Ireland: FG €11bn/100,000 Jobs Stimulus Plan announced by Enda Kenny

FG Plan will Transform Irish Economy for next Thirty Years

Enda Kenny today unveiled his Party's plan (Rebuilding Ireland) to generate an €11bn stimulus plan to kick start the Irish economy and generate 100,000 jobs over the next four years. The plan involves the creation of a new industrial development holding company, NewERA (New Economy and Recovery Authority) that will be responsible for delivering a targeted series of large scale investments in green energy power generation, telecoms and broadband roll-out and an upgrading of all our water distribution and treatment networks. The ambition of the Party is to turn Ireland in to the most competitive and sustainable economy in Europe. The plan was brought to the Fine Gael Front Bench this week by the Party Spokesman on Energy and Communications, Simon Coveney T.D. The FULL TEXT may be downloaded here

This policy document is a worthy contribution to the debate on the future direction of Irish economic policy. It is well researched and is brimful of original and radical proposals, which have the potential to radically transform the Irish economy and drive future economic growth. The FG party and Simon Coveney in particular deserve our gratitude. FG in recent months has published a raft of well-researched policy documents. No opposition party in Irish political history has brought policy development to such levels.

Commenting on the plan today, Enda Kenny said;
"Fine Gael has a plan to get this country back to work. More than that, Fine Gael has a plan for our economy that will help make us the most competitive and sustainable economy in Europe. We have long recognised that the Fianna Fail model of selling property to ourselves was not a viable long term strategy for the Irish economy. That is why we have consistently driven the need to return to the basics that made our economy strong in the first place. That means getting costs down, regaining competitiveness and producing things that international consumers want to buy. This plan today sets out a roadmap that will get 100,000 people back to work in the next four years, but in the process, will position our economy as a world leader in green energy, make us energy self sufficient and a net energy exporter by 2020 and turn us in to a genuine hi-tech base for Irish and overseas investors.

"The creation of the NewERA holding company to drive industrial development in key strategic areas allows that entity to borrow monies from the EIB (European Investment Bank) and issue bonds that do not affect our national debt calculations. That is because, as a commercial semi state, the NewERA investments would be treated as financial investments seeking a commercial rate of return. By moving existing NDP investments and new additional investments "off the balance sheet" in this way our strategy also helps with the parallel objective of cutting exchequer borrowing.

"The additional €11bn in investments funds that NewERA will manage, on top of the outstanding €7bn worth of NDP projects in the relevant areas, will be funded from a combination of sources. These include the draw down of National Pension Reserve Fund monies, additional forms of borrowing by NewERA and the sale of existing state assets that it is judged no longer serve the strategic goals of the NewERA initiative. These sales will only take place when market conditions are favourable and will have to be approved by Government and the Oireachtas. The funds raised by these asset sell offs can then be used to replenish the NPRF and will, in effect, result in the swapping of old state assets for new state assets in the form of new green energy and broadband infrastructure."

Commenting on the report, its principal author, Simon Coveney said;
"As a people we can begin the fight back against the recession with this stimulus package. At the core of Fine Gael's vision for Rebuilding Ireland and cutting unemployment is our proposal for €11 billion in new investments in the cutting edge technologies and network infrastructures - energy, transport, communications and water - needed to reposition Ireland as the most competitive and sustainable economy in Europe.
"Supported by these investments, Ireland can drag its economy out of recession by:
- Unclogging the key arteries - like energy, transport, broadband and water - that have so damaged our competitiveness in recent years and held back private sector investment in Ireland;
- Becoming a world leader in green energy technologies;
- Giving tens of thousands of homes, businesses and farms a role to play in protecting the environment, and an opportunity to generate extra incomes, by selling their own renewable energy into the electricity grid;
- Starting to power our cars with domestically produced renewable energy, rather than spending billions on foreign fossil fuel imports; and
- Eliminating the "digital divide" and giving every child, home and business the same access to the education, entertainment, health and information services that will be delivered over "next generation" broadband telecoms networks.

"The ownership of a wide range of existing and new state companies involved in energy, transport and communications will be vested in NewERA. Among the existing state companies that will be moved under NewERA will be the ESB, Eirgrid, An Post, Bord Gais, Bord na Mona, Coillte and the Metropolitan Area Networks (MANS). The new commercial state companies will include;
Smart Grid (ESB Networks restructured and split off from the ESB Group) that will invest an additional €3.3 billion (over and above existing investment plans) between 2010 and 2013 to develop a 21st century "smart grid"Broadband 21, to invest an additional €2.5 billion in amalgamating and building out the diverse telecom assets of existing state companies,BioEnergy Ireland will merge together Bord na Mona, Coillte and the National Council for Forest Research and Development (COFORD), to invest €800 million in 2010-13 to become a global leader in the commercialisation of next generation bio-energy technologiesRenewable Energy Ireland which will invest in early stage green energy companies and applied renewable energy research, with a particular focus on technologies that can be licensed.Irish Water will take overall responsibility for providing safe clean drinking water and treating waste water through an expanded water infrastructure investment programme.Greener Home Bank will help tens of thousands of home owners across the country upgrade their homes to challenging new energy and waste water standards.

"The new jobs will be spread evenly between regions and skill levels, and will include thousands of jobs in the following areas:
- Telecoms, civil and structural engineering- Plant maintenance and operation- Scientific researchers- Insulation and home energy appliances- Plumbing, electrical work and other construction crafts- Software programming and support- Forest maintenance and timber processing- Digital content production for health, education and Government services

Deputy Coveney continued;
"By stimulating new investment and job creation in the economy, and by moving some NDP investments out of the exchequer and into "NewERA" commercial state bodies, NewERA investments will also cut the Government borrowing requirement by just over €4 billion by 2013.
"If Fine Gael were in Government tomorrow we would begin preparations straight away so that the NewERA investment and stimulus programme could proceed in 2010.
"Among the actions by Government now needed to make this happen are:
1. New legislation establishing by May the New Economy and Recovery Authority (NewERA) as an independent state company, and allowing the Government to vest ownership of commercial State companies into NewERA;
2. The appointment of a board of directors by June and a management team by September.
3. A further amendment to the National Pension Reserve Fund Act 2000 by May further extending the Government's powers to direct the €9.2 investment by the NPRF Commission into NewERA over the period 2010-13.
4. Government recapitalisation of the EBS by June, making it a state-sponsored mutual building society, with a new board of directors appointed by Government.
5. The establishment of ESB Networks as a stand-alone company, separate from the rest of the ESB Group, and re-branded as "Smart Grid".
6. New legislation by the Autumn establishing Irish Water and transferring the responsibilities for maintaining and upgrading our water infrastructure from local authorities to the new State company.

"Fine Gael has a plan to get our economy back on the right track. We can become a world leader in key industries and create a thriving and, importantly, a sustainable economy. The smart decisions have to be taken now though so that we avert a further slippage down the competitiveness, jobs and IT league tables of the world."