Transcript Density Dividend

Presentation overview
• Back to the Future
• Reality check
• Reaping the Destiny Dividend
• Conclusions
Executive Summary
•Celtic Tiger doesn’t exist
• Ireland’s economy no miracle; a coiled spring waiting to unwind
• The economic slowdown is a needed pause for breath…more the “end of the
beginning” than the “beginning of the end”
•BUT
•Productivity growth is running into the sand. A range of interconnected and
mutually dependant obstacles to the future exist
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East-west population imbalance
Failure to urbanise
Poor infrastructure
No economic planning
Bad use of land
Dysfunctional local authority structures
•Ultimate debate: Political Technology of decisions making is part of our
economy and needs to be upgraded starting with Electoral system
BACK TO THE FUTURE
Back to the Future
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1841: Population of island 8.2 million
Net exporter of food
Post famine (1851) 7 million
Since 1851 population of Europe has
trebled
• Island’s pop today would be around
20 million today
• Only EU country to have fallen
Back to the Future: Policy Permafrost
• 1847 Although repealed, legacy of penal laws
hugely influential on economy and subsequent
development
– Capital flows to UK
– No native industrial entrepreneurs
• 1847 to 1917: Even after famine, emigration
encouraged as substitute to developing
indigenous economy
• 1932 to 1957: Protectionism cripples domestic
economy
• 1957 to 1977: Brief respite
• 1977 to 1987: Fiscal insanity
• Policy permafrost only ended in 1987
– NCB: Population of Republic to hit 6 million by
2050
– 2 million in the six counties
– so finally recovery of pre-famine
population levels by 2050
– But since 19th Europe’s population has trebled
• This implies a higher population level for
Ireland by then than 8 million.
• How high?
Back to the Future: Then and now
• 1841 - 1987:
– Huge dependance on agriculture
– Inward looking economy
– Real (policy-driven) or effective (incompetence-driven)
closure to world economy
• 1987-2007:
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–
–
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Agriculture falls to less than 4 % GDP
Globalised, diverse economy
Currency union in a market of almost 400 million people
Strong links with US & developing links with China,
India
Back to the Future
Republic of Ireland*
Northern Ireland*
Island of Ireland
9000
8000
7000
Persons (000s)
6000
5000
4000
3000
2000
1000
0
1841
1871
1901
1936
Censal year
*Before 1922 the geographical equivalent of
1966
1981
2006
Back to the Future
• What is Ireland’s “steady-state”
population potential?
• How quickly can it be reached?
• What obstacles have to be overcome
to reach it?
Israel
Germany
Switzerland
Republic
Denmark
Poland
France
Austria
Ireland 1841
Ireland 2006
Millions of people
What if Ireland was as densely populated as…?
Island
35.0
30.0
25.0
20.0
15.0
10.0
5.0
0.0
Rates of population growth 1970 to 2005
250.0%
Percentage change
200.0%
150.0%
100.0%
50.0%
0.0%
Malaysia
Singapore
S Korea
Back to the Future
• The case of Israel
– 1948:2 million people
– Now: 7 million people
• Land mass
– Size of Leinster.
• If they can do it……
REALITY CHECK
Reality Check
• Coldwell international estate agents:
“Ireland 2nd most expensive in world for
executive property costs after Beverly Hills”
- CSO
- “Between 1996 and 2002 the average distance
traveled to work nationally had risen from 6 to
10 miles”
- And this with just 4.2 million?
Reality Check: Growth runs into the
sand
• Since 2002
– Growth increasingly domestically driven
– Absence of competition and lack of
efficiency in non-traded sector
(especially public sector) hits traded
sector hard.
– 1957: Economy’s external side opened
to competition
– 2007: Challenge is to open non-traded
sector to competition.
Reality Check: “Cain Slew Abel”
• “Cain Slew Abel”
– January 2000 to today
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General prices rose by 30 per cent
Electricity prices rose by 240 per cent
Various local authority charges by 240 per cent
Health costs (largely public) by 93 per cent
– More generally
• Chronic underperformance of public sector & overprotected parts of private sector generally –
transport / postal services / electricity is holding
economy back and retarding Ireland’s future
Figure 5 Year-on-year growth of Domestic Demand and External Demand
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4
%
1
2
%
1
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%
8
%
6
%
4
%
2
%
0
%
-2
%
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9
9
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D
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sticD
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xte
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Source; Central Statistics Office 2007
2
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Question: Dream or Disaster?
• In a high technology, well-planned
economy rising population guarantees
growth
• In a low technology, poorly planned
economy it guarantees congestion, rising
prices and falling living standards
• As latter looks increasing the reality
Ireland must start reaping the Density
Dividend
DENSITY DIVIDEND
Density Dividend 1: East v. West
1. East / West Imbalance
– Post famine eastward bias remains.
– Overreliance on Dublin as a source of
employment
– 40% employment outside is Ag /
Construction
– In 19th century, west was congested
– Now it’s the east.
The Leinsterisation of Ireland
1841
2006
60.0%
Percentage of total population
50.0%
40.0%
30.0%
20.0%
10.0%
0.0%
Leinster
Source; Central Statistics Office 2007
Munster
Connaught
Ulster
Density Dividend 2: Cities Anyone?
Urbanisation
• Sweden less densely populated than
Ireland (for climatic reasons)
• But three-quarters of Sweden’s pop.
lives in urban areas (Ireland: 55%)
• Swedish cities are really cities.
• Galway, Limerick, Waterford, Sligo,
Athlone: Are they cities?
Density Dividend 3: Shannon v.
Shenzen
• Shenzen city 1970:
300,000
• Shannon/Limerick 1970: 80,000
• Shenzen city 2006:
8.5 million
• Shannon/Limerick 2006:
• Belfast hinterland 2006:
120,000
1 million
Density Dividend 3: Shannon v.
Shenzen
• 8 % growth in overall population
2002 to 2006
• Cork & Limerick’s population’s
actually fell
• Urban population growth was half
national growth
• What if we could reverse this latter
relationship?:
Density Dividend 3: Shannon v.
Shenzen
• Cork (& suburbs)
– 300,000 by 2020
– 500,000 by 2050
• Limerick /Shannon (& suburbs)
– 136,000 by 2020
– 240,000 by 2050
• Galway (city area)
– 114,000 by 2020
– 200,000 by 2050
Density Dividend: Boston vs. Berlin?
• Real debate is: Dublin vs. Berlin
• Berlin:
– Size: 890 sq kilometres
– Population: 3.8 million
• Dublin:
– Size: 922 sq kilometres (county area)
– Population: 1.2 million (county area)
Density Dividend: Boston vs. Berlin?
• Berlin:
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3 times population density
Public transport (underground/bus/tram) financially feasible
Competition for local goods and services provision high
Apartments (& rights of tenure) designed for sustained family
living
• Dublin:
– Lowest population density of any capital in EU, possibly world:
– Logistically & financially hostile to public transport provision
– Competition for local goods & services provision poor, so
prices high
– As shown by recent Halifax survey – half the Dublin labour
force is now priced out of the capital because of poor land use
Density Dividend: Bull McCabe factor
• C&AG: NDP 2000 – 2006 roads programme
rose from 7 billion to 14 billion
• 2006 alone, 360 million spent on land
acquisition
• High price of land now distorting planning
decisions
• Monaghan co. council zones for
development 29 villages one center,
implying growth in county of 122,000
• Would have been disastrous; no
infrastructure provision or economic plan
• Thankfully rescinded by Minister
Density Dividend: Bull McCabe Factor
• Massive transfers of wealth to farming community
(already benefit 40 billion from CAP)
• Impact on cost of accommodation severe.
• Impact on residential, commercial & industrial
rents also severe
• Sean Dunne 59 million per square acre;
Unsustainable unless we build up.
• Erskine Childrers 1957
“It is not too much to
say that our entire economy will stand or
fall by the use made of the land”
Density Dividend: Ireland of the 100
governments
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> 100 local authorities
Poor interaction with road / rail authorities / government
departments
Plays havoc with infrastructure planning and cost effectiveness
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2006: N.I. local authorities cut from 26 to 7
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Consolidation of local authorities from 100 into around 8 properly
planned authorities corresponding to existing regions would
– Achieve economies of scale
– Provide proper local government
– Be consistent with reform of local authority finance and real local
democracy
– not to mention segregation of local from national perspectives
amongst our TDs.
Density Dividend: Electoral Reform
• How do we want to be governed?
– National or tribal interest?
– Leadership or “followership” ?
– Short term or Long term?
• Existing electoral system..
– Gives huge weight to organised lobbies who
trade votes or favours
– Large mass of voters who seek national
interest ignored
• Electoral reform needed to desensitise
system to minorities & facilitate reform
CONCLUSIONS
• Ireland is a bicycle in a traffic jam.
– It is bizarrely underpopulated
– It is linked into the euro zone and US economies and is
forging strong links with Asia
• But…
– …although 1957 saw “external” side of economy
– ..internal side still needs drastic reform
• Vast gains in terms of potential economic growth
are there for the taking
• So….let the debate begin.