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Analysis of Government Spending: Dublin Suffering from Severe Under-Investment in Local Services and Infrastructure 1

Analysis of Government Spending:

Dublin Suffering from Severe Under-Investment in Local Services and Infrastructure 1

+ New Spending Analysis Shows Historic Under-Investment in Dublin to

Maintain Productivity +

+ Dublin Receives Lowest Capital Spending on a per capita basis despite

economic importance of region +

+ Dublin not ‘too big’ but suffering from under-investment

Far from being ‘too big’, all evidence suggests that Dublin is suffering from a gap in productive infrastructure investment.

While Dublin’s offering as a location for inward investment is second to none, there has been significant erosion of its attractiveness in recent years due high housing costs, poor transport and inadequate infrastructure and local services.

Inward investment lost to Dublin is usually lost to Ireland, as MNCs in key services and advanced manufacturing areas want to locate in a large urban area. Firms will continue to want to locate in the Dublin Region, regardless of a policy ambition to spread FDI evenly throughout all regions.

Despite this, there is a pervasive criticism that Dublin gets disproportionate FDI due to it being a favoured location for Government investment.

An analysis by Dublin Chamber shows that, far from being a favoured location for Government investment, the four Dublin Local Authorities receive significantly less than everywhere else in the country on a per resident basis.

Although it is the economic capital of Ireland, with 47% of national employment being located in the GDA, Dublin has received much less investment in its productive infrastructure than is required for it to remain a highly competitive location.

1 Feb 2017

Despite having such pressures on its productive and social infrastructure, over the past 7 years,

Despite having such pressures on its productive and social infrastructure, over the past 7 years, the county received the second lowest capital investment per capita by central government, receiving less than 50% of the national average and just 30% of the counties that received the highest levels of funding, such as Sligo, Kilkenny and Mayo.

Severe levels of underinvestment in its local infrastructure and capital maintenance, including Housing, Transport, Environment, Development Management, Education and Employment Services Recreation and General Purpose Grants is beginning to cost Dublin and Ireland dearly.

The evidence is that FDI firms decide to locate in Dublin despite its sub-par offering in terms of productive infrastructure, due to the high value they attach to clustering and agglomeration.

Insufficiently investing in Dublin’s productive infrastructure will not lead more firms to locate to other regions, it will lead to them locate to other countries.

Lack of investment in core economic infrastructure, such as transport, water, electricity and housing, has yet to seriously affect inward investment. But sub- standard infrastructure is beginning to be seen as a huge negative for firms looking to invest in Dublin.

Other Findings:

Ø On a per capita basis, Dublin has received below average current funding for local services and average total spending by central government 2009-2016

Ø Dublin has received one of the lowest capital investment per capita in housing by the Central Government over the 2009-16 period, despite having proportionately the highest number of households reliant on social housing supports

Ø Dubliner’s pay proportionally by far the highest household and personal taxes of anywhere in the country, with the average Dubliner paying over 3 times the average per capita taxes

Kilkenny Leitrim Westmeath Roscommon Mayo Kildare Longford Laois Monaghan Average Tipperary Clare Kerry Galway Waterford

Kilkenny

Leitrim

Westmeath

Roscommon

Mayo

Kildare

Longford

Laois

Monaghan

Average

Tipperary

Clare

Kerry

Galway

Waterford

Limerick

Wexford

Donegal

Offaly

Cavan

Cork

Meath

Wicklow

Louth

Dublin

Carlow

Average Annual Capital Spending per capita 2009-2016
Average Annual Capital Spending per capita
2009-2016

-

100

200

300

400

500

600

700

800

Notes: Includes 1) Income Received by Local Authorities for Capital Spending in Six Budget Service Categories including transport (37%), housing and urban regeneration programmes (34%) and general purpose grants (16%); 2) allocations from Transport Infrastructure Ireland for National Roads in each county. Does not include: 1) One-Off Capital Spending on National Infrastructure Projects (such as Hospital Buildings and Primary Care Centres) that is difficult to localise geographically and mainly takes form of availability payments on PPPs.

Capital Spending by Central Gov in Local Authority 1600 1400 Dublin Average all LAs Galway

Capital Spending by Central Gov in Local Authority

1600 1400 Dublin Average all LAs Galway Sligo 1200 1000 800 600 400 200 0
1600
1400
Dublin
Average all LAs
Galway
Sligo
1200
1000
800
600
400
200
0
amount per capita, €

2009

2010

2011

2012

2013

2014

2015

2016

Notes: As Above. Galway and Sligo shown for comparison.

The Dublin Region also experienced below average current funding for public services delivered by Local

The Dublin Region also experienced below average current funding for public services delivered by Local Government (including water, traffic services, waste, environment etc.) while Dublin had the fourth lowest social transfers per capita over the 2009-2016 period.

Average Annual Local Gov Exp per capita, 2009-2016
Average Annual Local Gov Exp per capita,
2009-2016

Sligo

Leitrim

Kilkenny

Westmeath

Longford

Mayo

Monaghan

Donegal

Limerick

Roscommon

Laois

Waterford

Tipperary

Galway

Kerry

Clare

Average

Kildare

Dublin

Carlow

Offaly

Cavan

Cork

Wexford

Louth

Wicklow

Meath

Carlow Offaly Cavan Cork Wexford Louth Wicklow Meath € - 200 400 600 800 1,000 1,200

-

200

400

600

800

1,000

1,200

Notes: Total LG Spending Includes 1) Income Received by Local Authorities from Central Government for Current + Capital Expenditure across six Budget Service Categories (Source: DHPCLG); 2) TII Spending on National Roads (Source: TII); 3 Does not include: 1) One-Off Capital Spending on National Infrastructure Projects 2) Full costs of social services provision (e.g. Education and Health) funded directly via Department Voted Expenditure (however a good deal of the geographically localised element of public services is captured by public service wages).

Despite having the highest housing needs in the country (proportionally the highest social housing waiting

Despite having the highest housing needs in the country (proportionally the highest social housing waiting lists and numbers in need of social housing supports, such as HAP or Rent Supplement), the four Dublin LAs received the one of the lowest capital spends on housing.

Total Housing Capital Investment per capita 2009-2016 (€) Cavan Meath Donegal Sligo Limerick Monaghan Louth
Total Housing Capital Investment per capita
2009-2016 (€)
Cavan
Meath
Donegal
Sligo
Limerick
Monaghan
Louth
Roscommon
Kildare
Galway
Dublin
Mayo
Laois
Average
Clare
Westmeath
Offaly
Wicklow
Kilkenny
Kerry
Wexford
Cork
Carlow
Tipperary
Waterford
Leitrim
Longford

700

1400

600 1200 500 1000 400 800 300 600 200 400 100 200 0 0 per
600
1200
500
1000
400
800
300
600
200
400
100
200
0
0
per capita investment, €
total investmet, millions €
0 per capita investment, € total investmet, millions € Total Housing Capital Investment 2009-2016 (€, millions)

Total Housing Capital Investment 2009-2016 (€, millions)

Total Housing Capital Investment 2009-2016 (€, millions) Total Housing Capital Investment per capita 2009-2016 (€) 6

Total Housing Capital Investment per capita 2009-2016 (€)

In terms of total expenditure, Dublin received average level of allocations/ spending per capita by

In terms of total expenditure, Dublin received average level of allocations/ spending per capita by Central Government. This includes all Local Government Funding, a large portion of infrastrucutre investment (e.g. National Roads), spending on Public Sector Pay and spending on social transfers. Overall this accounts for 77% of total voted exechequer expenditure.

Average Total Spending per annum by Central Government by County,

2009-2016 14,000 12,000 10,000 8,000 6,000 4,000 2,000 - Average Total Spending 2009-16, per capita
2009-2016
14,000
12,000
10,000
8,000
6,000
4,000
2,000
-
Average Total Spending 2009-16, per capita
Average Total Spending 2009-16, millions

Notes: Total Spending by CG Includes 1) Income Received by Local Authorities from Central Government for Current + Capital Expenditure across six Budget Service Categories (Source: DHPCLG); 2) TII Spending on National Roads (Source: TII); 3) HH & Individual Social Transfers (source: CSO); 4) an estimate of spending by Central Government on All Public Sector and Civil Service Wages in Each County (source: Own Analysis, DPER). Does not include: 1) One-Off Capital Spending on National Infrastructure Projects 2) Full costs of social services provision (e.g. Education and Health) funded directly via Department Voted Expenditure (however a good deal of the geographically localised element of public services is captured by public service wages). Overall accounts for 77% of Voted Exechequer Expenditure. See Methodology Below.

Dubliners pay by far the highest levels of personal and household taxes per capita (

Dubliners pay by far the highest levels of personal and household taxes per capita ( 15,000 vs. average of 4,000 per annum). In terms of total individual and household taxes (personal, product, household) the average Dubliner pays over 3 times the average per capita tax nationwide, however the average household income is only 28% higher than the national average, which does not factor into consideration costs of living in Dublin.

Revenue Collected by County, 2016 18000 60% Personal + Household Taxes, € per capita 16000
Revenue Collected by County, 2016
18000
60%
Personal + Household Taxes, € per capita
16000
50%
% of Total Revenue Collected in County
14000
12000
40%
10000
30%
8000
6000
20%
4000
10%
2000
0
0%
Dublin
Westmeath
Cork
Kildare
Kerry
Clare
Galway
Leitrim
Offaly
average
Limerick
Wicklow
Meath
Kilkenny
Waterford
Louth
Cavan
Carlow
Mayo
Monaghan
Wexford
Sligo
Tipperary
Longford
Roscommon
Donegal

Note: Left-Axis displays personal and household taxation collected per capita in each county. Personal Taxation includes receipts from VAT plus employee & employer PAYE, USI and PRSI (source: Revenue); Household Taxation includes Local Property Tax (source: Revenue) plus Motor Tax Receipts (source: Department of Housing). Right-Axis displays Total Revenue collected by county including receipts from all product, business, personal and household taxes (source: Revenue)

Methodology and Data Sources ‘Spending’ does not include all spending by Central Government in an

Methodology and Data Sources

‘Spending’ does not include all spending by Central Government in an area, but is estimated using the following method.

Overall our analysis accounts for 77% of annual voted exechequer expenditure.

1. Local Government Funding: all income received by each local authority across the six budget categories. This is parsed into current and capital income/ expenditure.

This includes large items accounting for significant portion of voted expenditure such as Regional and Local Roads Expenditure and All Capital Housing Expenditure (see explanation below).

This data is from the annual Local Authority Budget publication from Department of Housing, Planning, Community and Local Government.

2. National Roads: a major element of geographically localised expenditure is that spent by Transport Infrastructure Ireland. We received these from TII.

3. Social Welfare: social transfers, social benefits and other current transfers (euro million) 2000-2014.

Mostly from voted expenditure of the Department of Social Protection (Source: CSO Regional Income).

4. Public Sector Wages: we attributed the public sector wage bill to each region and county using the following method:

a) Total Public Sector Workers (CSO, Earnings Hours and Employment Costs Survey, 2008-2017)

b) Total Public Sector Wage Bill (DEPR, 2009-2016)

c) % Regional Employment (Located) in County (CSO, Census 2016, Profile 6 Commuting Patterns)

d) ‘Public Sector’ Employment (Resident) in NUTS 2 Region (Source QNHS 1998-Q3 2017)

e) This is the number of people employed in 3 NACE Rev 2 Economic Sectors: Public Administration & Defence, Education & Human Health and Social Work Activities

f) While the number of people employed in these categories is more than the number of persons employed in the public sector (Incl. Semi-States but

does this incl. LOCAL AUTHORITES) this is only used to get the percentage of public

does this incl. LOCAL AUTHORITES) this is only used to get the percentage of public sector employees living in each region

g) % Public Sector Employment by Region (NACE) (Source QNHS 1998-Q3 2017) i.e. 10% of Public Sector Employees Located in Border Region, 30% in Dublin

h) Estimated Public Sector Employment in County = (1 * 5) = Number of National Public Sector Workers Attributed to Region * % Regional Employment Located in County

i) % National Public Sector Employment Located in County

j) Amount of National Public Sector Wage Bill Attributed to County (Millions) = Public Sector Wage Bill * % National Public Sector Employment Located in County

Breakdown Local Government Spending

Local authorities receive a substantial part of their annual funding from a range of central government departments and agencies.

In 2014, funding to local authorities from central government sources totalled 1.7 billion, which represents a decrease of 28% on 2013.

60% of this total originated as Exchequer funding.

The balance was provided through the Local Government Fund and the Environment Fund both of which are administered by the Department of the Environment, Community and Local Government (the Department

1. Government Grant/ Subsidies from CG The Local Government

Fund provides funding to local authorities mainly for their day to day activities (‘general purpose’ grants) and for the upkeep of regional and local roads.

2. Funding for Provision of Goods and Services from CG-

Breaks down into Current and Capital across 6 programme categories

In 2014, 87% of the total funding provision from central government to local authorities was

In 2014, 87% of the total funding provision from central government to local authorities was accounted for by three categories. Those were transport (37%), housing and urban regeneration programmes (34%) and general purpose grants (16%).

I. Transport – This isn’t all recorded in LA Budget Accounts

It includes DTTAs direct funding for L&R and some maintenance of NR as then payments to LAs that act as agent for TII for NR construction

National Roads: Improvement and maintenance of national roads is the responsibility of the National Roads Authority, operating under the aegis of the Department of Transport, Tourism and Sport. The National Roads Authority normally uses local authorities as its agents to deliver the projects, and channels expenditure through them.

R&L: The Department of Transport, Tourism and Sport receives an allocation for the upkeep of regional and local roads from the Local Government Fund.

It provides funding to local authorities using the National Roads Authority’s payment system.

Public / Sustainable Transport: The National Transport Authority, also operating under the aegis of the Department of Transport, Tourism and Sport, funds local authorities for improvements in the public transport system. Funding objectives include increased accessibility for older people, improved traffic flows, more routes for cyclists and pedestrians and better access for buses and taxis.

II. Housing – Part Current, Part Capital, All from Department of Housing

The bulk of funding for housing and urban regeneration is provided directly to local authorities by the Department from voted funds.

Capital = LA Income for Building, Maintenance/Improvement of LA Housing Units including channelled to AHBs

III . General Purpose Grants – Mostly Current Expenditure Funding is provided to local authorities

III. General Purpose Grants – Mostly Current Expenditure

Funding is provided to local authorities from the Local Government Fund to assist them bridge the gap between their other income sources and the cost of the services they provide, including their own administration costs.

IV. Environmental Initiatives (all current, voted expenditure Dept. Housing mostly + others e.g. Heritage)

V. Education and Employment Services (Vote Exp from DES – all current & might be best to exclude as HE Grants & Superannuation for VECs was channelled thr. LAs until 2014)

VII. Recreation and Other Local Services (from Voted Expenditure of Multiple Departments)

Breakdown Taxation by County TAXATION = PERSONAL + PRODUCT + BUSINESS + HOUSEHOLD TAXES 1.

Breakdown Taxation by County

TAXATION = PERSONAL + PRODUCT + BUSINESS + HOUSEHOLD TAXES

1. Personal & Product Taxes by county

vat_internal

paye_income_tax_and_usc

self_employed_income_tax

(Source: Revenue Net Receipts 2011 to 2017)

2. Business Taxes by county

corporation_tax_

capital_gains_tax

=TOTAL PERSONAL, PRODUCT & BUSINESS TAXATION

(Source: Revenue Net Receipts 2011 to 2017)

3. Households Taxes (LPT, Motor Tax) by county

Motor Tax (Source: Department of Housing) 2011-2017

LPT (Source: Revenue)