Oireachtas Joint and Select Committees

Wednesday, 4 May 2022

Committee on Budgetary Oversight

Stability Programme Update 2022: Minister for Finance

Photo of Paschal DonohoePaschal Donohoe (Dublin Central, Fine Gael) | Oireachtas source

I thank the Deputy for his points. I wish to return briefly to a figure I shared earlier with the committee. I referred to 2.5 million people at work. That 2.5 million is for 2023 as opposed to 2022.

I will comment on the points made by Deputy Canney. The Minister for Public Expenditure and Reform is aware of the impact that cost price inflation is having on the viability of contracts. He is engaging with the OPW and representatives of the construction industry in this regard. However, we have seen very significant growth in the amount we have set aside for capital expenditure in recent years. In 2023, our commitment for capital expenditure is €12.4 billion, which is €1.5 billion up on where we were in 2021 and is a €500 million increase on where we are in 2022. I recall being before this committee when the figure for capital expenditure was approximately €4 billion, so there has been a huge increase in capital investment in recent years.

We are planning to sustain it at a high level for some time to come. The dilemma we have is that, of course, we need to play a role in seeing how we can support projects we are committed to going ahead, but, at the same time, we need to avoid the risk of doing things in our economy that further add to the heating of the inflationary pressures that are in it and create even further difficulties and challenges for ourselves. There is a balance we need to get right and I know that the Minister for Public Expenditure and Reform who has responsibility for this area and which I share with him, is engaging with stakeholders on this to see if there is a way in which we can get the balance correct.

What we want to do is try to support all the projects we are committed to going ahead. However, the Deputy knows that despite the intention of a Government, not all the things we want to go ahead at any one point in time always do go ahead. That means there can be flexibility in the capital budget to try to get the right mix of projects going ahead in each year. However, both the Minister for Public Expenditure and Reform and I would take great care in changing the capital figure in any way significantly because it would have a big knock-on effect on the financial position of the country overall and other choices that we might want to make on the current spending side.

The Deputy asked about help to buy. He and I have debated this on many occasions. I am still of the view that help to buy should only be focused on creating new supply within our economy as opposed to helping facilitate the purchase of existing homes. Assisting to renovate empty properties is done through grants and it is best done local authority by local authority. Housing for All provides significant money to local authorities to do that. If we were to try to incentivise that via our tax system, help to buy would be on the path to being a general support for purchase of homes that are already built. Were we to do that, it would directly and definitely add to the existing inflationary trends in our housing market. I take a different view from the Deputy on the matter. We are trying to make progress on that through the grants and funding that we have made available to our local authorities.

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