Richard Bruton (Dublin North Central, Fine Gael)
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Question 40: To ask the Minister for Finance the cumulative cuts in the public investment programme made to date; and if further cuts in investment in 2011 represents a sound basis for economic recovery. [11991/10]

Brian Lenihan Jnr (Dublin West, Fianna Fail)
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The economic downturn from the middle of 2008 meant that the Government has had to take urgent and decisive action to stabilise our public finances. This has inevitably required a series of reductions across all areas of public expenditure, including capital expenditure. The NDP, when launched in early 2007, envisaged that Exchequer capital investment would be €76 billion over the period 2007-13 when growth of 4%-4.5% per annum was expected. It is now envisaged that Exchequer capital investment for the same period will be more than €47 billion, a considerable investment even though economic growth is now far lower.

The economic developments since the launch of the NDP have implications for the affordability of investment plans and the demand for infrastructure in the economy. The capital programme for the future remains substantial. The 2010 Exchequer capital allocation is €6.43 billion, which is nearly 5% of GNP. I also announced on the day of the budget a further €5.5 billion Exchequer capital allocation for each year from 2011-16. The cumulative Exchequer capital investment programme from 2010-16 will amount to more than €39 billion. Lower construction and tendering prices will also allow us to get greater outputs, even within nominally reduced levels of investment.

This is a significant investment programme which will build on the high level of public sector investment which has taken place in the past decade. Government capital investment will continue to support those projects which will help economic recovery, the development of a productive and internationally competitive economy, the development of the smart green economy, support sustainable long-term employment and provide modern social infrastructure.

The PPP model of procurement will also play an important role in delivering investment in Ireland's economic and social infrastructure. The Exchequer programme outlined above will be supplemented by a substantial pipeline of PPP projects. The PPP programme is projected to deliver in excess of €5.5 billion in private capital investment across the transport, education and wider social infrastructure sectors in the medium term. I am confident this well-targeted investment will help support jobs in the construction sector, will provide us with the requisite economic and social infrastructure and make a substantial contribution to our economic recovery.

Richard Bruton (Dublin North Central, Fine Gael)
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I thank the Minister for his reply. If the Minister proceeds with a cut in spending of €1 billion next year, over the years 2009-11 he will have taken almost €9 billion out of capital spending. It will reduce spending by almost one third compared to what was projected in the capital budget. We know from the ERSI that the impact of that would be the equivalent of 90,000 jobs in the construction sector. When everyone in the country is saving to try to reduce their excessive debts, is it not a mistake for the State to slash its investment programme? Should we be using this opportunity to invest in assets with sound returns? I do not want to market Fine Gael's new era project. Does the Minister agree that vital arteries, such as the electricity and broadband systems, need to be brought up to 21st century standards? How can we have a strategy for economic recovery which is solely built on retrenchment in capital budgets when we need investment to begin?

Brian Lenihan Jnr (Dublin West, Fianna Fail)
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Almost 5% of GDP is quite a high level of capital investment compared to many other member states in the eurozone. That said, it is justifiably high given our infrastructural needs. The Government's commitment to peg the figure at a definite sum for the next five years is welcome and ensures there is stability and certainty about the continuance of that level of public investment.

Deputy Bruton referred to other forms of investment apart from the public capital programme, such as the investments which can be made through devices such as investments made by the ESB or Bord Gáis in different projects, something which those commercial enterprises are free to do. As Deputy Bruton is aware, the dividends which the State might have obtained from these bodies in recent years have been foregone in order that enterprises have cheaper energy prices. That is a vital economic need in the current stressed economic conditions.

The Deputy referred to his party's document on these matters - I do not want to be contentious about it so I will not discuss it today - but the figures do not allow for the fact that it is necessary at this point in time to give support to energy companies and energy prices for business. That is what the Government is doing.

Richard Bruton (Dublin North Central, Fine Gael)
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In the past 18 months, some 200,000 people have become unemployed, more than 80% of whom are under the age of 30. Are we at risk of pursuing a very limited policy of retrenchment when we need a combination of investment, reform and restructuring? The Minister's narrow track risks a correction in the economy which will be ground out by mass unemployment rather than examining where we can create opportunities to invest at a time when, to use the phrase "The paradox of thrift", everyone is saving furiously. The economy will continue to sink into a vicious cycle. The State has to take a leadership role. If the Minister does not like Fine Gael's new era document, I submit to him that he needs to develop another strong investment vehicle which can drive forward the economy instead of grinding it down.

Brian Lenihan Jnr (Dublin West, Fianna Fail)
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On a stimulus package, every country in the world has been faced with similar problems to ours and all have had recourse to some form of stimulus through the injection of moneys by central banks in the countries concerned. We have seen this in the United Kingdom and in the United States. Ireland is in a free trade area and we have provided a substantial stimulus. Members of the House must recognise that the extent of the borrowing in which are currently engaged is a substantial stimulus to the economy. It is at a percentage which cannot be trespassed, as far as any Irish Government is concerned. It provides a substantial stimulus to the economy. If we did not have that element of borrowing in the equation, far greater retrenchment would be required. A balance must be struck in these matters.

I agree with the Deputy on the wider question he raised. The Government has to move on from the stabilisation it has effected in the economy. The Government now has to move on to the essential measures which will support economic growth and recovery in the months and years ahead.