HomeWorldIreland should have Apple houses as well as Guinness homes

Ireland should have Apple houses as well as Guinness homes

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In London on Thursday night I was chatting to a number of prominent British financial journalists. The Apple/Irish decision was, of course, top of the agenda. The contrast between both countries’ fiscal positions couldn’t be more stark. The new UK government has just uncovered a previously unaccounted-for £25 billion (€29.5 billion) deficit, a “black hole”, in its national budget. The British Labour Party line is: “We’d love to do such and such but we have no money.” In Dublin, the line is: “We’d love to do such and such, but we have too much money sloshing around and we can’t be spending any more.”

How did Ireland arrive at this misunderstanding of economic prerogatives?

The conversation centred on trying to understand why a government in a European democracy that is facing serious infrastructural deficiencies and has just received a €13 billion gift might not want to spend this money. All across the European Union, countries are cash strapped and their infrastructure and public investment programmes are being slashed because of this lack of cash. In Ireland, we face the opposite problem – we have too much revenue. Can I let you into a secret? A country facing a housing and transport crisis can never have too much cash. If everyone was housed and we had a Swiss-style public transport system, then there might be a legitimate reason for a discussion about what to do with the Apple money. But that is not the case. We have one or possibly even two generations locked out of the housing market and our public transport is lamentable, not to mention an energy grid that requires upgrading and weaning off fossil fuels.

Intellectually, it seems that our national planners, those arguing that the money should be set aside and not spent in the short to medium term, believe they are being prudent. This good housekeeping approach to national investment is normally framed in household budget logic, regularly described as sensible, as if the State is a household. Nothing could be further from the truth. Countries are not households. Countries must constantly invest, build and modernise. National competitiveness is a function of public investment. Inflation is caused by bottlenecks that can never be alleviated by building less; inflation is assuaged by building and investing. It is basic supply and demand.

Society is imperilled by a lack of housing, not by a surplus of housing. People who are locked out of the housing market are prevented from building wealth and see their stake in the country diminish, never mind the personal indignity of not having the safety of your own front door. People, understandably, become radicalised when they feel they are being left behind. Politically radicalised voters lurch for extreme options, flirting dangerously with militant options. It is evidentially prudent to avoid this outcome. The way to prevent extremism is not to patronise those people with legitimate concerns, it is to address their grievances. In the case of housing and public infrastructure, this means building, investing and capital spending.

Apart from building affordable homes so that we have large estates of Apple houses in the same way as inner-city Dublin is full of Guinness homes, Ireland can fix our transport problems with Apple’s cash.

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The €13 billion could be transformative if it were also used efficiently and effectively to pursue some worthwhile capital-intensive investments. In a week that saw Mario Draghi present his damning report on EU competitiveness (or lack thereof) and Ibec executives bemoan the fact Ireland’s inability to deliver critical infrastructure has led to multinationals beginning to shy away, there is no shortage of serious proposals.

Top of the pile is, of course, Dublin’s MetroLink, which has been in the proverbial pipeline for years. The latest cost estimate for the project sits at €9.5 billion, which would eat up a large chunk of the Apple dosh. However, the benefits would be immense. The existing plan means there would be trains every three minutes during peak periods, potentially rising to every 90-100 seconds by 2060. The system would be capable of carrying up to 20,000 passengers per hour in each direction, as opposed to the Luas Green Line, which can carry up to about 9,000 passengers per hour. Travel times from Swords to the city could drop from the current 45 minutes to just 20 minutes, eliminating the need for tens of thousands of cars. It is estimated that it could carry up to 53 million passengers annually.

We are afraid to invest. We don’t have the guts to build so we take the cowardly option, we save, avoiding taking a decision

Smaller but equally transformative proposals merit consideration. Let’s focus on Galway, although Cork’s transport problems are equally urgent. In Galway, a Gluas (a light rail system for Galway) has been proposed often over the years. The city’s traffic is a mess. Recent calls for a line to stretch from Oranmore in the east right across to Moycullen in the west have cited technological advancements and a similar development in Coventry, England as an inspiration – their (very) light rail development has a target cost of £7 million (€8.38 million) per kilometre, whereas conventional tram systems can cost upwards of £25 million (€30 million) per kilometre and as high as £100 million (€120 million) per kilometre in city centres.

Very light rail is cheaper, primarily because the sleepers sit just on top of existing roads, eliminating the need to dig up the road to run cables. If designed well, it could transform urban transport for more than 80,000 people in Galway, cutting transit times within the city and drastically reducing congestion. In the context of the Apple cash, Gluas would be a drop in the ocean, particularly as the National Development Plan is targeting population growth of 50-60 per cent in the city by 2040.

Apple and Ireland: A tale of two tax sweetheartsOpens in new window ]

Regarding rail networks in general, as well as spending the Apple money we might think of importing those Spanish engineers who have built the cheapest projects in Europe. The efficiency of Spanish construction models offer a benchmark for Ireland. If Ireland matched Spain’s cost efficiency, the price tag for MetroLink could potentially be halved to about €4-5 billion, freeing up more of the €13 billion windfall for other projects. The average cost for high-speed rail construction in Spain is €14.7 million per kilometre, rising slightly to €15.3 million when station costs are included. This is significantly cheaper compared with other European countries, where costs often exceed €30 million per kilometre.

Ireland is a country with first-world income but third-world infrastructure. We have the opportunity to rectify this. Our problem is not a lack of cash but a lack of courage. We are afraid to invest. We don’t have the guts to build so we take the cowardly option, we save, avoiding taking a decision. Proper countries build, endowing their citizens with first-rate public infrastructure. We are afraid to do so. How depressing is that?

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