Mick Wallace (Wexford, Independent)
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11. To ask the Minister for Public Expenditure and Reform if he has read TASC's report: A Time for Ambition, which calls for a significant increase in public investment from 1.84% of GDP to 2.8% per annum with regard to the announcement of a new ten year capital plan; his plans to open a public consultation process with regard to formulating the new plan; and if he will make a statement on the matter. [10623/17]

Mick Wallace (Wexford, Independent)
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The Minister said earlier that investment in infrastructure in 2017 would be 14% higher than in the previous year. According to my mathematics if investment currently stands at 1.7% a 14% increase on that will leave us at well under 2% in terms of investment whereas the European average is approximately 2.9%. If we are not going to challenge the EU rules, will we be paying expensively for the money we are going to invest?

Paschal Donohoe (Dublin Central, Fine Gael)
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I am aware of the report which supports the broad consensus on the need for increased public investment. The current capital plan sets a baseline from which this Government intends to increase investment in critical infrastructure into the future.

As outlined in the 2017 Estimates, gross voted capital expenditure will increase to €4.5 billion in 2017. This represents an increase of almost €400 million in comparison to the 2016 outturn. By 2021, it is envisaged that gross voted capital expenditure will reach €7.3 billion, an increase of over 100% in comparison to its level in 2014. Based on Department of Finance Gross National Product forecasts Ireland's Exchequer public investment will reach 2.7% of GNP by that point.

In addition, as outlined in the capital plan, the wider State sector, including our ports, airports, energy network etc., plans to invest €14.5 billion in capital projects over the period 2016-2021. This amounts to approximately €2.4 billion invested per year and brings total State-backed investment in 2017 to 3.1% of GNP, rising to 3.7% of GNP by 2021, which is the figure I referred to earlier. This will be allocated to identified priorities on the basis of the outcome of the review of the capital plan currently under way.  

The first phase will refer to decisions to be made in the context of budget 2018 and the second phase, which will commence before the end of 2017, will assess and report on the framework required for a much longer term analysis of our needs. As I said earlier, public consultation in this regard will begin next week.

Mick Wallace (Wexford, Independent)
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We are starting at an incredibly low base so the percentage increases will leave us playing catch up. The Central Bank has said that Government investment has declined by two-thirds since 2008. One of the ways we have been sourcing money because of EU fiscal rules is the public private partnership, PPP, model. Research in Britain shows that public private partnerships cost, on average, between 13% and 19%. How mad is that when money can be got for 1%? I know that the EU fiscal rules do not allow us to borrow money at 1% and invest it in infrastructure but they should. On what basis can the EU say to a country like Ireland that is playing catch up in terms of infrastructure investment that it cannot borrow money at 1%? Why will it not allow for flexibility under the fiscal rules so that we can borrow money at 1% to invest in infrastructure? It is a no-brainer and a win win all around investment in infrastructure whereas paying a PPP between 13% and 19% is not.

After all, the bill must be paid some time. Just because it is stretched over 30 years does not mean it is cheap.

Paschal Donohoe (Dublin Central, Fine Gael)
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It is my strong awareness that the bill needs to be paid some time that led me to take such care with the use of public private partnerships and undertake to review the role they can play in infrastructure funding. In all of the enthusiasm around the use of PPPs, we must bear in mind that there remains a liability the Exchequer must meet. The fact it is not inputted directly on the State balance sheet does not change the reality that for existing PPPs, we now have bullet payments of hundreds of millions of euro we must meet each year.

Regarding the Deputy's point on the reduction in capital expenditure, that was done during the crash for two reasons. First, we went through a period in which the demand for infrastructure was much lower than had been predicted. There simply was not the need for new buses, trains and new forms of public transport because the existing facilities were not being used in the way we had anticipated. The second reason for the reduction was that we did not wish to impose further cuts on current expenditure in areas such as social welfare. If we had reduced those spending programmes even further during that period, the Deputy would have criticised us for so doing.

Mick Wallace (Wexford, Independent)
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I knew that final line was coming 30 seconds ago. The Minister is correct that I would not have advocated further reducing current expenditure. What I am advocating is that we challenge the EU fiscal rules in order to borrow money at 1% for investment in infrastructure. I am delighted to hear the Minister is having reservations about PPPs and I agree wholeheartedly with him on that point. The Think-tank for Action on Social Change, TASC, has argued that using the moneys raised by selling the State's shares in AIB would not break EU fiscal rules. I would not support a proposal to sell those shares but the point is that using that money for investment purposes would not, according to TASC, amount to a breach of the rules. The Minister is saying that when we were in trouble there was reduced demand for this, that and the other. However, there was always demand for things like housing and for the health centres which are only now being built. The demand was there but we were not concentrating on it because, the argument was made, we had other problems. Joseph Stiglitz would have argued that the best way out of the recession at that time, instead of imposing austerity which impacted most on the less well-off in society, was to have put money into the system, investment in infrastructure being one of the best ways of doing that. If we had done so, we would have got out of the recession in a healthier fashion.

Eugene Murphy (Roscommon-Galway, Fianna Fail)
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The next question is in the name of Deputy Bríd Smith.

Paschal Donohoe (Dublin Central, Fine Gael)
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Acting Chairman, surely I should have an opportunity to respond?

Eugene Murphy (Roscommon-Galway, Fianna Fail)
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The time is up, Minister.

Paschal Donohoe (Dublin Central, Fine Gael)
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I did not use up my time. Issues have been put to me by Deputy Wallace and I should have a chance to respond.

Eugene Murphy (Roscommon-Galway, Fianna Fail)
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We must move on to the next question.

Paschal Donohoe (Dublin Central, Fine Gael)
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If the Chair allows Deputy Wallace to go over time in putting his questions, do I not have the right to respond?

Eugene Murphy (Roscommon-Galway, Fianna Fail)
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No, the rules state there are six minutes for questions and answers. I must insist, Minister, that we move on.

Paschal Donohoe (Dublin Central, Fine Gael)
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I should be allowed to reply.

Eugene Murphy (Roscommon-Galway, Fianna Fail)
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I will allow the Minister 15 seconds.

Paschal Donohoe (Dublin Central, Fine Gael)
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I thank the Acting Chairman. I am glad to hear Deputy Wallace agree with me on a point. Who says the new politics have achieved nothing? The Deputy has acknowledged I am correct in saying that if we had reduced current expenditure even more, he would have criticised us for it. To clarify, however, I did not say I was against PPPs. That seems clear given that we are availing of a large number of them at this time. I simply said we must take great care in regard to their use in the future.