Ibec: Budget 2024 must invest in infrastructure

Budget 2024 must focus on creating greater economic capacity through both infrastructural and social investment.

The group that represents Irish business argues that delaying investment in the short term to mitigate the risk of overheating will hinder future economic expansion and negatively impact Ireland's long-term competitiveness. According to Ibec, lack of investment has led to systemic congestion in both access to physical assets like housing and infrastructure and to the ability of households to access services which should be afforded in a wealthy society.

Additionally, Ibec highlights the ongoing challenge of significant planned increases in employment costs for many businesses and urges the Government to provide an offset mechanism for companies struggling with new labour market measures.

“Budget 2024 presents a significant opportunity to invest in infrastructural capacity while concurrently strengthening social investment, ensuring the benefits of economic progress are felt by all,” said Fergal O’Brien, Executive Director of Lobbying and Influence at Ibec.

“Demand in the Irish economy, driven primarily by external factors, underscores the urgent need to enhance domestic supply capacity to alleviate significant congestion. The country's current structural challenges can be attributed to the failure to invest in absorptive capacity, including skills, housing, and infrastructure, despite significant private sector investment.”

“With unprecedented employment levels, we must also encourage higher levels of innovation and productivity while safeguarding businesses' cost base, ensuring the continued prosperity of our economy.”

Infrastructural investment

To ensure continuous investment in infrastructure regardless of economic conditions, Ibec proposes the establishment of a National Infrastructure Fund. This fund aims to address Ireland's significant social, economic, and environmental infrastructure needs over the next decade. Their proposed target is to provide an additional €30 billion for infrastructure spending by 2030.

Innovation and productivity

Ireland cannot afford to be complacent when it comes to innovation, productivity and skills. In a highly competitive global environment, it is crucial to foster, enhance, and promote high value investment. This requires a focus on future-proofing the talent pipeline, particularly in areas of digital, climate action proficiency, and Industry 5.0.

As part of this drive, Budget 2024 should unlock the €1.5bn surplus of the National Training Fund (NTF) to help deliver the key skills for the 21st century. Ibec also recommends a €710m investment to boost research, innovation, and digital capacity, along with €307m in university funding and €225m to support the growth of Irish exporting businesses.

Ibec also proposes investing €650m to advance net zero carbon goals and allocating €500m from the NTF for measures promoting workforce development over the coming years.

Cost competitiveness

Budget 2024 must recognise the implications of rising employment and operating costs, as well as general inflation. Implementing measures such as providing support to counter the impact of increasing regulated employment costs, ensuring tax rates and bands are indexed, and preserving the 9% VAT rate for the experience economy are among Ibec’s recommendations to address these challenges.

Additionally, Budget 2024 must also set out a plan to ensure the introduction of a living wage does not interact with the tax and welfare system in such a way as to impact on people’s incentive to work. Further supports for those firms severely impacted by high energy costs are also required.

Social investment

To ensure meaningful social investment is delivered, Ibec is calling for a €125m budget allocation to enhance state capacity and modernise systems for improved infrastructure delivery by ensuring adequate staffing, specialisation in key regulatory and delivery bodies and invest in administrative modernisation. Additionally, Ibec recommends allocating €700m to enhance housing delivery and €200m to expand childcare accessibility.