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

Over the coming years, the Government intends to increase capital expenditure, as clearly outlined in our capital plan. When account is taken of the additional €5.14 billion now committed to capital investment over the period of the plan, capital expenditure will reach 11% of gross voted expenditure in 2021, or almost 75% higher than we were in 2016. We do need to be careful to avoid stoking construction price inflation by increasing expenditure without paying attention to the capacity of the sector to undertake additional projects.

Public infrastructure is primarily funded by direct Exchequer financing, which is classified as on-balance sheet as the Deputy knows. Off-balance sheet funding of capital projects is also possible in certain circumstances, primarily through the use of public private partnerships, PPPs. They offer an alternative model for delivering infrastructure that can facilitate the delivery of additional capital projects and can be effective in some circumstances. However, the long-term nature of the financial commitments arising under PPPs requires that the use of such arrangements must be carefully planned to ensure they are used to address needs that are not likely to change over a 25 year period, and do so in a way that is sustainable. I have asked the Department, as part of the mid-term review of the capital plan, to review our experience of using them and to consider their scope for further use to complement the direct provision of infrastructure using Exchequer funding.

A senior group has been established, comprising officials from Departments with experience of procuring projects by PPP, together with the Department of Finance, the National Development Finance Agency and Transport Infrastructure Ireland.

Additional information not given on the floor of the House

This group is reviewing past experience with PPPs and its report, once complete, will provide an evidence-based analysis of the potential for further use of PPPs, and concessions, as a procurement option for the delivery of additional capital infrastructure. Assessing the affordability, sustainability and value for money of PPP procurement will be key elements of the group's work.

There is already a significant number of projects being delivered on an off-balance sheet basis under the Government's PPP programme. While such off-balance sheet structures have a role to play in enabling additional infrastructure to be delivered in parallel with direct Exchequer provision, they are not a panacea and involve significant financial commitments on the part of the State for many years to come. The scope to use such off-balance sheet structures to deliver capital infrastructure is also somewhat constrained under the latest EUROSTAT rules. However, the Government remains open to the possibility of using further off-balance sheet options to supplement direct Exchequer investment and assist with the delivery of critical national infrastructure on a timely basis, where this is considered suitable and provided that this can be done on a sustainable and affordable basis.

The report of the expert group will help inform a final decision on how to proceed with off-balance sheet PPPs in the context of the new long-term capital plan to be published later this year.

See this speech in context