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Reprioritising and Updating Transport Policy and Investment

Recently, there have been a few publications which focus on the need to reprioritise policy and investment across various aspects of Irish transport infrastructure and services.

The Irish Exporters Association (IEA) has published a paper entitled Building a Transport infrastructure that fosters Irish exports to the world, see here. The IEA, whose focus is on supporting Irish exporters and ensuring efficient international transport access, sets out policies and recommendations which they believe are necessary to more effectively support exporters across Ireland. From a Western Region context, a few of these are particularly relevant.

Atlantic Economic Corridor (AEC)

The IEA believes that the Atlantic Economic Corridor needs to be supported through improved connectivity from the North West to the South West of Ireland. The IEA sees the AEC and Ireland’s regions as an important counterbalance to Dublin and the transport infrastructure needs to more effectively support Ireland’s agri-food and Life Sciences industries along with all other industrial clusters located there.

Rail Freight development

The IEA are asking for policy supports to move more freight by rail, noting the relatively tiny share of traffic carried by rail in Ireland (0.9%) compared to an EU average of 17% in 2016. The Western Region is the source of most rail freight in Ireland. The IEA is asking for supports such as reduced track access charges for rail freight, which is a practice common across Europe. This is discussed further in a report commissioned by the WDC and available here. Apart from the need to reduce greenhouse gas emissions (rail freight can reduce the carbon footprint by 70%), the other significant driver is the huge degree of congestion which generates significant costs, highlighted in a report discussed further below.

Ports

The IEA believe that with Dublin Port operating at or near capacity, further upgrading and diversifying Ireland’s export gateways must be a strategic Government priority. This need is compounded by Brexit. The IEA believe the Government should further develop Ireland’s regional seaports to provide exporters across Ireland with viable, cost efficient and accessible alternatives to Dublin port. They welcome the proposed redevelopment of both Rosslare and Galway Ports.

Airports and air cargo

Similar to the concentration of traffic through Dublin Port, the IEA recognises the concentration of air cargo through Dublin airport. It believes that cost-efficient, viable and well-connected alternatives should be promoted in the West and South to facilitate high-frequency aviation connections to key European and global cargo and business hubs and ensure sustainable economic growth nationally.

This echoes the views expressed by the WDC in its submission to the recent consultation on the Regional Airports Programme, arguing for the need to update transport policy generally and aviation policy specifically to reflect the overarching objectives of Project Ireland 2040, see the WDC Submission here.

The CSO Aviation statistics, see here, highlight the trend of the increasing concentration of air passengers travelling through Dublin airport compared to other airports. For example, in 2014, Dublin accounted for 81.9% of all passengers (total = 26.5 million), compared to 85.6% in 2018 (Total = 36.6 million). This represents an increase of 9.6 million passengers in 4 years with Dublin Airport accounting for 95.2% of total passenger growth in that period. So along with a significant increase in total air passenger numbers, there is an ever-increasing share travelling through Dublin airport. The WDC considers that with Dublin Airport now operating at or near capacity, and capacity available at other airports such as Ireland West Airport Knock and Shannon, cost-efficient and accessible alternatives to Dublin should be utilised and promoted.

Level of concentration unusual in a European context

Just last week a report by Copenhagen Economics entitled Assessment of aviation policy as a driver of economic development in the West and Mid West of Ireland, see here noted the particularly high concentration of passenger traffic in Dublin relative to the other airports in Ireland which is especially high when compared to other small, open economies in Northern Europe. According to this report, the concentration of Dublin’s share of passenger traffic in Ireland represents the second highest, behind only Schiphol in the Netherlands. However, while Dublin’s share continues to increase that of Schiphol has been decreasing over time. This is partly due to Dutch aviation policy, which sets maximum aircraft movements through Schiphol, and actively encourages flights via other national airports in the Netherlands. Dutch aviation policy recognises that airport development is viewed as being part of regional development outlined in the Randstad 2040 Strategic Agenda. The report calls for initiatives to improve Shannon Airport’s global connectivity. A better capacity utilisation at Shannon Airport (in addition to other airports outside of the Capital) will enhance the growth capacity of the West and Mid West regions, and at the same time alleviate pressure on Dublin without requiring costly infrastructure investments.

Budget 2020

It seems Government maybe listening and in Budget 2020, a marketing support fund was announced, comprising approximately €10 million over three years to Tourism Ireland which is to be made available to support the regional airports outside Dublin, including Shannon Airport see here. This is a small but welcome development but more policy supports will be needed to ensure that other airports can grow their numbers and their share of national traffic which in turn will help them to become self-sustaining.

The Costs of Congestion

Finally, recent reports by the Department of Transport indicate that rebalancing traffic away from an increasingly congested Greater Dublin Area (GDA), will not only support the goals and objectives of Project Ireland 2040 but will also make financial and economic sense! The research measured the costs of congestion, specifically around the Greater Dublin Area (GDA) see here. Some of the congestion in the GDA and the M50 are contributed to by passengers and freight originating in the catchments of ports and airports in the West and South such as Shannon and Knock but who currently travel through the GDA to access services at Dublin Port and airport.

The reports estimate the annual value of time lost to road users due to aggravated congestion in the Greater Dublin Area (GDA), as compared to where the road network is performing well. The cost of time lost due to aggravated congestion is measured at €358 million in 2012 and is forecasted to rise to €2.08 billion per year in 2033.

These estimated costs do not include other costs, for example, increased fuel consumption and other vehicle operating costs, or increases in vehicle emissions or the impacts of congestion on journey quality. Additionally, congestion also has an impact on the wider economy, and Ireland’s competitiveness. All else equal, high levels of congestion will reduce the attractiveness of a location to work and live in, as well as directly affecting the cost of transporting goods and services. These costs are not captured by this study, and as such, the total costs of aggravated congestion are likely to be higher than those estimated in this report.

Conclusions

It is clear that the benefits of supporting better transport infrastructure and services across ports, airports, the rail and road network outside of the GDA and specifically along the Western Region and Atlantic Economic Corridor makes sense from an economic, social and financial perspective. Implementation of Government policy already set out in Project Ireland 2040 through the NDP and the updating of various sectoral policies needs to take place to give effect to these policies and to a better Ireland for all its regions.

 

Deirdre Frost

Aviation trends, Government Policy and Ireland’s airports

The Department of Transport, Tourism and Sport is preparing a new Regional Airports Programme 2020-2024 and has sought the views of stakeholders. The WDC has made a submission which is available for download here. The WDC views are set out in the context of aviation trends, Government policy and airport capacity across Ireland.

Aviation Trends & Implications

The latest CSO Aviation statistics, Quarter 4 and Year 2018, see here, highlight the trend of the increasing concentration of air passengers travelling through Dublin airport compared to other airports. For example, in 2014, Dublin accounted for 81.9% of all passengers (total = 26.5 million), compared to 85.6% in 2018 (Total = 36.6 million). This represents an increase of 9.6 million passengers in 4 years, a 44.2% increase, with Dublin Airport accounting for 95.2% of total passenger growth in that period. So along with a significant increase in total air passenger numbers, there is an ever-increasing share travelling through Dublin airport.

The WDC believes that without more active intervention, further concentration of air traffic is likely. An ever-increasing share of passenger traffic through Dublin Airport is not in the State’s best interest (from a safety and security perspective) as well as counterproductive in delivering on targets within Ireland 2040.

Globally, it is difficult for smaller airports to compete with larger airports. For example, 80% of airports in the world have fewer than a million passengers per annum and 94% of these airports are loss-making[1]. This is one of the reasons that the EU allows State aid under certain conditions to support smaller airports.

Government Policy: Project Ireland 2040

There needs to be consideration of how the airports of Shannon, IWAK and Donegal can be more effectively supported through policy changes and State aid to deliver on the targets of the NPF and effectively on the role in supporting the economic growth of their respective regions (planned under Ireland 2040). The overarching policy objectives of Project Ireland 2040 state;

We need to manage more balanced growth … because at the moment Dublin, and to a lesser extent the wider Eastern and Midland area, has witnessed an over concentration of population, homes and jobs. We cannot let this continue unchecked and so our aim is to see a roughly 50:50 distribution of growth between the Eastern and Midland region, and the Southern and Northern and Western regions, with 75% of the growth to be outside of Dublin and its suburbs[2].

Policy and funding alignment

Given the recent Government commitment to Project Ireland 2040, sectoral policies need to be updated in order to effectively support the overarching objectives of Ireland 2040. If not, then Ireland 2040 is likely to fail. The National Aviation Policy (NAP, 2015) predates the publication and consideration of Ireland 2040 but can be seen to unduly reinforce the dominance of the larger airports (Dublin in particular).  Now that Project Ireland 2040 is Government Policy, the NAP should be reviewed and updated in light of the overarching objectives of the NPF. In the absence of reassessment and updating it is difficult to see how development can move away from a ‘business as usual’ approach and how the NPF can achieve its targets. It is sectoral planning and policy that are the real drivers of spatial and regional development.

The WDC believes that changes are required to more effectively support the growth of the airports in the Western Region, namely, Donegal, Ireland West Airport Knock (IWAK) and Shannon, to enable them to deliver on NAP and the regional targets contained in the more recently published Project Ireland 2040.

Airport Catchments

As the maps below show IWAK serves a very large catchment relative to some of the other airports. The planned road improvements for the North West will help support greater traffic through Ireland West Airport, which in turn will allow the airport better serve the catchment to its north including Sligo – a designated regional centre under Project Ireland 2040. The planned road improvements must be prioritised.

Maps 1 & 2: 30-min and 60-min catchment areas for Ireland’s airports

Source: Spending Review 2019, A Review of the Regional Airports Programme, DTTaS, IGEES

As the Department’s consultation document notes, though passenger numbers at all four regional airports are less than 1 million annually, just one airport – IWAK – has more than 400,000. IWAK has had annual passenger numbers in excess of 700,000 for the last three years and is forecast to have passenger numbers exceeding 800,000 in 2019. This is because Ireland West Airport Knock essentially serves the same purpose for its region (the North West) as the State airports perform in the Mid-West, South-West and East respectively, illustrated by the maps above. This needs to be recognised in an updated NAP.

Donegal serves a large catchment within a 60-minute radius and given the geography of Donegal, the relatively poor surface accessibility and the likely impacts of Brexit, it is important that support for Donegal continues.

Shannon Airport is the second largest airport in Ireland (in terms of capacity of the airport campus) and is a critical element in the transport infrastructure of the mid-west region, serving the significant industrial cluster of Shannon and the wider catchment as illustrated in the maps. It is therefore important that it operates optimally to help deliver the objectives of Project Ireland 2040, to enable the cities of Limerick and Galway on the Western seaboard, to each grow by at least 50% to 2040 and to enhance their significant potential to also become cities of scale[3].

The WDC considers that with Dublin Airport now operating at or near capacity, and capacity available at other airports such as IWAK and Shannon, cost-efficient and accessible alternatives to Dublin should be utilised and promoted. Shannon, IWAK and Donegal are important airports serving the Mid-west, West and North west of the country and policy and funding needs to effectively support them.

Industry view

 Exporters are also concerned with the ever-increasing concentration of traffic through Dublin Airport For example, the Irish Exporters Association (IEA) advocate for support for better air connectivity from the West of Ireland such as direct access to a European hub airport.  The IEA submission[4] to the Draft National Planning Framework noted that of those IEA members surveyed many said that they would use a different Irish airport as their primary route to move goods from Ireland if:

  • There were more frequent flights from another airport – 36%
  • Road networks between primary distribution centre and another airport were improved – 23%
  • Another airport was upgraded – 14%

These views are likely to be attenuated with Brexit.

In our submission, along with an updating of National Aviation Policy to align policy with Project Ireland 2040, the WDC propose some amendments to the existing operation of the Regional Airport Programme, see here for more detail.

 

Deirdre Frost

[1] ACI Report https://aci.aero/news/2019/03/28/aci-economics-report-affirms-the-importance-of-non-aeronautical-revenues-for-airports-financial-sustainability/

[2] Project Ireland 2040, NPF, 2018, p.11

[3] https://www.gov.ie/pdf/?file=https://assets.gov.ie/166/310818095340-Project-Ireland-2040-NPF.pdf#page=1 p.22.

[4] IEA Submission https://irishexporters.ie/wp-content/uploads/2019/03/IEA-Submission_Draft-of-the-National-Planning-Framework.-Nov-17.pdf

Regional Spatial and Economic Strategies- the final steps

The long process of developing a National Planning Framework under Project Ireland 2040 is nearing its end, with the publication of the three regional Spatial and Economic Strategies anticipated shortly.  Each of the three regional assemblies (Eastern and Midland, Southern, and Northern and Western (see the map below) is at a slightly different stage in the process but have either completed (EMRA) or are currently consulting on material amendments to draft Regional Spatial and Economic Strategies (SRA and NWRA).  These will feed into the spatial planning process as depicted in the graphic below which shows the relationship between the different planning levels.

Source: Eastern and Midland Regional Assembly https://emra.ie/regional-spatial-and-economic-strategies-2/

The Eastern and Midland Regional Assembly published its Regional Spatial and Economic Strategy and accompanying documents in June 2019 (see here for more information).

The Southern Regional Assembly has recently published its Proposed Material Amendments (PDF 3.5MB) and associated Environmental Reports for public consultation. The consultation period is from 12th September 2019 until 11th October 2019, (dates inclusive).  The WDC will review the material amendments relevant to the Western Region (largely as they relate to Clare).  Our previous submission is discussed here.

Finally, and of most interest to the WDC, because of its coverage of the Western Region (aside from Clare which is part of the Southern Region), the Northern and Western Regional Assembly is currently consulting on the Material Amendments (5.6MB) to the draft RSES.  The closing date for comments on these Material Amendments is 11 October.  More information about how to input to this process is here.

The three Regional assemblies cover the areas shown in the map below.

The WDC has made submissions and attended consultation meetings throughout the development of the National Planning Framework and the Regional Spatial and Economic Strategies  (see WDC Insights posts here, here and here).

The WDC is finalising its inputs to the consultation on the Material Amendments in the Northern and Western Region, mindful that considerable consultation has already taken place and that the proposedamendments have been included by the elected members of Regional Assembly.  Therefore, the WDC comments will be confined to specific details of the amended text.

Proposed amendments

The material amendments largely relate to the RGCSPs but there are a number of other new Regional Policy Objectives and amendments to the previous RPOs (see this document for the full detail of all the material amendments under consultation).  A small selection of the new RPOS (relating to the region as a whole) are outlined here.

There is a proposed overarching environmental regional policy objective:

The Assembly supports the integration of biodiversity considerations in a positive, proactive and precautionary way and promotes the protections of the environment and bio-diversity conservation as key principles of the strategy.

There is increased emphasis on collaboration among Local Authorities and the Regional Assemblies:

It is an objective to establish a collaborative approach between the Regional Assemblies (NWRA, SRA), the Local Authorities and other stakeholders to enable all their metropolitan areas to collaborate with each other to harness their combined potential as an alternative to development of Dublin.

A number of RPOs relating to Tourism assets have been amended (e.g. 24-26, 31) :

24.To support working with relevant landholders and recreational / tourism agencies to increase access to the Countryside and to our Coastal area’s, and to ensure maintenance and access to the existing network of trails, paths, ways etc.

25.To support the maintenance of, and enhanced access to state lands, such as National Parks, Forest Parks, Waterways together with Monuments and Historic Properties, for recreation and tourism purposes.

26.To support the preparation and implementation of Visitor Experience Development Plans (VEDPs) within the Northern & Western Region, to underpin the overarching regional tourism benefits and to promote the natural and cultural assets of the Regions.

31.To ensure provision is made for the expansion in accommodation, and facilities within key destination towns, such as Carrick on Shannon, Cavan, Roscommon Town & Athlone, together with necessary supporting infrastructural investments, including improvements in the public realm, Transport links, accommodation, the night time economy, and sustainable development of our natural & built economy

The WDC welcomes a new RPO on the Bioeconomy:

The Assembly supports the future proofing of Infrastructure Planning to allow for the potential upgrading of existing industrial sites to bio-refining plants while also supporting the use of bio-renewable energy for production of bio-based products.

In relation to Ports the proposed RPO now includes Killybegs:

The Assembly supports the designation of Galway and Killybegs as Tier 1 Ports, subject to environmental and visual considerations as well as transport and economic viability requirements.

New RPOs are included on Climate Action and for the designation of National Parks:

The Assembly will support the preparation of local climate strategies by CAROs and Local Authorities to address vulnerability to climate risks and prioritise actions in accordance with the principles within the National Adaptation Framework and the National Mitigation Plan.

The Assembly supports the advancement of the zone of North Sligo/North Leitrim (Ben Bulben and its hinterlands) and the area surrounding Lough Arrow/Lough Key as potential National Parks/National Recreation Areas. It also supports collaboration in this regard with stakeholders including NPWS, Local Authorities, Department of Culture Heritage and the Gaeltacht.

In relation to roads, the following amendment is proposed (listing more roads than the original draft RSES):

The delivery of the following projects shall be pursued, in consultation with and subject to the agreement of TII, through pre-appraisal, early planning and to construction as priority projects to be delivered to an appropriate level of service in the medium term.

    • N15 Sligo to BundoranN16 Sligo to Blacklion
    • N13 Manorcunningham to Bridgend/Derry
    • N59 enhancement
    • N61 Athlone to Boyle improvement
    • N63 Galway to Longford improvement
    • N56 lnver to Killybegs
    • N15 Stranorlar to Lifford
    • N13 Stranorlar to Letterkenny
    • N3 North of Kells to Enniskillen, via Cavan and the A509 in Fermanagh;
    • N54 (NS) Cavan to Monaghan Town;
    • N55 (NS) Cavan to Athlone;
    • N26 and N58 (NS) linking Ballina to N5.

 

Finally, a RSES Oversight Committee is proposed, which will be established to ensure oversight of the implementation, monitoring and reporting of progress in implementation of the RSES, as well as identifying opportunities to drive Regional Development, and suggest sources of funding, fostering partnerships / new collaborations.

This is only a small selection of the proposed amendments. It is worth taking the time to consider all of the proposed amendments and provide feedback to the Northern and Western Regional Assembly by 11 October 2019.  The WDC will make its submission shortly and it will be available on our website.

Conclusion

The completion of all of the Regional Spatial and Economic strategies will be a very significant achievement, the culmination of years of work since they were first announced  and extensive consultation and stakeholder engagement.  Of course, this means the work of implementation becomes a priority.  The incorporation of the strategy goals and targets into Local Area Plans and City and County Development Plans is to follow, and wider implementation of the strategies to ensure that the growth and employment targets set out the in the NPF are achieved, along with ten National Strategic Outcomes (NSOs listed below) is essential:

  1. Compact Growth
  2. Enhanced Regional Accessibility
  3. Strengthened Rural Economies and Communities
  4. Sustainable Mobility
  5. A Strong Economy Supported by Enterprise, Innovation and Skills
  6. High Quality International Connectivity
  7. Enhanced Amenity and Heritage
  8. Transition to a Low-Carbon and Climate-Resilient Society
  9. Sustainable Management of Water Waste and other Environmental Resources
  10. Access to Quality Childcare, Education and Health Services

 

Achieving these will involve co-ordinated spending and investment and alignment of policy across all sectors (eg transport, education, enterprise and initiatives such as the Atlantic Economic Corridor) as well as through the planning process.  It will require the iterative incorporation of new policies (such as the Climate Action Plan and the local Climate Adaptation Strategies (see here for example)  as well as incorporating responses to economic, social and policy responses to know and unknown factors (e.g. Brexit, changes in global economic activity and any unexpected events).

 

We look forward to a strong, driven, implementation process responsive to the changing world and to changing priorities.  With this we can be optimistic about living, working and doing business in a thriving, active and sustainable region twenty years from now.

 

Helen McHenry

Incomes in the Western Region: what do Geographical Income Profiles tell us?

At WDC Insights we are always on the lookout for data sources which can improve our understanding of the economy and society of the Western Region and give us greater insight into how the people living and working here are doing.  The CSO recently published Geographical Profiles of Income in Ireland 2016, a new, very comprehensive report on incomes in Ireland which provides data at both county and Electoral Division (ED) level.  This post provides a taster of the data available.

Background

Geographical Profiles of Income in Ireland 2016, examines income for both households and individuals by county and by ED. Income is also examined across the areas of housing, health, education, occupation and commuting.  The primary definition of income used throughout is Gross Income. This includes income from employment, self-employment, pensions, rental property, social welfare and further education grants.

The production of this data involved the integration of datasets held by Revenue and the Department of Employment Affairs and Social Protection with CSO held datasets to produce aggregated analysis and outputs at a detailed geographical level not previously available. see Background and Methodology for further information[1].

 

Household Median Income for counties

There is significant variation in household income across the county as is shown in the map below with highest incomes tending to be in the East and around the cities.

The median household income in the state was €45,256 in 2016, but there was significant variation from the lowest (Donegal, €32,259) to the highest (Dun Laoghaire Rathdown €66,203) as shown in Figure 1 below.  All of the Western Region counties and Galway city had median incomes below the state average.

Figure 1: Household Median Income for counties, 2016

Source: CSO Geographical Income Profiles, Table 1.1: Household median gross income by county, 2016

Looking more closely at the Western Region (Figure 2), not unexpectedly the highest median income was in Galway City (€44,492), with Galway county (€44,352) close behind.  Clare also had a median household income of more than €40,000.   Surprisingly (especially given other data on county incomes) Roscommon had the next highest median household income (€39,006) , higher than Sligo (€38,695) and Mayo (€37,214).  As noted above Donegal had the lowest median income, with Leitrim significantly above it (although this was still the second lowest in the country).

Figure 2: Household median Income in the Western Region

Source: CSO Geographical Income Profiles, Table 1.1: Household median gross income by county, 2016

Incomes in larger towns

The report also provides data on incomes in towns of more than 10,000 people, of which there are five in the Western Region (Figure 3).  Ennis  (€40,508) had the highest income in the Western Region for these towns (though, as noted above, income in Galway City is higher) while the lowest was in Ballina  (€32,779).  Nationally the lowest income in these towns is in Longford (€29,224)  while the highest is in Malahide (a very substantial €78,631).

Figure 3: Median income in Western Region towns, 2016

Source: CSO Geographical Income Profiles, Table 1.2: Population and household median gross income by town, 2016

 

Incomes at local level

Finally, as mentioned, this data is also available at ED level, providing more information on areas of high income and those which are doing less well (shown on the Map below).  Clearly incomes in many of the EDs in the Western Region and along the Atlantic coast are among the lowest in the country, though there are pockets of affluence in each county.  The detail of income at ED level will be discussed in a future post.

Source: CSO Geographical Income Profiles

 

Conclusion

In previous discussions of measuring regional success it has been noted that limitations in the GVA data need to be counterbalanced by better regional level data on the three key variables of Income, Wealth and Consumption.  This recent publication provides an excellent start in relation to the first of these.  It is really helpful to have such a comprehensive source of data available at both county and ED levels.  The CSO is to be complemented in their work on this.

This new data set has provided much food for thought, with data at county level not always as I would have anticipated (for example, Roscommon having a higher median income than Sligo is unexpected).  Over the coming months I hope to have the opportunity to look into the data in more detail to better understand components income and earnings in our region, counties and at a local level and to consider the patterns which are emerging.

 

 

Helen McHenry

[1] Under the auspices of the Statistics Act 1993[1] and in compliance with all relevant data protection legislation, the CSO is in a unique position to gather and link administrative data sources held by Government Departments and Agencies and evaluate their potential for statistical use.

Professional Services in the Western Region

The Western Development Commission (WDC) has just published the latest in its ‘Regional Sectoral Profiles’ series which analyses the most recent employment and enterprise data for the Western Region on specific economic sectors and identifies key policy issues.[1]

This report examines the Professional Services sector which includes two sub-sectors: ‘Professional, Scientific & Technical Activities’ (legal, accountancy, architecture, veterinary, graphic design, translation services etc.) and ‘Real Estate’ (auctioneers, valuers, property letting and management). Both are knowledge intensive services sectors, relatively high value and are highly sensitive to the level of overall economic activity.

Two publications are available:

Employment in Professional Services

According to Census 2016, 14,499 people worked in Professional Services in the Western Region.  Professional Services play a far smaller role in the region’s labour market than nationally (Fig. 1).  In 2016 Professional Services accounted for 4.3% of total employment in the Western Region compared with 6.1% in the state.

As would be expected, Galway City is where this sector is most important in the region (5.2% of its residents work in Professional Services), but this is still well below the state average and is in fact only tenth highest of all counties in Ireland.  Donegal is where it is least important (3.8%) and it has the second lowest share in the state.

Source: CSO, Census 2016: Summary Results Part 2, Table EZ011

Between 2011 and 2016 there was 10.8% growth in employment in this sector in the region.  Although growth in the region was only half that occurring nationally (21.1%), the sector still grew considerably more strongly than total jobs over this period in the region (7.5%) as the sector responded to increased economic activity and growing demand.  At 18.2%, Leitrim had the highest growth in the region, followed by Donegal and Sligo showing a strengthening of this sector in the North West.

Professional Services sub-sectors

Within the Professional Services sector, ‘Accountancy & Management Consultancy’ is the largest activity (22% of Professional Services employment) though its share is notably lower in the region than nationally (26.2%) due to the concentration of the head offices of large accountancy firms in Dublin.  The next largest sub-sector is ‘Architectural & Engineering Services’ accounting for 20.1% of all Professional Services jobs in the region (similar to the national share), linked to the construction and manufacturing sectors.

The third largest sub-sector is ‘Advertising, Market Research & Other’[2] and it is considerably more important in the state (20.3%) than the region (17.2%).  As this includes many quite specialised activities mainly serving business/commercial clients there is high concentration in cities and particularly Dublin.

Two sub-sectors where the region has a notably higher share are ‘Testing, Research & Development’ (10.9% v 7.3%) and ‘Veterinary’ (5.4% v 3.3%).  The region’s strength in manufacturing[3] with companies providing testing or R&D services to these factories influences the first, while the region’s rural and agricultural nature influences the second.

Employment in western towns

When considering towns, commuting can be particularly important and it must be remembered that this data refers to residents of the towns, although some may travel to work elsewhere.

Bearna (8.1%, 72 people) has the highest share of residents working in the sector (Fig. 2) and ninth highest among Ireland’s 200 towns and cities (1,500+ population).  Within the region, Strandhill (7.1%, 57 people), Loughrea (6.9%, 159 people) and Buncrana (6.4%, 153 people) have the next highest shares.  In all cases, this is influenced by commuting, with other commuter towns such as Oranmore and Athenry also having quite high shares.

A number of more rural, medium-sized towns such as Castlerea, Boyle, Carndonagh and Ballymote also have relatively high shares and clearly act as service centres for their rural hinterland.

Source: CSO, Census 2016: Profile 11 – Employment, Occupations and Industry, Table EB030

Self-employment in Professional Services

Of the 14,499 people working in Professional Services in the Western Region in 2016, 30.3% (4,399 people) were self-employed (employer or own account worker).  This is among the highest rates of self-employment across all economic sectors which is not surprising given the nature of the sector with many small and micro businesses e.g. solicitors, photographers, vets.

Self-employment is considerably more common in the Western Region (30.3%) than nationally (25.7%) (Fig. 3). More people in the region have chosen self-employment as a route to work in this sector, perhaps due to more limited job options and also the fact that the smaller size of the local market favours smaller operations.

At 32.5%, self-employment is most common in Sligo, followed by Leitrim (32.4%).  This implies these counties tend to have a large number of smaller businesses and fewer larger firms.  Roscommon (27.5%) and Galway City (28.9%) have the lowest shares. In the case of Galway City, the presence of larger firms contributes to a lower share of self-employment.

Source: CSO, Census 2016: Profile 11 – Employment, Occupations and Industry, Table EB033. Special run from CSO.

In the Western Region, the number of self-employed people working in Professional Services grew by 5.7% between 2011 and 2016. This compares with a 1% decline in total self-employment over the same period, indicating that this sector differed from the general trend of declining self-employment in the region.

At a county level, Leitrim had the strongest growth in self-employment in the sector, increasing 20.4% between 2011 and 2016.  This was clearly a very strong driver of the county’s total jobs growth in this sector.  Sligo (11.4%), Donegal (11.4%) and Clare (9.1%) had the next highest growth.  Roscommon had the lowest growth (2.8%) which contributed to its current low share of self-employment.

Professional Services Enterprises

In 2017[4]  there were 8,139 Professional Services enterprises registered in the Western Region. This was 14% of total enterprises[5] (Fig. 4), well below the 17.3% state average.  The sector’s share of total enterprises in the region (14%) is substantially greater than its share of all employment in the region (4.3%, see Fig. 1), though it should be noted that the employment data refers to 2016. Again this illustrates that this sector is characterised by a large number of quite small enterprises.

At 16.2%, Galway[6] has the highest share of its total enterprises in this sector, though still below the national average. Sligo, Mayo and Clare have the next highest shares influenced by the presence of quite large urban centres.  In common with employment, Donegal has the lowest share of its total enterprises in this sector which points to less activity in the sector.

Source: CSO, Business Demography 2017, Table BRA18.

During the period 2012 to 2017 there was 16.8% growth in the number of Professional Services enterprises in the Western Region, the highest increase across all economic sectors.  Growth in the region was higher than the 15.7% increase nationally.

Key Policy Issues

Lower level of activity in Professional Services in Western Region:  Given that this is a knowledge intensive services sector offering high quality employment, increasing the level of Professional Services activity in the region could make an important contribution to diversifying and strengthening the region’s labour market as well as increasing income levels.

Responds strongly to economic cycles and changing domestic demand: While several Professional Services activities can be traded internationally e.g. architectural services, most enterprises in this sector serve clients in the domestic market and often quite locally.  It therefore relies heavily on the level of domestic demand in the economy including from the construction sector.  The fact that economic recovery in the Western Region lagged that occurring elsewhere in the country[7] was an important factor in the region’s lower jobs growth in this sector.

As well as responding to the economic cycle, this sector also helps to facilitate it, as Professional Services play a key role in business growth by providing legal and accountancy services, market research, advertising and so on, to enterprises. The presence of a strong Professional Services sector within the region is therefore a key driver for wider regional economic growth.

Smaller scale operations and high self-employment: Professional Services enterprises in the Western Region tend to be smaller in scale than the national average and it is characterised by high self-employment.  As many Professional Services are outside the remit for direct financial supports from enterprise development agencies, continuation of existing, and the development of new, soft supports for self-employed and micro-enterprises in this sector is important, particularly in smaller urban centres and rural areas where self-employment can be a key pathway to work and this sector is an important source of professional career opportunities.

Large urban locations play a critical role but there are also opportunities for growth beyond these:  More specialised Professional Services tend to be quite concentrated in larger urban locations.  Nationally, there is strong concentration in Dublin and within the region Galway City is a key location. It is important that the locational advantages of Galway City and the region’s other larger centres (e.g. office space, networking opportunities, digital infrastructure) are enhanced to allow them to play a greater national role as centres for Professional Services activity.

There is also potential for further expansion, at a suitable scale, in smaller centres and more rural areas, including through remote work.  Access to high speed broadband is a critical factor in facilitating this sector to such areas.

For more detailed analysis, download Professional Services in the Western Region: Regional Sectoral Profile and WDC Insights: Professional Services in the Western Region here

Pauline White

 

Feature image by Robert-Owen-Wahl from Pixabay

[1] Previous Regional Sectoral Profiles are available here https://www.wdc.ie/publications/reports-and-papers/

[2] The ‘Other’ includes graphic and fashion design, translation, agents/agencies etc.

[3] See WDC (2019) Industry in the Western Region: Regional Sectoral Profile 

[4] Data in this section is from CSO, Business Demography 2017

[5] Total enterprises includes all ‘business economy’ enterprises (NACE Rev 2 B to N(-642)) plus the sectors of Health & Social Work, Education, Arts, Entertainment & Recreation and Other Services.

[6] Business Demography data does not distinguish between Galway City and Galway County.

[7] WDC Insights Blog Post, ‘Recent Trends in Regional GDP’ 14 June 2019

Our 5th Birthday! 5 years of the WDC Insights Blog

Five years ago today we published the first WDC Insights blog post.  This special anniversary post today is our 208th post.

As we noted in the celebration for our 200th post, the blog covers a wider range of topics from the impact of the famine on the Region’s population, to the analysis of economic and social issues for the Western Region.  We are delighted that the blog has given us an effective way to let you all know about our work and given us, the authors, the opportunity to explore issues we might not have otherwise considered.

In this short celebratory post we thought we should give you a little insight[1] into the workings of the blog and show you some of the other places where you can find our work.

About us

The WDC Insights blog is written by the Policy Analysis Team in the Western Development Commission.  There are three of us, Deirdre Frost, Pauline White and me, Helen McHenry.  Regular readers may have spotted that, while we all post on social and economic issues for the Western Region and for rural areas, we also have a few specialist areas. Deirdre, for example, is our telecoms and rail expert; Pauline posts on employment and enterprise; and I cover energy and low carbon issues.  These are just examples of some our work areas. We all cover specific issues relevant to different aspects of regional and rural development and , of course, have a particular focus on our seven county Western Region.

In general we rotate posting among the team, so we are all familiar with the three week deadline and the ‘what will I write about this week?’ question.   Sometimes it is obvious.  We may have completed or published some analysis, attended an interesting event or given a presentation.  Sometimes it is not so obvious.  The posts we write on these occasions, in retrospect, are often most fun to prepare, covering some issue important to the Region following something of particular interest to us, or analysing unusual data available at county level (something that still excites us!).  One great thing I have learned about those posts is that you never know when a piece of analysis will suddenly become relevant or useful.

Where to find our work

As the blog is a showcase for the work of the Policy Analysis Team at the Western Development Commission this is a good opportunity to highlight some of the other work we do which may be of interest.  All our work is on the website of the Western Development Commission www.wdc.ie and you can read more about the areas covered by the team here.

On the website we have statistics about each of the seven counties and the Western Region in our County Profiles.  The areas covered include:

  • Physical data (e.g. land mass)
  • Human Resource
  • Centres of Population
  • Education levels
  • Natural Resources
  • Employment
  • Local Sustainability
  • Tourism
  • Enterprises

 

So, if you want to know more about one of our seven counties (Donegal, Sligo, Leitrim, Mayo, Roscommon, Galway or Clare) or the Western Region itself, check out the County Profiles.

 

Publications

The best place to find our range of outputs in on the publications page of the WDC site which has all of our reports and papers and our submissions.

We produce a range of reports and papers including:

 

Submissions

We also make submissions to national policy consultations on an on-going basis to provide a Western Region perspective to national and regional policy making.  These are on the submissions page.  Recent submissions were on European Union guidelines for the development of the trans-European transport network, the options for the use of revenues raised from increases in Carbon Tax and to the Northern and Western Regional Assembly on the Draft of its Regional Spatial and Economic Strategy. See all of our submissions here

 

We hope that you continue to enjoy the blog and find our analysis useful and interesting.  Don’t forget that to be sure of getting our weekly posts you can follow the blog here.  You can also sign up to the WDC Insights Policy Mailing List for monthly updates on our work and publications or follow us on twitter where we are @wdcinsights.

In the meantime we are off to celebrate our five years of blogging!

 

Helen McHenry, Deirdre Frost and Pauline White

[1] Pun intended.

The Public Administration & Defence Sector in the Western Region

The Western Development Commission (WDC) has just published the 9th in its Regional Sectoral Profile series which analyse employment in different economic sectors in the Western Region.

And this one is of particular interest to us, as it’s the sector we work in!  The report examines the Public Administration & Defence sector which includes all those working in the civil service, local authorities and state agencies, as well as Gardaí, prison officers and the defence forces.  It does not include those working in Education[1], Health & Care[2] or ‘semi-state’ companies e.g. Bus Eireann.

Two publications are available:

Employment in the Western Region

According to Census 2016, 18,858 people worked in Public Administration & Defence in the Western Region.  It plays a somewhat greater role in the region’s labour market than nationally (Fig. 1) accounting for 5.6% of total employment compared with 5.3%.

There is considerable variation across western counties and at 8.4%, Roscommon has the highest share working in Public Administration & Defence in Ireland with Leitrim (7.9%) second highest and Sligo (7.5%) fourth. Donegal is also in the top ten nationally.  North Connacht and the North West have high reliance on the public sector to sustain employment, partly due to more limited job options in the private sector.  In addition to Public Administration & Defence, Sligo and Leitrim also have the highest shares in Ireland working in Health & Care while Donegal has the highest share working in Education.

In contrast, at just 3.6% Galway City has the lowest share of its residents working in Public Administration & Defence in Ireland, with Galway County (4.6%) also in the bottom ten nationally.  Greater economic and employment diversity around Galway reduces this sector’s relative importance.

Source: CSO, Census 2016: Summary Results Part 2, Table EZ011

During 2011-2016, the Western Region experienced a 7.4% decline in the number working in Public Administration & Defence, greater than the 6.3% decline nationally.  In both cases this decline contrasted with overall jobs growth.  This period was characterised by a moratorium on recruitment in the public sector.

Every western county, except Clare (+3.9%), saw a decline over this period.  Donegal (-14.2%), Galway City (-12.5%) and Mayo (-10.1%) saw particularly large losses.  One factor would have been reduced staffing in their respective local authorities which are significant employers, as well as declines in the defence forces.

Employment in western towns

In 2016 there were 40 urban centres with a population over 1,500 in the Western Region. The relative importance of Public Administration & Defence as an employer varies across these towns (Fig. 2).  It is important to note that commuting is a particular issue when considering towns and this data refers to residents of the town.

At 11.4% (53 people) Lifford (county town of Donegal) has the highest share working in Public Administration & Defence in the region and second highest of Ireland’s 200 towns and cities (1,500+).  Lifford shows the potential jobs impact of locating the administrative centre of an area away from that area’s main economic centre both to support development in smaller towns and also to ease congestion in larger centres.

Strandhill in Co Sligo (9.4%, 75 people) and Roscommon town (9.2%, 208 people) were next highest in the region and third and fourth highest nationally. Except for Galway City and Ballina, the region’s larger (10,000+) urban centres all have around 7% working in this sector. Many host local authority head offices as well as offices of Government Departments and state agencies.  The very low share in Galway City is due to the wider range of alternative job options as well as the role of surrounding commuter towns e.g. Athenry.

Source: CSO, Census 2016: Profile 11 – Employment, Occupations and Industry, Table EB030

Of the 38 towns in the region for which data is available for both 2011 and 2016,[3] 28 of them experienced a decline in the number working in Public Administration & Defence between 2011 and 2016, nine had an increase with one unchanged.  Bearna (18.5%, +5 people) and Gort (15.8%, +6 people), had the largest percentage growth possibly due to commuting to Galway City or Ennis as several of the other towns which grew are also commuter towns e.g. Strandhill, Sixmilebridge, Moycullen.  In absolute terms, Ennis (6%, +40 people) had the biggest increase in the number of residents working in the sector.

Many more towns experienced decline than growth however. Clifden had the largest decline (-49.1%, -26 people) and was also the town with the largest population decline of all western towns. Ballyhaunis, Ballybofey-Stranorlar, Castlerea and Loughrea also experienced large declines. These are all medium-sized rural towns, at some distance from larger urban centres.

Employment by gender

Overall, employment in Public Administration & Defence is quite gender balanced.  In the Western Region women account for a small majority (51.4% are women) in contrast to the state where there is a male majority (52.4% are men).  The female share has been higher in the region than nationally throughout the past two decades.

In terms of the sector’s relative importance to total male and female employment (Fig. 3), 6.2% of all working women and 5.1% of all working men in the Western Region work in Public Administration & Defence.  While the sector plays a notably more significant role in total female employment in the region than nationally (6.2% v 5.4%), its importance to male employment is the same.

In all areas the sector accounts for a greater share of all women’s jobs than men’s.  In Leitrim (9.4%), Roscommon (9.2%) and Sligo (8.9%) Public Administration & Defence plays a critical role in total female employment.  More limited options for alternative professional career opportunities, particularly in more rural areas, increases the role of Public Administration & Defence in women’s employment.

For male employment, Roscommon (7.6%) is where the sector is most important by quite some margin.  This may reflect the nature of some public sector employment in the county e.g. Castlerea prison.  Again, neighbouring Leitrim (6.6%) and Sligo (6.2%) is where it is next most important for men’s jobs, while it is least important in Galway.

Source: CSO, Census 2016: Summary Results Part 2, Table EZ011

The period 2011 to 2016 saw both male and female employment in Public Administration & Defence decline by 7.4% in the region.  For both, this was a greater decline than nationally with the difference greater among women (-7.4% in the Western Region v -5.8% in the state) than men (-7.4% v -6.7%).

Key Policy Issues

Higher reliance on public sector employment in the Western Region: Public Administration & Defence is a more significant employer in the Western Region than nationally (5.6% of total employment v 5.3%) and this is the case to an even greater degree for the two other predominantly public sectors of Health & Care and Education.  The three primarily public sectors of employment jointly account for 28% of all jobs in the Western Region (24% in the state).

This is also reflected in income earned.  Recent analysis by the CSO[4] found that 41.7% of earned income by employees living in Sligo came from Public Administration & Defence, Education and Health & Care combined, the highest share in Ireland, followed by Leitrim (37.8%) and Donegal (37.8%).  The spatial pattern is very vividly illustrated by Fig. 4.  This higher reliance means that developments, such as the moratorium on public sector recruitment, had a greater economic and employment impact in the region.

Fig. 4: Proportion of earned income from Public Administration & Defence, Education and Health & Care combined, 2016

Source: CSO, (2019), Geographical Profiles of Income in Ireland 2016, Map 6.8

 

Important role in female employment: Public Administration & Defence is a more important source of female employment in the region compared with nationally and the gap widened over the past two decades as women’s employment in the region became increasingly dependent on this sector. This is particularly true in more rural counties with 9+% of women in Leitrim, Roscommon and Sligo working in public administration.  Such employment may help maintain the viability of household income, particularly during a recession when there are large private sector job losses e.g. in construction.  Future trends in public sector employment will have a greater impact on female than male employment levels.

Providing professional career opportunities in smaller towns and more rural areas: Public Administration & Defence plays a critical role in providing professional career opportunities, including in more rural areas and smaller towns where there may be fewer alternatives.  North Connacht and the North West, which is the more rural part of the Western Region, has particularly high reliance on the sector (see Fig. 4).  More limited private sector job options increases this sector’s impact on the local economy.  While the main focus for Public Administration & Defence policy must be on the provision of quality public services, it parallel role as a provider of jobs, particularly in smaller towns and rural areas, should also be a factor in policy decisions on the location of such jobs.

Contribution to achieving regional and rural development: As was highlighted in a previous WDC study ‘Moving West’[5] the location of Public Administration & Defence employment is a key policy tool at the disposal of Government. The relocation of public sector offices and jobs from Dublin to other locations has considerable potential to both stimulate development in these areas and to ease pressures on the capital.  The Government, national and local, can therefore play a very direct role in delivering the regional development objectives of the National Planning Framework (NPF) through its location decisions.  Lessons learned from previous relocations, as well as technological developments to facilitate more dispersed work locations, can contribute to implementing such moves.

For more detailed analysis see ‘The Public Administration & Defence Sector in the Western Region: Regional Sectoral Profile’.

Pauline White

 

[1] See WDC (2019) The Education Sector in the Western Region: Regional Sectoral Profile

[2] See WDC (2018) The Health & Care Sector in the Western Region: Regional Sectoral Profile

[3] Two towns with a population above 1,500 in 2011 (Portumna and Bunbeg-Derrybeg) dropped below in 2016. Two towns (Collooney and Convoy) rose above the 1,500 threshold in 2016.  There were also town boundary changes between 2011 and 2016 for 15 of the 40 towns in the Western Region which has an impact when considering change over time. For most towns the impact was relatively minor, however there was a quite substantial change for Ballina.

[4] CSO (2019), Geographical Profiles of Income in Ireland 2016

[5] WDC (2008), Moving West: An Exploratory Study of the Social and Economic Effects of the Relocation of Public Sector Offices to Towns in the Western Region

Diverse Neighbourhoods: New report analysing the residential distribution of immigrants in Ireland

Recently I attended a very interesting seminar on ‘Migrant Integration: policy and place’ organised by the Economic and Social Research Institute (ESRI) and the European Migration Network (EMN).

At the seminar two new pieces of research were presented and discussed: ‘Diverse neighbourhoods: an analysis of the residential distribution of immigrants in Ireland’ and ‘Policy and practice targeting the labour market integration of non-EU nationals in Ireland’.

Given the Western Development Commission’s (WDC) regional development remit, the spatial analysis of the residential distribution of immigrants in Ireland was of particular interest.  The ‘Diverse Neighbourhoods’ report[1] points out that previous research has highlighted both positive and negative reasons for the residential clustering of migrants. Proximity to migrant networks can provide support and information (as the Irish of the Kilburn Road know only too well). However, high levels of residential segregation may be a signal of poor integration and disadvantage, especially if the areas in which migrants are clustered are themselves deprived.

The purpose of this analysis was to investigate the residential pattern of Ireland’s migrant population, to identify the extent of residential segregation and the characteristics of areas where migrants are concentrated.

Distribution of Migrant Groups in Ireland

The analysis used the results of Census 2016 for 3,409 Electoral Divisions (ED) in Ireland.  Individuals were assigned according to their country of birth (to take account of foreign born naturalised Irish citizens) and UK-born migrants were excluded because they have a different experience and there are complexities for Northern Irish citizens.

Four broad groups were analysed (the size of each group as a proportion of the national population in 2016 is in brackets):

  • Total migrant population – excluding UK-born (11.4%)
  • EU migrants – excluding UK-born (6.3%)
  • Migrants born outside of the EU (5.1%)
  • People with poor self-rated English-language proficiency (1.8%).

Total, EU and non-EU Migrants

The total migrant (non-Irish/UK born) population is highly concentrated in urban areas in Dublin city and its commuter belt, as well as around Cork, Limerick and Galway (see Figure 2.1).  In fact half of all foreign-born migrants live in the three cities of Dublin, Cork and Limerick.  The top 10 EDs in terms of the percentage of their total population who are foreign born were all in Dublin, Limerick, Cork or Waterford cities.  Half of the total foreign-born population live in just 159 EDs (out of 3,409 total EDs).

The patterns for both migrants born in the EU and migrants born outside of the EU are relatively similar to the total. For EU migrants, there are high concentrations around Dublin, Cork and Limerick with low concentrations in North Connacht and Donegal.  For non-EU migrants the pattern is very similar, though with even greater concentration in Dublin.  For both, most of the top 10 EDs are to be found in Dublin, Cork or Limerick.

People with Poor English Language Proficiency

The fourth group examined are people who reported in the Census that they speak English ‘not well’ or ‘not at all’. This group was examined as they may have particular integration difficulties. Nationally there were about 86,000 people in this group in 2016.

It was found that the residential pattern for those with poor English language proficiency differs from the other groups (see Figure 2.4). While there is also significant concentration in the larger cities, this group are less centralised and there are also strong concentrations in small towns.

The ED of Monaghan town has the highest share with poor English language proficiency at 15.3% with is linked to the mushroom industry.  Ballyhaunis in Co Mayo has the fifth highest share (11.1%) connected to both the meat processing sector and a Direct Provision Centre.  Another town in the Western Region, Roscommon Urban ED has the eight highest share (10.7%).  Other smaller towns with high shares include New Ross in Co Wexford, Ballyjamesduff in Co Cavan and Navan in Co Meath.

It seems that migrants with poor English language proficiency are less centralised in the larger cities and are more likely to be located in smaller towns (often linked to specific sector or legacy), they are also more clustered in fewer locations with half located in just 135 EDs.   This pattern has implications for service provision.

Integrated Communities

The report goes on to assess the level of segregation of migrant communities. It found that the level of segregation in Irish cities is near or below the international average and there was no discernible trend of increasing residential segregation between 2011 and 2016 with some groups becoming less segregated over this time.

The report also profiled the characteristics of areas which have a high share of migrant residents.  It was found that immigrants in Ireland tend to be concentrated in more affluent areas (based on the Pobal Deprivation Index) and also in areas with an above average share with a third level education. The other key characteristic was that migrants tended to be concentrated in areas where private rental housing was plentiful.

One area of concern however are those with poor English language proficiency.  This group is more likely to reside in areas with average levels of affluence/deprivation and low third level education attainment.  For those living within the three largest cities, they are also concentrated in areas with higher unemployment rates.

Policy Implications

The results have implications for many policy areas including integration, housing and regional development.  The National Planning Framework contains targets to rebalance growth towards the ‘second tier’ cities and regions.  Reducing the level of concentration of the migrant population in Dublin, through the provision of job and housing opportunities, would contribute to achieving NPF targets.  Reliance on the private rental market among migrants means that the provision of such accommodation in other locations is important, as well as employment policies which stimulate job opportunities for migrants in these locations.  There is the potential for smaller towns and more rural areas which, as a result of out-migration, may have poor age dependency ratios to benefit from inward migration by those in economically active age groups.

The greater distribution of migrants with poor English language proficiency in smaller towns (often associated with employment in specific sectors e.g. agri-food) and concentration among this group is an area of policy concern.  As this analysis was conducted on an area basis (rather than at the individual level) it is not possible to determine the characteristics of this group but issues such as gender, age, employment status and education level are likely to be important factors.  Policy responses and tailored service provision at a local level targeting this group would be important given their higher risk of poor integration and also the potential impact on the agri-food sector from Brexit.

Reports and presentations from the ‘Migrant Integration: policy and place’ seminar are available here

Pauline White

[1] Fahey, É., Russell. H., McGinnity, F. and Grotti, R. (2019), Diverse Neighbourhoods: An Analysis of the Residential Distribution of Immigrants in Ireland, Economic and Social Research Institute and Department of Justice and Equality, funded by the Office for the Promotion of Migrant Integration

The Benefits as well as the Costs of the National Broadband Plan

There are significant benefits associated with the planned rollout of the National Broadband Plan (NBP), though the recent media coverage seemed to focus largely on the costs.

A review of newspaper headlines over the period following the announcement of the preferred bidder and the likely cost of the National Broadband Plan (NBP), suggests that the overall benefit is significantly lower than the cost. For example some of the headlines included;

  • Its wrong to endorse broadband plan and ignore officials’ warning on costs, Independent, 12 May 2019
  • National Broadband Plan, labelled ‘the worst deal ever seen’ Irish Examiner, 13 May 2019
  • Government to press ahead with €3bn broadband plan despite cost warnings, 26 April, 2019

But in reality, the cost benefit analysis (CBA) conducted by consultants on behalf of the Department of Communications, Climate Action and Environment, found that under all three different scenarios considered, the benefits outweigh the costs. The CBA also made clear that many benefits were not included in the computations and some of the benefits were estimated on a very conservative basis.

The Costs and Benefits of the National Broadband Plan

The table below shows the costs and benefits anticipated under three different scenarios; pessimistic, central and optimistic. There is a detailed analysis showing how each of the costs and benefits are computed, all of which is published and available for download on the Department of Communications website, see here  (825KB)

Costs: The total project costs include both costs to the State and costs to the operator.

Benefits include benefits to residents and enterprises. The residential benefits refer to the residents who will benefit from the NBP through various savings which will be made in communications services, time savings through online access of services as well as time and cost savings from remote working.

The enterprise benefits refer both to benefits to all firms, those within the NBP area and those outside it.

For firms outside the NBP area one of the largest benefits to be realised is that many of their staff (who live in the NBP area) will now have better broadband access enabling productivity gains from remote/tele-working.

For firms within the NBP area, all SMEs will benefit. Farm enterprises will be able to engage in smart farming, while all SMEs will benefit from higher upload and download speeds to serve their clients and suppliers more efficiently.

Scope of Costs and Benefits

Table 1 shows that under all three scenarios the benefits of the NBP exceed the costs. In the analysis, the entire range of costs have been considered and furthermore they are capped and there are various clawback mechanisms to ensure limited and capped costs to the State.

The benefits that have been measured are just some of the range and a whole range of benefits have not been included. As the CBA report notes, in including and profiling benefits, the consultants adopted a deliberately conservative approach to ensure benefits were not overstated. As a result, there are important categories of benefits which are not quantified and therefore not included in the CBA analysis. Table 2 below provides an overview of these benefits and examples of how households and enterprises in the NBP area may benefit.

Measuring benefits – Other international examples

In making the case for various state supports and state aid for broadband investment, other countries have also grappled with how to measure and capture benefits. While investment in fibre networks can be evaluated in a similar fashion to investment in other infrastructure, technological innovation and new product and service developments are continually extending the range of benefits from investment in broadband infrastructure generally and fibre deployment in particular. Consideration of these other benefits is not new and other countries have valued the benefits of fibre rollout across various sectors.

For example, research undertaken in Sweden provides some economic calculations on additional returns to fibre which need to be captured in evaluation. In Sweden, higher rents are charged for homes with fibre connectivity. Tenants pay an extra €5.50 per month for a home with a fibre connection and this is valued at €267 million per year for all fibre connected homes, which yields €185.6 million per annum return on investment.

Investment in fibre networks can also reduce telecommunications costs to the user, for example the Stockholm Regional Council (regional government) reduced its telecommunications costs by 50% following deployment of the fibre network. This is attributed to increased efficiency and greater competition with more telecommunication operators providing services on the high capacity fibre network.

The development of eHealth technologies including remote monitoring and diagnosis will provide opportunities to deliver some healthcare direct to the community rather than through hospitals. Community care is generally significantly less expensive than hospital care. The greater bandwidth and symmetrical (upload and download) speeds with fibre networks can support those applications requiring very good upload and download speeds. As many of these applications such as eHealth are still being developed, it is difficult to estimate their full value and benefit.

At a wider economy level, the OECD has examined the benefits arising to other economic sectors (transport, health, education and electricity) of a national ‘fibre to the home’ network. The analysis examines the cost of deploying ‘fibre to the home’ across different OECD countries, including Ireland, and has estimated that the combined savings in each of the four sectors over a 10 year period could justify the cost of building a national ‘fibre to the home’ network. These examples are outlined in the WDC report, Connecting the West, Next Generation Broadband in the Western Region, see here (1.5MB).

Measuring the benefits of State investment should also take account of the impact on other Government policy objectives. More balanced regional and rural development and greater regional economic growth are important Government policy objectives.

State Aid

The Telecoms sector just like most other economic sectors are subject to strict EU State Aid Rules. State aid is subject to very strict criteria, one of which is that there is market failure. In the NBP areas, defined according to a detailed mapping process which was undertaken as part of the requirements for State aid, it is clear that no commercial deployment of high speed broadband has been or is likely to occur. This is then a case of market failure. Just as with other utility provision (transport, water, energy) the State intervenes where commercial provision does not occur.

One of the other criteria for State aid is that the aid serves an Objective of Common Interest. The European Commission’s Digital Agenda for Europe (DAE) is an objective of common interest to which Ireland has committed and this sets out a minimum of 30Mbps download for all homes and businesses by 2020. Given the increasing demand for higher speeds the EU Commission has revised upwards the target for member states which is now to achieve a basic service of 100 Mbps for all households by 2025. This objective and need to reduce the current digital divide complies with State aid requirements.

Conclusions

The NBP has been subject to probably the most extensive, thorough and comprehensive evaluation both within various Government Departments as well as across the wider public domain.

When the benefits exceed the costs, and the costs are capped while the benefits that are measured are only partial and conservatively estimated then the results of the CBA are positive and clearly make the case to proceed with the investment.

The full report on the benefits from the NBP (February 2019), is available for download on the Department of Communications website, available here (2.5MB).

The NBP Cost Benefit Analysis report (April 2019), is available for download for the Department of Communications, see here  (825KB).

 

 

Deirdre Frost

200th WDC Insights blog post – Our Top 5!

It is hard to believe but this is our 200th post since the Policy Analysis team’s WDC Insights blog was first launched on 25th July 2014. Over the last (almost) five years and 200 posts we have addressed everything from labour market to climate change, broadband to county incomes, demography to electricity and much more in between.

We’ve tackled mysterious questions (Understanding rural transport statistics: Why are there so many new cars in county Roscommon?[1]) and pressing issues (Energy and Climate Action- the WDC View of the Draft National Plan); assessed the regional impacts of national trends (Leprechauns in Invisible Regions: Regional GVA (GDP) in 2015) and policies (WDC submission to Ireland 2040-Our Plan, the Draft National Planning Framework); analysed Census data (Census 2016: Housing In Ireland – What has been happening in the Western Region?) and explained changing statistical classifications (Nuts about NUTS!). And of course there’s our annual Christmas Quiz!

So of our 200 posts so far, what have been the most popular…?

Number 5: How are we doing?  GDP of Irish Regions in 2014

From April 2017, How are we doing?  GDP of Irish Regions in 2014 by Dr Helen McHenry is among our annual posts analysing CSO data on county incomes and regional GDP.  The analysis in this post showed the increasing dominance of Dublin and the South West in terms of their combined share of national GDP, with the share accounted for by other regions reducing over time, a trend that has continued.

Number 4: Preliminary Results of Census 2016 for Co Roscommon

Presenting our analysis to stakeholders is a key part of the work of the WDC’s Policy Analysis team and Preliminary Results of Census 2016 for Co Roscommon, from December 2016, summarised the main points from a presentation by Pauline White to the Roscommon Local Community Development Committee (LCDC). It outlined the key preliminary Census results for the county on population and the components of change.  Of course, these results have since been superseded by the final Census results, but it seems fitting this is in our Top 5 given that Roscommon is the WDC’s ‘home’.

Number 3: What is Rural?

It might seem like a simple question, but the popularity of this post by Dr Helen McHenry from October 2017 shows that defining What is Rural? is far more complex that you might think. The post explores differing definitions of ‘rural’ used by the CSO, the National Planning Framework and the Commission for the Economic Development of Rural Areas. It concludes by asking if we need ‘rural policy’ or policy for people living in rural areas?

Number 2: Census 2016: Rurality, Population Density and the Urban Population of the Western Region

Examining the population living in rural areas (using the CSO definition!), population density across western counties and the population of towns in the region, Census 2016: Rurality, Population Density and the Urban Population of the Western Region from May 2017 provides a handy overview of the distribution of the region’s population.  It highlights that the region’s highly rural nature, with a dispersed population and a large number of small and medium-sized towns, has important implications for the delivery of services and infrastructure to residents of the Western Region.

And finally …

Number 1: Balanced regional development – What does it mean?

In our most popular post (by a long way!) Balanced regional development – What does it mean? Deirdre Frost explored the differing definitions and uses of this much used (and abused?) term.  Written in May 2015, when the initial discussions were underway for the National Planning Framework, as a successor to the National Spatial Strategy, it concluded … ‘When considering a new national planning framework which aims to deliver balanced regional development, deciding and agreeing what we actually mean by balanced regional development and how we measure it would be a useful starting point which might ultimately ensure a greater chance of success.’   Whether the final NPF actually achieved this clarity is perhaps a topic for a future post …

So, 200 posts done and we are looking forward to the next 200.  We hope you have found (at least some of) them useful and of interest.  If you have, forward them to your friends!  And if there are any issues you think we should cover in future posts, just let us know policyanalysis[at]wdc.ie

All the best

Pauline, Deirdre & Helen

[1] The answer’s here