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‘Investing in Jobs & Growth’ Jobs Conference – Ireland’s Way Out of Recession

‘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. IRELAND IS NOT UNIQUE.

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‘Investing in Jobs & Growth’ Jobs Conference – Ireland’s Way Out of Recession

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  1. ‘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

  2. 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

  3. 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%

  4. Something to be proud of …… Lansdowne Road

  5. 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 • Quality • Cost Certainty – Guaranteed maximum price agreed June 2009 • Country & Companies must preserve skills base at sustainable level • (10%-12% of GDP) • Internationalize ……… Emigrate ……….Retrain 23.06.07 10.11.09

  6. Outlook for Jobs Direct Indirect Total 2007 285 115 400 Aug 2009 155 62 217 Mid-2011 80 32 112 • 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. ¾ of all jobs lost

  7. Correction has happened, now it is time to Stabilize for Recovery December 2007 400,000 Overdue correction to sustainable level We are here December 2009 200,000 • Optimum Level Output at 2000 level 12% GDP 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’ December 2010 100,000 Freefall or Stabilize

  8. Do we need to invest in infrastructure

  9. 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 • 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)

  10. 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’

  11. Job Intensity of the Industry €1bn investment creates 10,700 jobs (Direct + Indirect) and an additional induced 4,300 jobs in the wider economy (TOTAL 15,000)

  12. 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

  13. What Projects are Critical Now 1 EDUCATION: Well Educated Workforce • All Primary and Secondary Schools to modern, high quality standard • 3rd Level – “Knowledge Economy” 2 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

  14. How will it be funded? • Exchequer – Public Capital Programme €6bn • Social Innovation Fund (ICTU) National Recovery Bond (Farmleigh Forum) Infrastructure Fund (CIC) • PPP’S (Off Balance Sheet)

  15. Infrastructure Bond Government Agency EIB / Banks Concession Special Purpose Company Debt Equity Equity Investor/ Sponsor Infrastructure Fund Recovery Bond Financial Legal Advisors Private Funds Diaspora Pension Funds

  16. 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

  17. 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

  18. Government must act Get Out of Recession • 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 • (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

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