Note: amended 11 November 2011 following receipt of information from the Department of Arts, Heritage and the Gaeltacht.
Note: the Irish Times of 12 November 2011 says that the government has changed its mind (again) on the A5 road and will give it €50 million of the €470 million originally proposed.
I cannot help feeling that it was a mistake to allow engineers to organise themselves as a profession. Kept below stairs, admitted through the tradesmen’s entrance, they were humble but useful artisans. Once they got access to the drawing-rooms of polite society, though, they began — like all other professionals — seeking to arrange the world to their own advantage.
I wrote about this in discussing the first Ulster Canal rip-off, which was getting the Junction Canal (nowadays the Shannon–Erne Waterway) built at taxpayers’ expense. Both W T Mulvany and John McMahon wrote reports based on ridiculously optimistic assumptions about traffic levels. The canal cost twice what McMahon estimated and the traffic was negligible. However, the engineers got paid.
This came to mind when I read Edgar Morgenroth’s ESRI paper How Can We Improve Evaluation Methods for Public Infrastructure? (pdf). He says that, with smaller budgets available, public investment projects must be prioritised, so they have to be evaluated in advance. The most common technique is cost benefit analysis; the paper considers two issues, the risk of inaccurate estimates of cost or benefit (he points to widespread optimism bias) and the setting of an appropriate discount rate.
He says in passing that (since 2006) “projects costing in excess of €30 million are subjected to a cost benefit analysis”. The proposed canal to Clones, however, for which a cost of €35 million is commonly quoted (on little evidence), has not been subjected to a cost benefit analysis. Morgenroth writes:
Pritchett (2002) constructs a simple political economy model where projects/programmes are support by “advocates” who are more committed to pursuing their project than the general public and where the latter is split into three groups according to their attitudes towards the project. He finds that except in the case where advocates know that the project will have the desired outcome, they will prefer not to evaluate the project i.e. they will prefer ignorance.
I should point out that neither Edgar Morgenroth nor the ESRI has expressed any opinion on the Ulster Canal project; my citing the paper is not to be taken as suggesting that either Morgenroth or the ESRI supports my views (or has heard of either me or the Ulster Canal).
As I have pointed out at length, I believe the published Ulster Canal cost estimates to be unreliable and its benefit estimates to be overstated. Waterways Ireland is nonetheless pressing ahead with its applications for planning permission (H/T T): see the Northern Ireland Planning Service application here and the application to Monaghan County Council here (for some reason I can see no documents in Monaghan).
What, then, of the funding? Folk interested in waterways policy will have gone on 10 November 2011 to the website of the Department of Public Expenditure and Reform to download the document Infrastructure and Capital Investment 2012–16: Medium Term Exchequer Framework (pdf). They will have noted that the government’s proposed contribution to upgrading the A5, a road in Northern Ireland, to motorway status has got the chop been postponed.
That was one of two proposals for Irish taxpayers to pay for infrastructure in the United Kingdom; the other was the Ulster Canal. A much smaller project, it is not specifically mentioned in the Framework document, but there is this about the relevant department (now the Department of Arts, Heritage and the Gaeltacht):
ARTS HERITAGE AND GAELTACHT
Capital expenditure in this area will focus in particular on supporting jobs in the film & TV sector and in the Gaeltacht. It will also seek to target investment in priority areas in the cultural and heritage sectors that can support cultural tourism as one of the most important elements of Ireland’s tourism product. Other investment will help to ensure continued implementation of EU Directives and support waterways development in the context of the implementation of the Good Friday/St Andrew’s Agreements.
It shows capital spending falling from €44 million in 2012 to €38 million in 2013 and €36 milliion in each of the years 2014. 2015 and 2016.
So do these amounts include enough for the department to pay for the Ulster Canal? Remember that the previous department, Craggy Island, was foiled, by the property crash, in its attempt to get the money by flogging off Waterways Ireland property in Dublin. It consistently refused to say where it thought it would get the money (the matter is now with the Information Commissioner) and the current ministers recently admitted that there was no ring-fenced funding: that the project would have to be funded from the annual allocations to Waterways Ireland. The capital allocations to WI fell from €8 million in 2010 to €6 million in 2011. So will the new department be able to pay for the canal?
The new Department of Arts, Heritage and the Gaeltacht is made up of bits that (as far as I can see) came from three previous departments: the Department of the Environment, Heritage and Local Government (DoEHLG), the Department of Tourism, Culture and Sport (DTC&S) and the Department of Community, Equality and Gaeltacht Affairs (Craggy Island, DCEGA). That makes it difficult to work out how much Waterways Ireland might get out of the capital available.
I asked the new department for a comparison between the 2012 and 2011 figures, based on the functions now carried out by the new department, and for a breakdown of the capital allocations from 2012 to 2016. While I was waiting, I did some analysis of my own (see below), but the department told me that:
The equivalent 2011 capital allocation available to this area is approximately €61m. This is made up of €54.567m allocated to the Department of Arts, Heritage and the Gaeltacht (Vote 35), €2m allocated to the National Gallery (Vote 33) and €4.248m expended by the former Department of Community, Equality and Gaeltacht Affairs.
The Minister is currently prioritising his plans within the context of both this Capital Investment Programme and the forthcoming Budget.
Note for anoraks: Vote 35, in the 2011 Estimates, was the Department of Tourism, Culture and Sport.
I came up with a slightly lower figure, €59 million, but I’m sure the department knows best. Still, it’s interesting to see what other claims there are on the money. If, for instance, a large chunk had been allocated to avoiding climate change or saving the lesser spotted gerbil, we could assume that waterways would be able to grab the loot. But if the money was going to well-organised and vocal pressure groups, or to geographically coherent groups of voters, waterways would be less likely to benefit.
Accordingly, I checked the department’s website to find out what it does and what bodies it funds; I then checked the 2011 Estimates for Public Services and Summary Public Capital Programme (pdf) to find what capital allocations those functions and bodies got in 2011. Here is the result.
|Public capital allocations to activities currently in the Dept of Arts, Heritage and the Gaeltacht|
|Current bit||Where it was||2011 allocation|
|Cultural development||DTC&S (35 D5)||7800000|
|N Archives||DTC&S (35 D2)||400000|
|N Library of Ireland||DTC&S (35 D9)||1000000|
|N Museum of Ireland||DTC&S (35 D8)||2000000|
|Chester Beatty Library, I Museum of Modern Art, Crawford Art Gallery, N Concert Hall||DTC&S (35 D3)||1500000|
|N Gallery of I||Own vote (33 B)||2000000|
|N Parks & Wildlife||DoEHLG (25 G3)||5534000|
|Built Heritage & Archi Policy||DoEHLG (25 G2)||2005000|
|Irish language bodies||DCEGA (27 F1)||100000|
|Gaeltacht schemes||DCEGA (27 E1)||2500000|
|Udaras na Gaeltachta||DCEGA (27 E7)||6000000|
|Islands||DCEGA (27 E4)||3700000|
|Waterways Ireland||DCEGA (27 G2)||6000000|
|An Foras Teanga||DCEGA (27 G1)||0|
|An Coimisneir Teanga||DCEGA (27 F2)||0|
|Arts Council||DTC&S (35 D7)||850000|
|Irish Film Board||DTC&S (35 D10)||16000000|
|Heritage Council||DoEHLG (25 G1)||1500000|
|Culture Ireland||DTC&S (35 D6)||0|
I should point out that I do not know enough about departmental functions, specific programmes or the niceties of government budgeting to be at all certain that I am making valid comparisons here. It could be, for instance, that some programmes are due to end in 2011 so that further capital allocations will not be required in 2012. If anyone can help improve the comparison, I would be grateful. I could not find allocations to the National Monuments Service, the Irish Manuscripts Commission or Marsh’s Library.
So I reckoned that the capital allocation to the department for 2011 (had it existed, in 2010, in its present form) would have been almost €59 million, whereas the department says the figure was €61 million. Either way, it’s well above the 2012 allocation of €44 million, not to speak of the future allocations of €38 million and €36 million. Waterways are listed as the lowest priority: film and television come first, then Gaeltacht, then cultural tourism, then EU directives, then waterways. Interestingly, the department told me that the EU directives bit includes
… investment in alternative solutions for those affected by the cessation of turf cutting on raised bog Special Areas of Conservation.
In other words, that’s for Ming‘s Merry Men, the turfcutters and contractors.
Given the stated priorities, and the other actors competing for the department’s limited capital allocation, I cannot see that there is any prospect of there being enough money to pay for a canal to Clones at any time before 2016. The Clones canal enthusiasts may of course have more information than I do.
The stake? It would be nice to bury the Ulster Canal at a crossroads, with a stake through its heart. But engineers have a habit of keeping plans in their drawers, refusing to abandon them, advancing them by small steps and producing them when political and financial circumstances are propitious. I may need to plant garlic in Enniskillen ….
Here is a statement, dated November 2011, from the Department of Arts, Heritage and the Gaeltacht.
“The most common technique is cost benefit analysis; the paper considers two issues, the risk of inaccurate estimates of cost or benefit (he points to widespread optimism bias) and the setting of an appropriate discount rate.”
Hear Hear. In my own opinion piece on the Ulster Canal that a certain heritage society refused to publish (and which now resides on my website for a wider audience to read), I made that the point that as a cost accountant, I can make your project viable or unviable, solely by changing the assumptions about costs and/or projected usage.
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