Budget 2025 sees unprecedented levels of capital expenditure to help accelerate the delivery of the infrastructure programmes set out in the National Development Plan (NDP).
This is in part due to the windfall revenue that the Government has recognised as a generational opportunity, and has put plans in place to develop a framework outlining the principles and strategies for its deployment. However, it is evident that the intention is to use these funds to tackle the country's infrastructure challenges with a particular focus on key sectors including, Housing, Energy, Water and Transport.
Paul O'Neill and Kieran Collins of our Infrastructure team explain what these measures will mean for the delivery of Ireland’s infrastructure and outline some of the non-financial barriers that must be overcome to accelerate delivery.
What you need to know
The priority sectors have each been allocated additional capital funding to enhance infrastructure delivery:
Housing: The Land Development Agency (LDA) will receive a further allocation of €1.25 billion, bringing the total amount of funding now available to the Agency to €6.25 billion to deliver on the country’s housing needs.
Energy: EirGrid will receive an additional €750 million to assist with enhancing the national grid, strengthen electricity supply and help to decarbonise the economy
Water: Uisce Eireann will receive a further €1 billion for capital investment. This will allow for works to be carried-out on capital projects related to remedial action lists, connections for new housing and addressing urban wastewater pressures.
Transport: Department of Transport will receive an additional €2.9bn in capital funding enabling the 1) construction of the first of the new Core Bus Corridors in Dublin 2) development in the DART+ and MetroLink programmes, and 3) investment in electric and hybrid buses, including the charging infrastructure needed at depots.
Infrastructure, Climate and Nature Fund: Budget 2024 saw the introduction of the Infrastructure, Climate and Nature Fund. An additional €2 billion has been added to the fund as part of Budget 2025.
What does this mean?
Through Budget 2025, the Government has acknowledged that our inadequate infrastructure is impacting our international competitiveness. Ireland ranks 2nd globally in GDP per capita but 38th with regards to availability of basic infrastructure, which demonstrates poor performance in the quality and availability of essential physical and digital infrastructure such as transport, utilities, digital connectivity, and energy infrastructure.
In a recent report published by the National Competitiveness & Productivity Council, it was acknowledged that infrastructure is a fundamental component of our competitiveness, and a vital part of both our support of SMEs and our FDI offering.
Budget 2025 sends a strong signal to the market and supply chain that the Government is committed to delivering the essential infrastructure the country requires.
While the capital investment is welcome, the absence of multi-annual funding, gaps in supply chain capacity, and challenges in construction productivity remain significant barriers to delivering on the National Development Plan (NDP).
However, whilst the significant capital allocation for infrastructure is welcomed, the lack of a multi-annual funding approach can create challenges for the delivery of major infrastructure projects. There are also other challenges to us delivering on the NDP.
We need to find ways to get projects on site quicker (i.e., improved planning system), attract international contractors to deliver our projects (i.e., develop the supply chain); and deliver projects quicker (i.e., increase construction productivity through modern methods of construction).
Challenging our progress
Planning & approvals
The upcoming Planning and Development Bill, upon enactment, will enhance the duration of development plans from seven years to ten years. This significant shift is essential for fostering long-term planning that is necessary for executing complex projects, particularly in urban settings, while also ensuring a coordinated strategy for the provision of supporting infrastructure. We need to place more emphasis on the huge socio-economic benefits that these major infrastructure projects can provide.
But it is not just the planning process – we also need to streamline the governance and approvals process within Government Departments and ensure that our major projects have political champions to drive the projects forward.
The business case process needs a more balanced approach, weighing the risks of failing to deliver swiftly against the management of delivery risks within the project.
Supply chain
A significant constraint within the supply chain is impeding our capacity to expedite infrastructure delivery. Various public authorities tasked with these initiatives are initiating international market engagement campaigns aimed at attracting global contractors to Ireland. Without such efforts, questions arise regarding the availability of sufficient electricians, for example, to concurrently deliver MetroLink, DART+, and 50,000 residential units each year. Furthermore, it is essential to consider whether we can produce an adequate supply of concrete and other raw materials to support the simultaneous execution of these projects.
The presence of only two or three international contractors in the State indicates a lack of confidence in the market regarding a clear pipeline of opportunities despite encouragement on the availability of funding. While the NDP is ambitious, we must demonstrate what opportunities exist and that we are serious about delivery or risk key market players simply opting to work elsewhere.
Construction productivity
The construction sector has been frequently highlighted for its productivity challenges. It is positive to see Government continuing to invest in the development of skills for Modern Methods of Construction (MMC). The €1.5bn package to 2030 to support education and skills will include support for the development of construction talent, further improving Ireland’s MMC skillsets.
Over the past 12 months we have seen lots of momentum in this space, in particular through MMC Ireland, Construct Innovate, DETE, and Skillnet MMC Ireland Accelerate group.
Considering the supply chain issues identified, there is increased importance on improving the productivity of the workforce that we have. The technology is there, but we need to encourage a shift in mindset on how we deliver projects. The benefits will multiply as by investing in MMC we will make the industry a more attractive place to work, further strengthening the workforce.
It is vital that we make the industry more attractive given the economy is operating at virtually full employment. Green procurement measures, circular economy targets in design, and a consolidated approach to MMC across the supply chain, are all areas that need to be at the forefront of infrastructure delivery.
Overcoming supply chain constraints and enhancing productivity requires a dual approach: attracting global contractors to bolster capacity while up-skilling our domestic workforce in Modern Methods of Construction (MMC).
Could a dedicated Department for Infrastructure help?
It’s clear that a number of Government Departments are experiencing the same problems outlined above. There is evidence of siloed approaches to the delivery of infrastructure, often on projects that directly impact each other. There is a lack of joined-up thinking between departments, and we must step back and ensure collaboration across the board through centralised delivery units.
One potential solution to this is through the establishment of a Department of Infrastructure which is currently being considered by Government. This has the potential to help remove the siloed approach to the delivery of infrastructure projects that impact multiple sectors and departments. For example, port infrastructure is delivered through the Department of Transport, while offshore wind delivery and grid infrastructure is through the Department of Energy, Climate and Communications, and these projects are intrinsically linked. Projects such as these could be streamlined through a Department of Infrastructure, enhancing project delivery and enabling Ireland to reach the goals of the NDP.
However, for this proposed Department to be successful, it would require senior ministry, equal to that of the Department of Finance or DPENDR, helping to provide a political champion to drive the change needed in infrastructure.
Despite all of the above, the big risk with this is that it adds an additional layer of governance and further slows down decision-making. It could also take a long time to stand up which could distract from the ongoing urgency to deliver projects.
For the proposed Department of Infrastructure to be successful, it would require senior ministry, providing a political champion to drive the change needed in infrastructure. But it needs to focus on delivery, not process.
Queries? Get in touch
The measures announced in Budget 2025 will have a significant impact on the infrastructure sector. For expert guidance on how Budget 2025 will impact the industry and your sector please contact Paul O'Neill or Kieran Collins of our Infrastructure team.
Paul O'Neill
Managing Director, Infrastructure and Government
KPMG in Ireland
Kieran Collins
Director
KPMG in Ireland
Our team
KPMG’s Infrastructure team of experts work with a wide range of clients in both the public and private sector on various projects of differing size, scope and complexity.
By combining valuable insight with hands-on local experience, we can help address the challenges you face at any stage of the project life cycle; from strategy and planning, to construction, operations and hand-back.
We look forward to hearing from you.
