Mr. Ronnie Downes:

Good morning, Chair. It is nice to see you and the committee again. I thank the committee for the invitation to appear before it. I am very happy to have this opportunity to discuss with members capital investment and the role of the Department of Public Expenditure and Reform, including phase 1 of the national development plan, NDP, review.

I wish to take this opportunity to highlight again the important question of my Department's role in capital investment and the three Vote sections, representatives of which are with me today, namely, colleagues from the health Vote, the housing Vote and the transport Vote sections. The Department of Public Expenditure and Reform's role in capital expenditure is to set the overall allocations for each of the sectors, to monitor and report on spending against profile, to set the overall guidance on the spending of public funds and to provide technical reviews on the compliance of spending proposals with the requirements of the public spending code. We are very happy to talk about all those issues and go into whatever details the Chair and committee members may wish to discuss. The Department of Public Expenditure and Reform does not have a role in the final prioritisation of spending within those individual sectors and the approval of particular projects and programmes within those allocated amounts. The Department also has a role, alongside the Department of Housing, Local Government and Heritage, in chairing and co-ordinating the Project Ireland 2040 delivery board and in meetings of the co-ordination group, which sits just below the delivery board and which is due to meet a little later today. Together, those bodies help to co-ordinate and oversee the implementation of Project Ireland 2040. Obviously, individual Ministers and Departments are answerable to their respective sectoral Oireachtas committees on the decisions they take and on the delivery of projects and programmes with the allocations they receive. Officials from the Department who are here today will not be in a position to discuss the rationale for specific decisions taken at sectoral level. I know members understand that but I am just underlining the point again.

Turning to the role of capital investment under the national development plan, Project Ireland 2040 was launched in February 2018 and sets out a ten-year programme of capital investment, with the overall aim of upgrading Ireland's infrastructure, enhancing our economic capacity and promoting balanced development across the regions of the country. The national development plan includes €91 billion of Exchequer investment and €25 billion of investment by the commercial semi-State sector. That gives a total of €116 billion in public investment. That reaches a target of 4% as a share of GNI*, an overall economic measure, and then maintains that 4% level over the remaining period of the NDP. In our Department's role in setting overall capital expenditure, we think it is important to give Departments and the sectors some level of certainty or assurance in the overall capital expenditures over a multi-year period. This allows them in turn to plan strategically the delivery of their key investment projects and plan to meet the national strategic objectives set out in Project Ireland 2040. For 2021, overall capital allocation stands at almost €10.1 billion. That is almost €5.5 billion or 119% higher than the amount allocated just a few years ago, in 2017, so capital allocations over that period have more than doubled under the national development plan. When you take that together with capital carry-over, that is, the amount allocated to Departments that they were not in a position to spend and that was carried over into the following year, in this case from last year into 2021, that is €710 million.

Taken together, that is a capital investment spending power of €10.8 billion in 2021. This is the highest level in the history of the State. Public investment in construction in Ireland has remained among the highest in the EU despite the Covid-19 pandemic. It is in recognition of the important economic and developmental role of capital investment.

The programme for Government brought forward a planned review of the national development plan. It had been scheduled for the midpoint of 2022 and is now taking place as we speak. The review commenced in October 2020 and the aim is to set out an updated national development plan for the period 2021 to 2030. That will provide an opportunity to reassess investment plans, update project costings, and highlight any new issues that need to be taken into account, particularly given the ongoing impacts of and recovery from the Covid-19 pandemic.

The updated national development plan will be aligned with the national planning framework, which together constitute Project Ireland 2040. Among the most important aspects underpinning Project Ireland 2040 is ensuring alignment of the spatial and investment plans to ensure that housing, jobs and infrastructure can be delivered in a planned, coherent and strategic way. By 2040, Ireland’s population is expected to increase by an additional 1 million people. This population growth will require hundreds of thousands of new jobs, new homes, extra cultural and social amenities, enhanced connectivity within our regions and improved environmental sustainability. The review of the NDP will reinforce the Government's plans to support rural Ireland over the coming years through compact growth in our smaller towns and villages.

Ensuring integration of climate change imperatives, including adaptation and mitigation, is also central to the development of the plan. Importantly, the review will also examine the capability in the public sector to ensure major projects are delivered on time, within budget and to the highest national and international standards.

The NDP review comprises two phases. The phase 1 report of the NDP review published on 4 April reflected submissions from each Department outlining strategic investment priorities. It also took account of the public consultation exercise, Review to Renew, along with a broader evidence base for the decisions to be made as part of phase 2 of the review and the continued implementation and delivery of Project Ireland 2040.

Phase 2 of the NDP review is the phase where we outline and the Government agrees on the capital ceilings for each sector over the coming years over the period of the new NDP. That is progressing well. There has been substantial engagement between our Department and each line Department, including at ministerial level, in discussing the new five-year rolling departmental capital allocations and overall ten-year capital ceilings out to 2030. They will be set out in the revised NDP. It is due to be published soon and will co-ordinate with other Government policy priorities. It will set out a vision for public investment in the period 2021 to 2030, including investment priorities, projects and allocations.

The overarching intention is that public investment will continue to be maintained at the high levels it is at, to be augmented where possible to reflect Government priorities, support the economic recovery and provide confidence, certainty and visibility to sectors about the future pipeline of capital investment. I am happy to take questions from committee members.