Mick Wallace (Wexford, Independent)
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7. To ask the Minister for Public Expenditure and Reform his views on the research carried out by Unite which found that in order to reach the mean of other European Union states with regard to public expenditure as a percentage of gross domestic product, Ireland would need to increase investment in public infrastructure by approximately €9 billion; the details of any recent discussions he has had with the Department of Finance in this regard; and if he will make a statement on the matter. [40614/15]

Mick Wallace (Wexford, Independent)
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I would like to know the Minister's views on the research carried out by Unite that found that in order to reach the mean average of other EU states with regard to public expenditure as a percentage of GDP, Ireland would need to increase investment in public infrastructure by approximately €9 billion. Ireland's expenditure on public services is currently 16.9% of GDP while the mean in Europe is 21.6%. We are actually near the bottom of the scale.

Brendan Howlin (Wexford, Labour)
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I am not aware of the foundational basis of the analysis referred to in the Deputy's question or the basis for the specific conclusion relating to the level of public expenditure relative to that in other EU states.

As the Deputy will be aware, there are important issues relating to differences in the composition of public expenditure in different jurisdictions affected by such factors as, for example, the age profile of the population, the level of defence spending and the mix between public and private provision of particular services that need to be taken into account in seeking to make cross-country comparisons.

Direct comparisons with public investment levels in Ireland under previous capital investment plans also need to be treated with caution, particularly when such plans are oriented towards addressing long-term infrastructural deficiencies, as was the example in the case of the period up to 2008.

In addition, the capacity constraints and levels of tender price inflation will impact on the real, compared to the nominal, level of public capital investment. Reflecting these considerations, trends in public capital investment should preferably be examined over a much more extended time horizon. In this regard, the ESRI which is regarded as the definitive examiner of these matters has reviewed investment levels in EU member states over more than four decades, from 1970 to 2013. It has found that Ireland ranks third behind Sweden and the Netherlands in terms of state investment in national infrastructure as a share of GDP.

The Government's capital plan, Building on Recovery: Infrastructure and Capital Investments 2016-2021, announced an Exchequer capital spend of €27 billion in the next six years. Supplementing Exchequer-funded investment with investment planned from the wider semi-State sector and PPPs means that total State investment will amount to €42 billion in the next six years. At the time of publication of the capital plan, State-backed capital investment, therefore, constituted a forecasted average of 3.5% of GDP per annum over the relevant period.

Mick Wallace (Wexford, Independent)
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The Minister has quoted figures going back decades, but the truth is that since 2009 the level of public investment in infrastructure has fallen by 45%. Research carried out by Michael Taaffe who, I understand, is a member of the Minister's party shows that we will run into trouble if we do not start investing more in infrastructure. The Minister is well aware of the fact that there is a housing crisis and the lack of direct investment in social housing means that the crisis is not being dealt with. We have to re-examine the problem because we will not solve it until we are prepared to engage in much more extensive investment in infrastructure.

Brendan Howlin (Wexford, Labour)
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I would obviously love to be in a position to spend more, but we have defended investment in infrastructure and, more importantly, focused on it as best we can in the capital plan. Social housing was a feature of the budget I introduced 13 months ago. At that stage we allocated in excess of €2.2 billion for housing and re-established the spend on social housing for the first time in almost a decade. The previous Government did not believe in building social housing, preferring instead to buy it from developers, but we have reoriented public policy to ensure we will build social housing. The Deputy is uniquely equipped in the House to know that it takes a lead-in time to do this. We have to acquire land, make sure it is serviced and obtain planning permission, ensure tenders and builders on site, all of which takes from 18 months to two years. I agree totally with the Deputy that social housing provision is one of the most demanding social issues and it is a priority for capital investment.

Mick Wallace (Wexford, Independent)
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The Minister has said the Government will prioritise the construction of State housing, but most of the money which he has stated has been earmarked for social housing will still involve social housing being provided by the private sector. The Government is not getting local authorities to build large numbers of social housing units, even though this is absolutely essential.

In response to a question from Deputy Sean Fleming, the Minister said France might break the rules in order to deal with its defence and security challenges. There is a housing emergency in Ireland. The idea that we cannot borrow money off the books to invest in social housing because it is outside EU rules needs to be challenged. It is outrageous that we are paying PPPs at a rate in the region of 15%, when the Government can access money at less than 2% when it sells Government bonds. That could be done in order to invest in an extensive social housing programme.

Anthony Lawlor (Kildare North, Fine Gael)
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I have a quick supplementary question on something which is part and parcel of the issue. What submission has the Government made to the European Union to allow us some freedom in terms of the constraints under EU rules?

Brendan Howlin (Wexford, Labour)
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I agree absolutely with a lot of what Deputy Mick Wallace said. It is simple to rejig local authorities back into providing housing because that capacity was hollowed out of them for the past ten years. I spoke to housing officers, including those in our county. There was an annual trawl to find the correct sites and make sure they were serviced. There were a number of local authority estates to be built and so on. All of this evaporated, but we are putting it back in place. One of the first things I did last year was to remove any embargo on the hiring of key people at local authority level in order to do that. Change will not be instant, but once things are back in shape local authorities will be a very regular provider of social housing.

We are examining a variety of ways to deal with the issue, including but not limited to direct capital investment. There is no shortage of money. Rather, the problem is having the money spent on bricks to build houses. As the Deputy said, we also have PPPs to supplement this and I have devoted a special purpose vehicle, with a total figure of €400 million from the sale of BGE, for social housing. We are developing ways to utilise this and ongoing discussions with the Department of the Environment, Community and Local Government are taking place.

On fiscal rules, they are in place for a purpose, namely, to stop countries being profligate and destroying their economies by not having prudent expenditure profiles into the future. In a way, the Deputies are correct. The rules have yet to bed down and have to be tweaked and examined. Whoever is in government after the next general election will have a job of work to do to address that issue. We have already made submissions to the Commission on infrastructural needs that might be excluded from the fiscal space calculations. It is a dramatic work in progress.

Seán Barrett (Dún Laoghaire, Ceann Comhairle)
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The next question is in the name of Deputy Bernard J. Durkan who is not in the Chamber.