Paul Murphy (Dublin South West, Socialist Party) | Oireachtas source

When I first read the capital plan it reminded me of the film "This is Spinal Tap" in which they talk about the turning the volume up to 11. This time the Government has announced a capital plan that is six years long instead of the normal five years. This allowed the Government to announce €27 billion instead of something less than €22 billion.

If the purpose of the plan is pre-election propaganda, it may or may not be successful. If the purpose of the plan is to deal with the historically low levels of public and private investment in the economy, then the plan is utterly inadequate. Let us start with the headline figures. Twenty-seven billion euro sounds like a great deal of money, until we compare it to historical long-term average figures for public investment. The historical long-term average figure for public investment in the State is 3.5% of GDP. In 2015 the figure stands at 1.8% of GDP, and with this new magic plan it will be 1.9% of GDP. In money terms, this means the plan represents an increase in public spending next year of €200 million and, in the following years of the plan, increases of €250 million. This is in the context of the Government's plan to cut taxes in the next budget to the tune of €750 million, tax cuts that will skew towards higher earners. The context is private sector investment remaining down by 35% compared to pre-crisis levels and public sector investment having been absolutely slashed. Those are the headline figures

When we examine it in more detail, the situation is even worse. Let us consider the phasing of the money. The money is back-loaded - that is to say, more money is spent later on down the road, when the Government may or may not be in power, rather than now. We simply do not know if the Government will be in power next year, never mind six years from now, by which time these big promises of public spending and investment may have been forgotten. In 2016 we will start with €3.8 billion, and this will rise in 2021 to €5.4 billion. This is utterly cynical and makes no economic sense at a time when interest rates are at an all-time low and the State could borrow at this stage to invest. It would be better to invest now in improving our infrastructure and to front-load that investment. The only reason to do it the other way around is cynical electioneering.

Let us consider the plan in more detail. There is no new money for housing, despite the emergency - only €3 billion or €500 million per year. Let us consider the categories of investment. More investment is going to areas that are connected to corporate welfare for some big businesses, rather than going into health, education, climate change and housing. The total going on enterprise or corporate welfare is €4.3 billion. Let us consider how money will be spent within the spending categories. Out of the €10 billion being spent on transport, including public private partnerships, more than €6 billion is going on roads and less than €4 billion on public transport. Let us compare that to €874 million on climate change, €430 million of which is going towards adapting to climate change by building flood defences rather than actually trying to stop it. The Government is also planning to invest as much in defence as on climate change.

Let us consider the role of public private partnerships. Some €500 million will be spent on new PPP funding, stood over by the Labour Party, in what is a scheme that costs the public more money. It is a more expensive way to deliver infrastructure and is basically about the public sector subsidising private profit. This is not what we need. In fact, it is the opposite of what we need. We need major public investment to deal with all the social problems that exist in our society and create the basis for a sustainable recovery. A key basis for a sustainable recovery will be increased levels of investment in our society. The collapse in investment - between 66% and 70% of private sector investment - was a key driving factor in the dragging down of the economy over an extended period. It is also the only way we will deal with the social problems that exist. For example, the Anti-Austerity Alliance will launch its budget statement in the coming days. The centrepiece of the document is the idea of major public investment to deal with the housing crisis. We estimate that for €10 billion of additional public investment, spread over three years - that is, a little less than €3.5 billion per year - we could build 100,000 homes and effectively clear the housing waiting list, together with the use of vacant properties and the resources of NAMA. In addition, we believe there is a need for further public investment based on creating decent jobs. One estimate suggests that an investment stimulus of €1 billion for one year would create approximately 16,750 jobs. That would represent a net cost of €575 million owing to greater tax revenues as a result of higher GDP. For example, for €2.3 billion we could have 15,000 workers in a major public works programme to replace non-compliant water mains throughout the State, or 10,000 child care workers in publicly owned crèches, or 5,000 special needs assistants, or 10,000 workers to develop Ireland's wind and wave energy to its potential.

The problem in the State is not too much public investment but too little, particularly in the context of the crisis in the private sector. This document does nothing to reverse the trend. In fact, it continues a level of stagnation in public investment.

See this speech in context