Thursday, 23 June 2016
Infrastructure and Capital Investment Programme
6. To ask the Minister for Finance the extent to which he is exploring options to fund strategic infrastructural capital projects to meet housing, transport and energy requirements off balance sheet in a way sufficient to meet infrastructural deficits and comply with prudent banking regulations; and if he will make a statement on the matter. [17482/16]
This question relates to the obvious requirements in terms of infrastructural development, the capital costs of which, if on balance sheet, might cause problems. I raise the issue to highlight the necessity for vital infrastructural development and investment by whatever possible means.
The formulation and implementation of policy decisions around strategic infrastructural capital projects such as meeting housing, transport and energy requirements are primarily a responsibility for the relevant Departments.
My Department has a role in monitoring the State's activities or projects that might have implications for the general government balance, the general government debt levels and compliance with the fiscal rules. This includes the consideration of requests for ministerial approval of borrowings and guarantees from Departments, commercial semi-States, State agencies and other State bodies, including local authorities.
My Department also provides ex anteadvice to Departments on the statistical classification of policy proposals that are considered.
The question of whether an investment is off balance sheet is a statistical matter and at national level the Central Statistics Office is responsible under EU regulations for ensuring that all investments within the economy are classified according to the rules set out under the European System of Accounts 2010. EUROSTAT is then the ultimate arbiter on the classification of investments in relation to excessive deficit procedure returns and other Government finance statistics.
The Department of Finance has an important role in supporting alternative financing models for State infrastructure, particularly in relation to increasing investment in productive infrastructure so as to mitigate constraints on economic growth. My Department led the negotiation of the European Fund for Strategic Investments, EFSI, and has co-ordinated with a number of Departments and entities such as the Ireland Strategic Investment Fund, the Strategic Banking Corporation of Ireland and NewERA to oversee implementation in Ireland. This EU initiative which is managed by the European Investment Bank seeks to advance the use of borrowing for key infrastructure projects that might not otherwise be delivered due to perceived risk. As a recent example, my Department has worked closely with the National Development Finance Agency, the Department of Health and the Department of Public Expenditure and Reform in progressing the Primary Care public private partnership project to a financial close in May this year. This project, which is a key element of the Government's healthcare agenda, is being supported by the EFSI.
I thank the Minister for his reply. I would further encourage, perhaps, the possibility of identifying the most serious infrastructural deficits, such as those in the areas of housing, energy, transport and health, with the view to putting together a package that is acceptable to the European institutions and which is capable of doing the job required to be done through the various Departments. Could the Minister see his way to encouraging the introduction of a financial structure or vehicle to facilitate those serious and much-needed projects?
It is a continuing work in my Department, the Department of Public Expenditure and elsewhere in the system. If one were to categorise infrastructural investment, one would divide it into economic infrastructure and social infrastructure. On the economic infrastructure side, if one were to list priorities, I assume most of us would agree that housing supply, both social and affordable, is one. Broadband and, in particular, its extension to rural areas is another. A third one would be completing the roads programme. There is a road from Cork to Limerick that many people would like to see finished.
On the social side are further primary and secondary schools. They are working well with public private partnerships, that is, bundles of schools, as are health centres. I am sure we can all think of a number of priorities that would apply either in our respective constituencies or nationally. We are working through an increased capital programme to fund them but we are also trying to get matching funds from the European Investment Bank so that we can provide more infrastructural investment.
I welcome the Minister's willingness to proceed along that road and I know that some provision has been made in the programme for Government in that regard. Would it be possible to establish a criterion whereby a particular deficit in infrastructure would automatically trigger the necessary or desirable capital expenditure? As the Minister just stated, this has both an economic and a social advantage, since one complements the other.
Would the Minister not agree that it is imperative we proceed in that direction, in the shortest time possible, with a view to achieving for the electorate - upon whom we all depend - the best possible result?
Deficits are fairly well known to most people, especially those in the Dáil and in the Seanad. The former Minister for Public Expenditure and Reform, Deputy Brendan Howlin, launched the national capital programme last year. That stretches out for six years and has identified deficits project by project. In the summer economic statement 2016, his successor, the current Minister, Deputy Paschal Donohoe, increased the amount of funds available for the capital programme by €5 million. However, he has not yet transferred that funding into specific projects. That will be a matter for the Estimates campaign with individual Departments. At the same time we continue to explore the possibility of getting more leeway to spend on infrastructure.
Before we proceed I remind Members of the new Standing Orders, which provide for 30 seconds for an introduction, two minutes for the Minister's initial reply and a further one minute each for two single supplementary responses. Members must be in the House as the questions arise. I am allowing a certain latitude today. I invite Deputy Donnelly to put his question.