Phil Hogan (Carlow-Kilkenny, Fine Gael)
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Question 37: To ask the Minister for the Environment, Heritage and Local Government the budgetary situation in his Department; the amount allocated to capital projects in his Department for 2009; the amount spent to date on capital projects in his Department in 2009; if he will outline these projects and the projects likely to proceed in 2009; if he will allow local authorities to borrow to meet capital project targets; and if he will make a statement on the matter. [10332/09]

John Gormley (Dublin South East, Green Party)
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On publication of the public expenditure Estimates associated with Budget 2009 in October 2008, the Department's overall capital expenditure envelope amounted to €2.145 billion. Most of this funding related to capital expenditure grants for housing, infrastructural and other capital programmes, chiefly implemented by local authorities. At the end of February 2009, total capital expenditure by the Department amounted to €223 million.

This level of capital expenditure has continued to sustain important local authority capital programmes relating to social and affordable housing provision; continued expansion of investment in sewage treatment and water supply infrastructure; the provision of fire stations and public libraries; upgrading of waste recycling facilities; improvements to our national parks and other heritage improvements.

In the reply to an earlier question, I referred to the Government's preparation of a supplementary budget to ensure that the projected general Government deficit does not worsen in 2009. This can be expected to include a combination of expenditure adjustments and revenue raising measures. In line with the Government's continuing commitment to productive capital investment, the Department will continue to have sufficient capital resources to allow local authorities to meet their capital commitments arising in 2009, that capital projects underway will proceed as planned across all local authorities, and that our most critical investment priorities can be maintained.

The capacity to commence new capital projects will reflect the extent of capital provisions finally determined for the current year. I will review the priority needs of all programmes in deciding on the extent to which new commitments are entered into by the Department and by local authorities. I am acutely aware of the value of key infrastructural investment programmes in terms of employment creation and maintenance, economic recovery and social and environmental support. I intend to sustain these programmes to the highest level possible into the future.

It is normal practice for local authorities to supplement Exchequer capital grants with borrowing and I am aware of the wishes of councils to continue to avail of borrowing facilities in 2009. Local authority borrowing forms part of the overall general Government balance for national financial reporting. As part of the overall management of national borrowing levels, a limit also applies to local government sector borrowing. I will be addressing priority borrowing needs in the local government sector for 2009 in consultation with the local authorities over the next few weeks and I will facilitate urgent needs.

Phil Hogan (Carlow-Kilkenny, Fine Gael)
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Many projects the Minister was intending to proceed with in 2009 will be not be possible because the funding is being cut and the development levies required for some of those projects at local authority level has dried up. Many local authorities face financial difficulties arising from those issues. How many new projects will go ahead in 2009? How many borrowing requests received by the Minister have been refused?

John Gormley (Dublin South East, Green Party)
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I will go through some of the issues raised by the Deputy. On a previous occasion Deputy Hogan asked about the housing capital programme. In broad terms, €1.4 billion of Exchequer capital funding is available for housing in 2009. We must work towards the fullest achievement of our broad range of housing objectives against the background of the significantly altered economic context. The approach must involve maintaining momentum in meeting social housing needs against a background of significantly increased pressures.

The 2009 provision of over €500 million will meet the ongoing commitments for some 150 schemes in progress under the water services investment programme and provide for continued investment under the rural water programme. Prudent management and profiling of the highest priorities will allow us to commence in 2009 on some new schemes and I will be examining the position closely in light of the final budgetary position which is currently being determined.

Phil Hogan (Carlow-Kilkenny, Fine Gael)
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What about the borrowing requests?

John Gormley (Dublin South East, Green Party)
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When all of the requests for capital borrowing are taken together, they exceed €500 million but these are beyond the requirements for this year. I envisage being able to accommodate half of this in 2009 with the rest spread over 2010 and subsequent years. I am finalising my consultation with the councils and the determining priority must be that we see how labour intensive projects are.

Phil Hogan (Carlow-Kilkenny, Fine Gael)
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We are heading for difficulties with the water framework directive. Can the Minister assure the House the provision he announced in the capital programme for 2009 for water and waste water services will be fully intact when the budgetary process is completed.?

John Gormley (Dublin South East, Green Party)
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I cannot give such an assurance because there was provision for a record amount of €560 million. We are looking at investment of over €500 million, which is still a substantial amount that represents an increase on last year. We have commitments related to the water framework directive and it is not just about compliance with our EU obligations, it is also a matter of putting in place infrastructure so we will be in a position to benefit from the recovery when it takes place.