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Increasing infrastructure spend must be used to drive economic growth

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Emma Cowan on April 17, 2014 - 7:00 am in News

Finance Minister Simon Hamilton MLA has highlighted the critical importance of the Executive investing in Northern Ireland’s infrastructure in the years ahead. Mr Hamilton has said that increasing infrastructure expenditure must be used to drive economic growth in Northern Ireland.
Speaking at the Northern Ireland Chamber of Commerce’s latest ‘Minister on the Move’ event at Henry Brothers in Magherafelt, Simon Hamilton said: “The argument in favour of investing in infrastructure barely needs to be made. Better roads, bridges, telecommunications networks, are all important in increasing the economic competitiveness of a state. Spending public money on enhancing infrastructure not only makes Northern Ireland more appealing to investors it also creates a bedrock for enduring economic growth. It assists in improving public service delivery and provides an immediate boost to the construction industry.
“The 2011 – 2015 UK Spending Review saw the Coalition Government in London reduce our capital budget by 40 % in real terms. That had a devastating effect on infrastructure spend in Northern Ireland. This year – 2014/15 – for the first time since 2010/11, we began the year with over £1billion in capital. Add in anticipated capital receipts and Reinvestment and Reform Initiative borrowing, and our total infrastructure spend as an Executive will be £1.6billion. Beginning to get back towards where it was.
“All of the projections coming from HM Treasury and the Office of Budget Responsibility suggest that even though austerity will have a long tail, expenditure on capital is loosening. We must seize this opportunity to ensure that increasing infrastructure spend is used to drive economic growth in Northern Ireland.

Faster procurement

“But simply having more money to spend on capital schemes isn’t enough in itself. I am acutely aware of the often valid criticism that we can sometimes fail to spend public money on infrastructure projects as quickly as we would like. The time from commissioning a project to its actual delivery is seen as too long. I therefore recently tasked a sub-group of the Procurement Board to focus on how we can improve the delivery of infrastructure schemes. There are two key areas I have asked them to focus on –prioritisation and centralisation.
“When you look carefully at states like Australia and Canada which are viewed as more successful in consistently delivering big infrastructure schemes, they prioritise key, strategically significant projects. We need to decide what projects are most strategically important to Northern Ireland and fast-track them through the process so that they are ready to go as soon as money is available. We need a definitive, decisive and durable plan of what Northern Ireland’s infrastructure priorities are.
“Similarly, successful states usually have a much more centralised approach to infrastructure delivery. I believe that our infrastructure investment plan would benefit from greater centralisation so that experience and expertise could be used to deliver major capital projects. Departments must retain responsibility for deciding what projects should be delivered but how they should be delivered could, in many circumstances, benefit from a new centralised procurement and delivery vehicle whose sole purpose would be to deliver infrastructure schemes.
“Spending more on infrastructure must reflect strategic prioritisation and improved delivery or else the opportunity that increasing infrastructure spend presents to aid and accelerate economic growth will not be maximised.”

Key recommendations

Commenting in the wake of a speech by the Finance Minister, CBI Northern Ireland Senior Policy Adviser, David Fry, said: “We strongly welcome the Minister’s comments this morning in terms of infrastructure prioritisation, centralisation and delivery. Much of what the Minister has said reflects positively on the key recommendations of CBI’s recent infrastructure report, Investing for our Future, which called for greater strategic prioritisation and fast-tracking when it comes to key projects and having a new centralised body, with appropriate skills and authority, to deliver projects.

“We believe there is strong merit in the Executive setting out clearly its key infrastructure priorities. It is crucial that the Procurement Board Sub-Group review now underway takes full cognisance of our report – and the much welcome strategic direction that the Finance Minister has clearly given the Sub-Group in his remarks today.”



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