In these difficult times, it is useful to step back from our day to day survival plans and to take a look at how outsiders view Ireland. Derry Scully of construction consultants Bruce Shaw Partnership considers the OECD view.

In these difficult times, with so much doom and gloom about, it is useful to step back from our day to day survival plans and to take a look at how outsiders view Ireland. The Organisation for Economic Co-Operation and Development (OECD) is a grouping of 30 countries whose governments work together to address the economic, social and environmental challenges of globalisation. They publish an Economic Survey of each country every couple of years and their latest survey for Ireland was launched in Dublin by their Secretary-General, Mr. Angel Gurria on the 4th of November. Mr. Gurria also launched the conclusions and recommendations from the OECD’s Environmental Performance Review for Ireland on the same day. In this column I will take a brief look at how some of their observations and recommendations may affect our property and construction industries.

Turning first to the Economic Survey of Ireland 2009, the OECD states that the global crisis and the end of a massive and unsustainable property boom have hit our economy very hard and that the peak-to-trough contraction in real GNP is likely to be close to 13%. They predict that Ireland’s recovery will only begin well into 2010, that it will be relatively weak and that a protracted period of adjustment of several years will be needed to resolve the economic imbalances built up during the expansion.
The Survey acknowledges that high levels of public investment over recent years contributed to a much needed upgrading of Ireland’s infrastructure. But, they state that this level of spending cannot be sustained and must now be adjusted in light of our budgetary constraints. However, they recommend that although public resources are limited, continuing to upgrade infrastructure remains a priority when the benefits can be clearly established. They recommend that projects such as those in Transport 21 should be rigorously re-evaluated in this context and point out that our environmental infrastructure still requires significant upgrades.

In relation to restoring financial stability the OECD recommends that efforts should now concentrate on ensuring that NAMA implements its mandate fully to allow the banks to lend again. They state that NAMA should be implemented without delay and that the assets that it will purchase should be at an “appropriate price” and that there should be risk-sharing mechanisms to protect the taxpayer.
The Survey also recommends that the Government should introduce a property tax to prevent future property bubbles and to fund local services.

The OECD states that property taxes are an efficient way of raising revenue and that the Commission on Taxation has recommended their introduction. However they fail to clarify that the Commission recommended that there should be corresponding savings in taxes elsewhere to compensate for the introduction of a property tax.
Moving on to the OECD’s conclusions and recommendations from their Environmental Performance Review for Ireland, the OECD repeat a call that they have made previously that households should pay for their water consumption. They state that Ireland is the only OECD country where this does not happen. They conclude that the consequences of not doing this are that our demand for water is too high, our water infrastructure is oversized and expensive to operate and that water losses from our systems are very large.

Turning to greenhouse gas emissions the OECD point out that in 2007 our emissions were up by 25% compared to 1990 levels, significantly higher than the Kyoto target of keeping them under +12.6% by 2008-2012. To counter this they recommend that Ireland implements the commitment in the 2007-2012 Programme for Government to introduce a carbon tax outside the Emission Trading Scheme. They state that this should be focused on areas where further emission reductions can be achieved most cost effectively.

Amongst other recommendations in this Review the OECD also recommends further investment in combined heat and power (CHP) installations in the industrial, commercial and service sectors. They also say that we should develop measures to better link land use and transport planning with a view to controlling urban sprawl.

It will be interesting to see if the Government decide to implement all or any of the OECD’s recommendations in December’s Budget and indeed whether they take on board the items called for in the pre-budget submissions from the SCS, CIF, CIC and the other property and construction bodies. I will review the Budget from these perspectives in my next column.

This article was written exclusively for irishconstruction.com by Derry Scully, FSCS, FRICS. Derry is Chairman of Bruce Shaw Partnership Dublin and a Past President of the Society of Chartered Surveyors. He represents the SCS on the Construction Industry Council.