green Energy, Food and Construction
World is more competitive than ever




Reduce Cost / Increase Productivity
World-Class Infrastructure (We are 1st World)
Manage major budgetary challenge at the same time as
planning for an economic recovery
Savings / Investment to replace consumption
17
Government must act


Secure workforce at 180,000 – 200,000
Maintain Skills
Single point of responsibility in Government for Construction Industry.




It is a vital part (10% to 12% of GDP) of productive economy
Transparency on content and delivery of Public Capital Programme


Get Out of Recession
(a) the outlook for 2010/2011 and
(b) an agreement on appropriate action
Revise NDP - Prioritisation of public infrastructure projects and
commitment to deliver
Stimulus Package – Recovery Bond / Infrastructure Fund
18