Farmers to get quarter of €18.5bn of taxpayers' money to be spent on Irish main roads over next decade

Irish
Farmers to get quarter of €18.5bn of taxpayers' money to be spent on Irish main roads over next decade
By Finfacts Team
Nov 22, 2006, 08:19

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Irish Junior Minister Tom Parlon and President of the Progressive Democrats (seated) has warned that any change in the restrictive rezoning system of land for development that has a 20-50 times multiplier effect on values, would be to the "left of Stalin" even though as a big farmer, he is a significant beneficiary of European socialism.

In a report in The Financial Times issue of August 12th, 2006, on Irish buyers driving up farm prices in the UK, Matt Dempsey editor of The Farmer's Journal is quoted: "When you can now sell a piece of rezoned farm land on the edge of a town in Ireland for €500,000 an acre, several farmers have found themselves very rich."

A quarter of the €18.5bn of taxpayers' money being spent on new main roads will go into the pockets of landowners and archaeologists.

The Irish Independent reports today that an astonishing €4.6bn will be spent on compensating landowners along the routes of roads by companies over the next 10 years.

A further €370m is earmarked for archaeological digs to satisfy environmental concerns.

This is far more than is being spent on land or archaeological digs in any other European country where major roads projects are undertaken.

The Irish Independent has learned that a full 23% of the overall budget of the National Roads Authority for roads is to be spent on compensating landowners.

This means that as little as €13.5bn will remain out of the original €18.5bn announced by the Government for roads in the Transport 21 package up to 2014.

The increase in the price of land for infrastructure projects has rocketed in line with the Celtic Tiger property and land boom.

The amount the State has been forced to pay out for land compensation was described as "disturbing" by the head of the National Roads Authority yesterday.

It accounts for 23% of the cost of roads projects in Ireland, but just 12% in England, 10% in Denmark, 9.4% in Greece and 1% in Iceland. A further 2% of the €18.5bn provided in the Government's Transport 21 for road building over the next decade will go to archaeologists.

The newspaper says that this is ironic, given that Greece, one of the country's with the richest archaeological treasures, has managed to build new roads while spending far less than Ireland on either land compensation or archaeology.

Ireland now has the highest competitive construction costs in Europe to add to the big slice being removed from the massive cash allocation for roads.

As a percentage of the total costs of roads, we also have the biggest land cost.

Fred Barry, chief executive of the National Roads Authority, said yesterday that Ireland's expenditure on archaeology exceeded all European countries.

He described the increases in the cost of land for major roads projects as "disturbing".

Notwithstanding the land and archaeology costs, it is expected that the programme to have motorways/ dual-carriageways between Dublin and Cork, Limerick, Galway, Dundalk and Waterford by 2010 is on target.

In 2001, the National Roads Authority (NRA), said in relation to a campaign for an increase in compensation for land acquired by Compulsory Purchase Order, that was led by Tom Parlon, then President of the Irish Farmers Association (IFA) that pronouncements by senior IFA officials, including Parlon, had claimed that:

the State, through the actions of local authorities, has no right to appropriate farmland;
the compulsory acquisition of farmland for the national roads building programme is unjust, inequitable and seriously damages the livelihood and viability of 8,000 farm families;
CPO legislation is outdated and compensation paid to farmers is inadequate;
compensation should be paid at development land prices given the intended use of land for road schemes and not at market value for agriculture land

Tom Parlon, who is now President of the Progressive Democrats and Minister of State, has said that any tampering with the existing system of determining land prices for development, would be a form of Stalinism.

It surely is a bizarre system of "free enterprise" that the PDs claim to support, where public funds paid primarily by German and Dutch taxpayers, provide Parlon and his farmer colleagues with most of their income and when they sell land, the average Irish taxpayer is also screwed.

Extract from Parlon's speech at the Parnell Summer School, Aug 2003:

The provision of quality affordable housing to all citizens is the ultimate goal that the State wants to achieve, and I fully support that. But I believe that weakening private property rights as a means to achieve this goal would be a great mistake.

Such an approach is gift-wrapped in an ideology somewhere left of Stalin, which has no place in a modern dynamic open economy like Ireland.

Any measure giving the State the power to control the value of private assets would have major negative ramifications for thousands of property owners and would be a jump back to the dark days of the 19th century.

What if your home, your business or your farm is zoned for development? Should you be allow reap the benefits of this? In a democracy of course you should.

The practical implementation of such a measure would be hugely inequitable and would end up taking the value of the land off the property owner and passing it on to the eventual owners of houses on the site.

It took centuries for Irish politicians to establish property rights and any move to change that would be a slight on the memory of people like Charles Stewart Parnell.

My party, the Progressive Democrats have worked hard since our foundation 18 years ago to put competition and enterprise at the heart of the Irish economy and a move like this would be regressive for Ireland.

Economist Jerome Casey, who is editor of the Building Industry Bulletin in a report in 2003, said that site costs account for 42.5% of a house nationwide. Casey said that typically in the mid 1990s, Durkan Brothers sold apartments off O'Connell Street for Ł35,000 to Ł40,000 (€44,440 to €50,790) for which the site cost was Ł5,000. Currently, both the Irish Council for Social Housing and private house builders are reporting city house site costs at up to 50% of the house price. Outside the cities, site costs can represent up to 40% of the house price. For the country as a whole, site costs may now constitute 42.5% of the house price, an increase of almost 30 percentage points on the pre-boom position. In Dublin that increases to 50%. Overall the Irish figures are grossly out of line with the rest of the developed world.

In the US land accounts for 20% of the total cost of a house. In Denmark the figure is similar while in Portugal the land factor drops to 15%.

It is similar for the rest of Europe. Casey estimated that the 30% differential between land prices for houses in Ireland accounted for about €6.6 billion of the total new and second hand housing market, estimated to be worth €22 billion in 2002.