With an unemployment rate of 14.6% equating to 324,000 people and with 420,000 overall on the Live Register which includes all recipients of employment-related benefits, you would have thought it was a national priority to encourage investment which might generate jobs.
So, when NAMA announced in May 2012 that it was going to invest €2bn in its developments over the next four years, there was a warm welcome for the announcement. NAMA itself said that the investment might create 35,000 jobs and that would make quite a dent in the unemployment numbers. Not just that, we know that construction-related investment is one of the best ways of stimulating growth more broadly throughout the economy.
At the time, NAMA was coy about when it would spend the €2bn, and declined to answer questions on the phasing of the expenditure.
But thankfully, we have the IMF involved in the running of this country, and in their latest staff review report on the Irish economy published this week, they say the following:
“To support its asset disposal and market restoration objectives, NAMA plans some €2 billion in capital projects in Ireland, phased in a back-loaded manner through 2016, with risks to be managed by limiting project exposure at any given time”
We know from the NAMA Act and from Minister for Finance Michael Noonan’s letter to NAMA in March 2012 which ordered the Agency to temporarily finance the repayment of the €3.1bn Anglo promissory note, that NAMA has a wider remit than just managing its loans. It has access to ultra-cheap financing and has a massive portfolio of property, a good deal of which requires development and it can act and be ordered to act in the interest of the wider economy.
Which all begs the question – why is NAMA “back-loading” its investment when the need is right now?
NAMA was asked for a comment on the statement in then IMF report, but none was forthcoming at time of writing. That is not to say that NAMA has not been investing in the economy and there have been announcements of shopping centre developments and there is speculation about a major office development in Spencer Dock. But why “back-load” the investment?
NAMA Wine Lake 
“why is NAMA “back-loading” its investment when the need is right now?”
For use as an election slush fund? Can you see the headline in 2016: “FG leader announces creation of 35,000 jobs in construction”?
So, these jobs would start coming onstream when, if the politicians are to be believed, we have left the bailout, the economy has recovered and the State is borrowing again at moderate rates. Surely, the Government is not so out-of-touch to fail to realise that these jobs are needed NOW and not later.
@ Brian, I think it will be a bit late making announcements in 2016, unless you are reasonably sure of being part of any subsequent Government.
There is a wider question around investment in the completion of projects – there is little need for any more shopping centres, retail parks, etc. The longterm housing position suggests a need for larger units, for example more four bedroomed units close to the centre of existing cities rather than in Tarmonbarry or Rooskey, or the two bed units on the fringes or further away.
Emigration trends would suggest that future household formation will be far lower than predictions. Indeed the Dept. of Social Protection’s Annual Statistical Report Section F, Table F6, page 77, raises serious questions about emigration trends, contradicting the CSO Reports on the subject. For example, in 2010 there were 64,327 beneficiaries of CB born in 2005 (i.e .5 & under 6). Move to the 2011 report and the same cohort (now 6 & under 7) falls to 61,997. http://www.welfare.ie/EN/Policy/ResearchSurveysAndStatistics/Documents/2011stats.pdf
Agree about slower household formation here in Ireland because so many household formers have/are leaving and we already have excessive capacity within some asset groups. However, we need more/better nursing home and hospital beds (NCH etc.), health centres, tourism, leisure and environmental facilities. Not suggesting that we build walls for the sake of it but if the funds are available from Nama they could be used to offset the massive cuts in capital expenditure which, because they don’t immediately impact, have flown below the radar.
Why back-load? Maybe because Noonan has committed to redeeming a further 2.75bn of Nama bonds by the end of 2013 so there will be less funds available to invest? Is there a further commitemt to redeem bonds beyond 2013 that is constricting investment?
@Howya, there’s no further commitment in the Memorandum of Understanding with the bailout Troika to redeem NAMA bonds after the €7.5bn target has been met by the end of 2013. However there is NAMA’s own informal schedule which you can see here. Hopefully someone will stop Minister Noonan from unilaterally committing to these informal and internal-to-NAMA targets in any future MoU with the Troika.
https://namawinelake.wordpress.com/2012/08/20/when-will-nama-run-out-of-cash-part-2-of-2/
I asked previously about statistics on amount emigrated. Do CSO measure this or have you any thoughts?
@ Brian I accept that there is a need to provide for certain types of infrastructure, but I am not sure that these types of investments are tied up with NAMA.
In relation to the nursing homes, we already house a higher proportion of older people in institutional care than many other countries. I have always wondered how much “granny dumping” actually goes on and the the level of underlying need.
I sit on the boards of management of two schools, one at primary and the other secondary and must admit to a high level of scepticism around the need for many of the primary schools planned. It strikes me that the research backing the need for many of these schools are based on highly optimistic population projections. As things stand there are a lot of surplus places particularly in DEIS schools. The level of surplus places will become even more apparent as emigration continues.
I am all for improvements in infrastructure, but don’t feel that NAMA is the appropriate body to provide it.
@ Brian If you have a look at Table 3.4 in the CSO publication from 2007 “Ageing in Ireland”. The figures show that the Irish position is much worse than anyone else in the EU, apart from Belgium & the Netherlands.
http://www.cso.ie/en/releasesandpublications/othercsopublications/ageinginireland2007/
@Niall. Those are surprising figures and really debunk the notion that more nursing homes (as I was saying) are necessarily the answer for the aged. Of course you could also argue that high quality residential (as distinct from institutional) care might be the most attractive solution for many older people especially those with health problems and/or living alone. However, I am not an expert on these matters aside from being (arguably) one of the aged .
Sure, Nama may not be the appropriate body – I was thinking mainly about its low cost funds.
@ Brian I know – while the figures relate to 2001, the trend in fact may be worse rather than better. Supported residential accommodation in the community is one issue – however the figures raise other issues to me. There is a consistent lack of family support in Ireland unless (as the recent whining about the respite allowance for carers showed) people are paid. However that is an issue for another day.
Cheap funding is available via the European Investment Bank, however they investigate proposals properly. I am very worried about the return of the PPP to education. I have been involved recently in one school which had a new building built under the direct control of the department and can only praise the staff in their careful approach and the control of costs. PPPs are a financial quagmire and end up costing far more for an inferior product.
Their use in relation to the building programme planned by D of E&S is particularly worrying.
There is a need to substantially reduce the number of national schools without delay and a start should take place in Dublin & Cork cities. There are currently 190 primary schools in Dublin city and this number could be halved by mergers and closures. Most of the mergers would be of the Pope Pius schools (buachaillí cailíní agus naíonáin) separated into three schools on the one site, but also there is a need to close many schools and tell the Church of Ireland to merge many of its smaller schools.
Infrastructure adjustments goes both ways!