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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.

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Presentation on theme: "1 ‘Investing in Jobs & Growth’ Jobs Conference – Ireland’s Way Out of Recession Irish Congress of Trade Unions Conference Thursday 26th November 2009 Gresham."— Presentation transcript:

1 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 In 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

3 3 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 4 Something to be proud of …… Lansdowne Road

5 5 World Class Management and Construction Skills -Planning – Complete end April 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

6 6 Outlook for Jobs ¾ of all jobs lost DirectIndirectTotal Aug Mid 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.

7 7 Overdue correction to sustainable level Correction has happened, now it is time to Stabilize for Recovery December ,000 December ,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 ,000 We are here Freefall or Stabilize

8 8 Do we need to invest in infrastructure

9 9 National Development Plan 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 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 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 11 Job Intensity of the Industry Project Jobs / €1bn School11,800 Hospital9,900 Waste Water Treatment8,400 Inter - Urban Road8,200 Average over 49m Man-hours sample10,700 €1bn investment creates 10,700 jobs (Direct + Indirect) and an additional induced 4,300 jobs in the wider economy (TOTAL 15,000)

12 12 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 Timing is Right for Stimulus Package

13 13 What Projects are Critical Now 1EDUCATION:Well Educated Workforce All Primary and Secondary Schools to modern, high quality standard 3 rd Level – “Knowledge Economy” 2HEALTHCARE: High quality infrastructure will improve quality of service Centres of Excellence – Oncology, National Childrens’ Hospital, North East, Private and Co-Located Hospitals 3NATIONAL ROADS: Complete Inter-Urban, Atlantic Corridor, Dublin to South-East 4PUBLIC TRANSPORT: Metro North, Irish Rail Interconnector, Dublin-Belfast 5WATER + WASTE WATER: Maintain supply and comply with EU Directives Flood Defences 6SOCIAL HOUSING: O’Devaney Gardens, St. Michael’s Estate, Moyross, Southill, etc Consider provision by Housing Trust 7ENERGY: Renewable Upgrade Public, Commercial, Residential Buildings to be energy efficient

14 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 15 Infrastructure Bond Pension Funds Special Purpose Company Government Agency Concession Equity Investor/ Sponsor DebtEquity Infrastructure Fund Recovery Bond EIB / Banks Financial Legal Advisors Private FundsDiaspora

16 16 1.Currently 93% of Irish pension Funds are invested abroad 2Pension Funds need new asset class (Long term liabilities matched by long-lived assets) 3Recovery Programme based on savings and investment rather than consumption 4Government cannot borrow to fund stimulus 5Model 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 Why the Infrastructure / Recovery Bond must work

17 17 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 1 st World) Manage major budgetary challenge at the same time as planning for an economic recovery Savings / Investment to replace consumption All Recessions End

18 18 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 Government must act Get Out of Recession


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