Michael Noonan (Limerick City, Fine Gael) | Oireachtas source

The first position is the current position. That position was set out by the then Minister, Deputy Brendan Howlin, in 2015 when he announced the capital budget. When one takes commercial State bodies and everything else into account, that amounts to €42 billion over the period to 2021. Since then, further revenue streams have come up with the growing economy. There is a review of the capital programme being carried out by the Department of Public Expenditure and Reform and that will involve the Minister prioritising the expenditure of a further €2.7 billion. That additionality will be there and I assume the Minister will announce the distribution of that on budget day, but he has already invited submissions on the prioritisation of projects and I know he has consulted with the committee and taken its views into account.

In addition to that, we continue to work with PPPs, which will be off-balance sheet. Andrew McDowell, whom committee members know as a previous adviser to the Taoiseach, is now vice president of the European Investment Bank, EIB, and he is working closely with us since the bank opened its Dublin office. We are looking at the possibility of getting cheap EIB money constructed in such a fashion that the costs will go off-balance sheet for key projects. To date, the position is that if a project can be shown to generate an income flow which is sufficient to service the borrowing, arguably, the European central statistics office, EUROSTAT, would allow it to go off-balance sheet. If we were to build a metro for Dublin, for example, one would have to do a cost analysis on it and match it against the fare structure and see if the fare structure was sufficient to cover the construction costs over a 20 or 25-year period. That is one area of exploration. Let us consider what would happen if we were to complete the roads programme. One of the big projects that remains is the Cork to Limerick one. The cost currently pencilled in for this is approximately €800 million, which is way beyond what is affordable even in the reassessment of the new capital programme. It might be possible to do the road if one were willing to apply tolls to it. The same would apply to the north-west project from Cavan to Derry, which is a North-South project. In light of Brexit, it would be important to see what contribution the British Government would make. The Deputy will accept there would be a big negotiation involved but if the Republic's portion of it were subject to tolling of some sort one could see how that might work.

One could probably do something on social housing as well but the rent flow on social housing, because of the rent structure, would be insufficient to service the investment. A model was developed in France which is now applicable whereby 40% of the construction has to be for private housing. Whether that is rented to generate a revenue flow or involves the sale of the asset to generate revenue over a period, by doing it that way the French have got the concept across the line with EUROSTAT. There is a way of engineering such projects also. We are at the early stages of discussion and we hope at European level to expand the capital programme along the lines Deputy Calleary seems to suggest.

There is some movement already on a loosening of the fiscal rules for investment purposes but the flexibility that has been introduced so far has not benefited us. We continue at all opportunities at the relevant European meetings, especially Eurogroup and ECOFIN, to stress that an economy like Ireland's which is coming out of a deep recession - and out of a programme - during which there was very low investment in capital needs to beef up capital investment to grow the economy further. While there have been some changes as to the flexibility of the fiscal rules that are applicable for investment, countries such as Italy have benefited strongly from that. However, for reasons I need not get into, what such countries have done does not match Ireland's circumstances and we have not got a benefit from it yet but we are still knocking on that door and pushing hard and we will see where it goes.

We are in favour of the fiscal rules, which we think have helped quite a lot in the context of the strong economy we now have.

We are still running a deficit and as long as one runs a deficit, one obviously increases one's indebtedness. In 2018, when we balance the budget in structural terms, we will run a surplus. From then on there will be extra resources and there will be a different calculation.