THE economy can continue to grow at 5 per cent a year into the next century, if major additional investment is made in roads, public transport and services to support extra housing, according to the Economic and Social Research Institute.
In a new report on "National Investment Priorities, 2000-2006", the ESRI calls for significant additional spending across a broad range of areas from urban transport to servicing land, along with cutbacks in grants to industry.
The report, which will form a key input to National Development Plan, a document on spending and the economy to be presented to Brussels this summer, calls for an overall investment programme of some £50 billion (€63.5 billion).
The bulk of this EU-supported spending, it says, should be on education and training - at almost £3.5 billion a year - although, because of the falling number of young people, this will not represent a major increase in spending in this area. The big increases should come, it says, in the two areas of housing-related investment and transport infrastructure.
Meanwhile, with unemployment falling and labour shortages emerging, spending on industrial grants should fall, the report says.
The report was edited by Mr John FitzGerald, Ms Ide Kearney, Mr Edgar Morenroth and Mr Diarmaid Smyth of the ESRI. DKM Economic Consultants, Peter Bacon and Associates and the Department of Economics at NUI Maynooth also contributed.
Mr FitzGerald, research professor at the ESRI, said long-term strategic plans for Dublin and the east of the country - and for the Republic as a whole - were now badly needed. The absence of such a plan has contributed to many of the problems now being faced - and the housing crisis in particular - the report states.
The report points out that demographic change has placed considerable and mounting pressures on the existing physical infrastructure. There is also a shortage of housing and we are only just catching up with rest of Europe in terms of educational attainment.
The top priorities are now to provide public physical infrastructure, roads, public transport, sanitary services, social housing and social, cultural and recreational infrastructure.
Speaking at a press briefing yesterday, Mr FitzGerald said the Government had to switch its emphasis from investing in human resources, including training and education, to investing in infrastructure. The public finances remain so healthy that the Exchequer will be capable of running Exchequer surpluses while funding a substantial increase in investment as EU structural funds run down. While tighter control will be needed on current Government spending, the ESRI still sees room for some improvement in public services as well as a limited reduction in the burden of taxation.
Among individual recommendations, the ESRI is calling for all public transport developments to be matched with planning decisions. For example, the decision to upgrade the Greystones, Malahide and Maynooth commuter rail services should be accompanied by planning for houses close to the stations on the line.
Speaking at briefing on the report yesterday, Mr FitzGerald admitted that a significant "constraint" on growth was the way the planning system worked in the Republic, slowing the development of new housing developments and road projects
On housing, it also calls for almost all tax reliefs aimed at specific sectors to be phased out, with all reliefs for housing and building to be replaced with a more extensive and urgent social housing programme.
Mr FitzGerald described mortgage interest relief as a "waste of money" and said there was no benefit in giving such relief to people who were able to afford their own houses.
He said most urban renewal projects would probably happen regardless of tax breaks.
In the area of transport, the report calls for a sharp increase in national road spending to £3.5 billion and a substantial increase in investment to £150 million a year in public transport.
The Dublin to Belfast train line should also include a stop at Dublin Airport which would have significant benefits for both economies, according to Mr FitzGerald.
On environmental infrastructure, the report calls for developers to be charged the full cost of servicing building land upfront and with immediate effect.
The educational proposals are likely to cause some controversy, with the ESRI stressing that additional resources should be targeted at disadvantaged children, rather than spending money on decreasing pupil/teacher ratios per se.
It is also calling for significant investment in pre-school education.
Controversially, it also calls for a "substantial reduction" in the amount of assistance provided to industry.
Mr FitzGerald told the press briefing that all IDA grants for multinational companies should be phased out, unless they were part of some attempt to stimulate regional development. He said multinationals could avail of a 12.5 per cent corporation tax rate and "that should be enough for them".
Regional policy should also incorporate a "nodal" strategy where specific towns are developed as regional centres. These would include Cork, Limerick, Galway, Waterford and Letterkenny.
