The Ulster Canal 10: kill it now

Back in 2007, when we thought we had lots of money, Brian Cowen TD, then Minister for Finance, said this:

Value for money is also a central theme in the delivery of the planned investment. Most of the capital projects, notably in the key area of transport, are being delivered on or below budget and, in some instances, ahead of schedule. Building on this performance, all expenditure under the National Development Plan 2007-2013 will be subject, as appropriate, to a robust value for money framework.

Among the key elements of this framework are that all projects will be subject to project appraisal, all capital projects over €30 million will require a full cost benefit analysis, the introduction of new procurement arrangements which will deliver greater cost certainty and evaluations under the value for money and policy reviews will be published and submitted to the relevant select committees of the Oireachtas.

In the coming period, my Department will be elaborating on the monitoring process to be put in place to measure progress under the plan. We envisage a streamlined, focused approach whereby progress can be readily assessed by reference to relevant financial and physical indicators. We will avoid the bureaucratic, committee-laden reporting process under previous plans, which was a source of dissatisfaction as expressed in the consultation process. The emphasis will be on efficient delivery and transparent reporting. A key new feature is the formal submission of an annual report on plan progress to the Houses of the Oireachtas.[i]

I do not believe that the current proposal, for a canal to Clones, has been subjected to a “full cost benefit analysis” despite its being a capital project “over €30 million”. Nobody knows how much over, because the costings (except for the new section at the Lough Erne end) are not reliable.

Furthermore, members of the Oireachtas have never subjected the proposed Clones canal to any serious examination: they seem to have been happy to support the spending of €35 million without any proper discussion. But every economic analysis of the proposed canal has shown that it is poor value for money. And I think that those analyses overstate the likely benefits, while the figure quoted for costs has not been reassessed for some considerable time. As a canal to Clones it makes very little sense, and I see no prospect that it will ever reach Lough Neagh. And (to put it mildly) I think there is considerable doubt over the possible funding sources.

This project makes absolutely no sense. It should be killed off now.

Why?

At the moment we can borrow at about 5%. The govt should spend money on any project that will give this return or greater.[ii]

As I write, the rate for Irish ten-year bonds is 6.36%.

I can see why Waterways Ireland wants the Ulster Canal: it likes doing engineering and, once the Royal Canal is finished, it will have no major project on hand, while its scope to carry out smaller projects may be limited if its capital funding is cut (the Department of Community, Equality and Gaeltacht Affairs twice ignored my question on that point, while WI refused to answer it).

However, I find it very difficult to understand why the Irish government is so committed to a project that will never have a reasonable return. Perhaps the clue is in a speech by Labour Party (ie opposition) TD Jan O’Sullivan in December 2006:

It is the Labour Party’s sincere hope that the latest initiative, the St. Andrews Agreement, and the subsequent timetable towards restoration, succeeds. Subsequent to the return of the institutions, the North-South agenda so crucial for the future must be put centre stage and prioritised by any new Executive. Unfortunately, the positive view of increased North-South co-operation and of the Implementation Bodies themselves is not shared by all political parties in Northern Ireland. In recent years the Democratic Unionist Party has had the bodies in its sights in its repeated attempts to renegotiate certain elements of the Good Friday Agreement. This has not just been a matter of political expediency. It has not sought mere minor changes to North-South bodies as cover for accepting the Agreement. Rather, it has specifically sought to diminish the powers and scope of the bodies and to challenge the basis on which they continue to function.

In this regard I express some concern about the Governments’ attitude to the DUP’s agenda. Ever since early 2004 when the DUP published its North-South, east-west document on strands two and three of the Good Friday Agreement, the DUP’s aims have been clear. In that document it stated:

“We opposed the all-Ireland Implementation Bodies, amongst other things on the basis that they were not accountable to the Assembly and were not value for money for the taxpayer. We opposed the overall set of proposals because they were mainly driven by the desire to achieve Irish unity.”

[…] All this is designed to make the work of the North-South bodies cumbersome, unwieldy and impractical. This would enable the DUP to argue that they are impossible to work and are in need of reform. It would then argue that North-South co-operation should only function on the basis of ad hoc consultation between Ministers in Stormont and Dublin on a case-by-case basis. There should be no superstructure, no formal institutions to promote North-South co-operation and development, in short, no implementation bodies at all in the DUP’s plans.

[…] It is evident from this reply that the British Government has conceded major ground to the DUP in its efforts to make unworkable any decision taken by the implementation bodies or the North-South Ministerial Council with which it may disagree. Unfortunately, over recent weeks I have heard very little from the Government on this issue. I afford the Government this opportunity to clarify its position. Has the Government raised this matter with the British Government? What was its reaction to Minister Hanson’s comments? Does it agree with the analysis that this represents a clear attempt by the DUP to damage the North-South agenda? More importantly, what efforts is the Government making to prevent the DUP from achieving its aim?

There is a real fear that in the period between now and the Assembly elections scheduled for March, if we get that far, the DUP will seek further concessions on North-South issues. To prevent this, I appeal to the Government to mount a robust defence of the implementation bodies and the North-South Ministerial Council to ensure that this vital area of co-operation and development is protected so that it can thrive in the future.[iii]

Most of the north-south bodies do boring background technical stuff:

• Food Safety Promotion Board
• Trade and Business Development Body (InterTradeIreland)
• Special European Union Programmes Body
• The Language Body/An Foras Teanga/North-South Body o Leid (consisting of two agencies, Foras na Gaeilge and Tha Boord o Ulster-Scotch)
• Foyle, Carlingford and Irish Lights Commission (consisting of two agencies, The Loughs Agency and Lights Agency).

Even Tha Boord o Ulster-Scotch has been a lot less colourful since Tha Lord Laird o Artigarvin retired as Head-Yin. So Waterways Ireland has more scope than the others for hosting spectacular events with bunting, logos and photos in the newspapers. And the Ulster Canal offers the only real opportunity for a significant extension of the scope of crossborderality.

Unfortunately it makes no practical sense. It may be that the northern parties decided not to participate in the restoration because they didn’t want to extend crossborderality but, even if that was so, the decision was made easy for them by the absence of any economic justification for proceeding.

Some nationalists seem to believe that, if Her Majesty’s Government were to announce its intention of removing Northern Ireland from the United Kingdom, unionists would be forced to realise that it was in their best interests to accept their Irishness and participate fully in a united independent Ireland. I think myself that that is nonsense, but I wonder whether a scaled-down version of the same belief is evident in the support for cross-border bodies: a belief that, when unionists see the many benefits that flow from the operation of the cross-border bodies, they will become enthusiastic participants in extending the scope of handsacrosstheborderism.

I am of course speculating, but if that is the Irish government’s belief I think it’s misguided. Whatever chance there might be of highlighting the cross-border benefits of complete restoration, there is pretty well none with a canal that goes no further than Clones. If you want to convince unionist politicians of the virtues of crossborderality, choose a sensible project with net benefits to both sides.

The canal to Clones is not a sensible project, and is even less so in current economic circumstances; the proposal should be scrapped.

Alternatives

Now, I don’t want to deprive Clones of the possibility of increasing its earnings from tourism. I have enjoyed visits to its Canal Stores and to its wonderful former engine-shed. So here are three suggestions for making some use of the Ulster Canal:

• a taxi service. According to Waterways Ireland’s restoration plan, the running costs of the canal to Clones, after restoration, will be €300,000 a year. The taxi (hackney) fare from Belturbet to Clones is €25 each way, €50 for a return journey. The Updated Economic Appraisal expected 600 trips on the canal, but 600 crews could be carried from Belturbet to Clones for a mere €30,000
• a voluntary restoration. Part of the problem with the Ulster Canal proposal is that it is too late: the various reports were written before British Waterways withdrew from the Cotswold Canal Partnership. But voluntary restoration effort continues in Britain, and (pace Éamon Ó Cuív) there is no reason why it couldn’t work here. In fact, a well-organised restoration campaign, with volunteers and fund-raising from both sides of the border, and local control and management, would be a far more effective example of cross-border cooperation than a scheme paid for and run by the Irish Exchequer or by Waterways Ireland
• a walking and cycling route. According to the Updated Economic Appraisal, the acquisition of the land between Lough Erne and Clones would cost £1,268,280 and the construction of a towpath would cost £655,513, a total of £1,923,793 (€2,293,777 at today’s exchange rate). This would allow work on the canal itself to go ahead, while providing the benefits expected to come from non-boating users. That’s £205,836 of benefits out of the expected total of £249,412, but for about one fifteenth of the cost, with the option of full restoration (if the economy ever again permits) still open in the long term.

But the current proposal should be scrapped.

Next: some information from Waterways Ireland (December 2010, before the budget) and some speculation based on what WI didn’t say.

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[i] Brian Cowen TD, Minister for Finance, Dáil Éireann 15 February 2007 National Development Plan

[ii] Rory O’Farrell on The Irish Economy http://www.irisheconomy.ie/index.php/2010/08/30/trichet-on-ricardian-equivalence/#comment-68649

[iii] Jan O’Sullivan TD Dáil Éireann 05 December 2006 on British-Irish Agreement (Amendment) Bill 2006