Can Ireland deliver on €112bn schemes?

It is a mark of the Republic of Ireland’s recent economic performance that listeners to a popular politics podcast had to be reassured this week they will not face a “hair shirt” budget in the autumn.

In an economic context “hair shirt” tends to mean punitive austerity policies which make citizens uncomfortable and unhappy.

This was in the wake of Ireland’s pre-budget report which pointed to a 6.5% increase in core public spending, a tax cut for hospitality businesses and a €112bn (£98bn) package of infrastructure investment.

For most European finance ministers those numbers would be closer to a silk shirt than a hair shirt.

The podcasters perhaps felt they had to give a reassurance as the budget will not deliver quite as much to household finances as it has in recent years.

For example a €250 universal energy credit introduced during the worst of the cost of living crisis will not be renewed.

Instead the run up to October’s budget is expected to be dominated by a drip feed of announcements on the specific projects which will flow from that huge infrastructure fund, known as the National Development Plan.

The government is able to spend this money because Ireland’s long-held policy of low corporation tax has come good in spectacular fashion, delivering a huge windfall from US firms who pay their global taxes in the country.

It is money which desperately needs to be spent because Ireland’s basic infrastructure is creaking.

For example, a chronic failure to build enough housing is contributing to economic and social problems, such as tensions around immigration.

The infrastructure backlog has built up because public and private investment collapsed during Ireland’s years of financial crisis and austerity.

Many firms across construction and development failed during that period and the workforce shrank sharply.

Then as the economy recovered rapidly and the population grew there wasn’t the capacity to provide the investment which was needed.

The National Development Plan (NDP) is an attempt to remedy this as quickly as possible.

Unsurprisingly, the biggest allocation is for housing which will get €36bn between 2026 and 2030.

The next biggest chunk is for transport, which gets €22bn.

Of that, €2bn is supposed to be used to start work on a long-planned underground Metro rail line from Dublin city centre to the airport and northern suburbs.

The experience of the Dublin Metro can help explain some of the scepticism around the NDP.

The Metro has been planned since 2000 but not a centimetre of track has been laid.

The current planning application has been under consideration for more than 1,000 days and the man leading the project has conceded it is likely to face more legal challenges.

There is also the continuing saga of the new National Children’s Hospital in Dublin which has missed 15 completion dates and is almost €1bn over budget.

The government has attempted to show people that the state does have the capacity to deliver.

One section of the NDP is a list of recent projects across education, health, roads and broadband which have been built without much fuss.

Another section lists the reforms to procurement and planning which should reduce delays, such as changes to judicial review processes.

But there is a more fundamental issue: who will do the actual construction work required to turn the €112bn into houses, roads and sewers?

The most recent figures suggest there are around 177,000 active construction workers in Ireland, the highest number in a decade.

However, an analysis by the Department for Further and Higher Education estimates that another 80,000 workers will have to be found to meet the government’s targets on housing, let alone other projects.

Finding those additional workers at a time when the Irish economy is at close to full employment will be a challenge in itself.