Rose Conway-Walsh (Mayo, Sinn Fein)
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44. To ask the Minister for Public Expenditure and Reform the capital underspend based on the targets set in the 2021 review of the national development plan; and if he will make a statement on the matter. [17724/24]

Rose Conway-Walsh (Mayo, Sinn Fein)
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I have raised the issue of capital expenditure with the Minister on many occasions. The NDP in 2021 set a target of 5% of GNI* to be invested in capital projects. The NDP states "the Government has decided to maintain the average level of investment in the new NDP at approximately 5 per cent of GNI* over the period 2021-2030". This has not happened in a single year since the NDP was published. On that basis, what is the cumulative underspend since 2021?

Paschal Donohoe (Dublin Central, Fine Gael)
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I thank the Deputy. As Minister for Public Expenditure, National Development Plan Delivery and Reform, I am responsible for setting the overall capital allocations across Departments and for monitoring monthly expenditure at departmental level.

The responsibility for the management and delivery of individual investment projects, within the allocations agreed under the national development plan, rests with the individual sponsoring Department in each case. Each Minister is responsible for deciding on the priority programmes and projects that will be delivered under their remit within the NDP and for setting out the timelines for delivery. The NDP published in October 2021 provides a detailed and positive vision for Ireland out to 2030 and delivers total public investment of €165 billion over the period 2021 to 2030.

In recent years, the delivery of the plan has been adversely impacted as a result of pandemic-related pauses in the construction sector, labour supply issues, the inflationary impacts from both Covid-19 public health measures and the inflationary consequences of, among other things, the war in Ukraine. Capital projects can go under or over profile for other reasons, such as delays in planning, delays caused by the rising level of costs, supply chain disruptions and skilled labour shortages, all of which can lead to delays.

The rolling multiannual capital envelopes introduced in 2004 allow Departments to carry over up to 10% of unspent voted capital expenditure from the current year into the next, although this is not technically considered to be an underspend as the funds remain with the Department. The total level of carryover sought from 2023 into 2024 was €520 million, which was 4.1% of the 2023 total gross voted capital allocation.

Rose Conway-Walsh (Mayo, Sinn Fein)
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The NDP set the target of expenditure as a share of GNI to properly account for inflation, especially when we are talking about a multiannual plan and indeed a multi-billion euro plan like the NDP. Since 2021 we have seen the high levels of inflation, particularly in construction, yet the funding was never adjusted to account for it. Budget after budget, the Government has acted like inflation did not exist. Does the Minister really expect people to believe that the ambition set out in the national development plan can be met when funding has not been adjusted to account for inflation? Again I ask the Minister to outline the cumulative underspend on capital projects. In 2021, the NDP was underfunded by almost €1 billion, in 2022 it was underfunded by €2.2 billion, and in 2023 the NDP was underfunded by €2.3 billion. This year, the NDP was projected to be underfunded by €2.4 billion. That is a €7.8 billion under-investment in badly needed capital projects.

Paschal Donohoe (Dublin Central, Fine Gael)
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I thank the Deputy. In the written parliamentary answer she shared with my Department, she referred to capital spending based on the targets set out in 2021 and we interpreted the question as meaning the expenditure targets that were set out in 2021. I will certainly ask my Department to see if we can come back to her about what the expenditure would have been if it was based on a share of GNI. The language that was included in that development plan set a target. We also have many other targets that need to be delivered, including with regard to current spending, as the Deputy will be aware. The Deputy is aware of all the other current spending pressures the Government has to contend with to make progress on all of the things the Oireachtas wants to see improved and, overall, to ensure that expenditure is growing at a reasonable rate that is not creating risks for the taxpayer in the future. It does mean that we have been increasing capital expenditure at a very fast rate. We cannot get all the way up to the 5% figure. The reason for that is that we have had to find money to pay for increases in current expenditure at the same time and we cannot do both.

Rose Conway-Walsh (Mayo, Sinn Fein)
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What I am really concerned about is the deficit that is already there in terms of infrastructure, particularly in the region I come from, and the under-investment in the west and north-west region. Having not accounted for inflation in the way we do, I am concerned about the hole that is there and the cumulative impact it would have. That was my question. I see now in my own constituency projects being delayed, such as school projects that were promised and that people thought were already over the line. Now suddenly a lot of them seem to have stalled. I am concerned that because of the impact of inflation, we are delaying projects further, not for any other reason such as planning permission or anything else but because we are not spending what we need to spend. I completely understand about heating up or increasing inflation and the need to manage that. The report made recommendations in terms of having shovel-ready projects that are not labour-intensive and all those things, so there are many investments that can be made and that need to be made under the NDP.

Paschal Donohoe (Dublin Central, Fine Gael)
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Across the same period, capital expenditure has increased considerably. In 2021 it stood at €9.78 billion. That was an increase of 19.8% versus the previous year. From 2021 to today, this year, it has increased from €9.78 billion to €13 billion. There has been a very big increase in the overall rate of capital expenditure. This has been done not just to cope with the effect of inflation and the cost of raw materials, but also with a view to increasing output and allowing the State to do more. There always will be a case made to spend more on capital projects. We have done that, but if we are trying to make sure expenditure overall is growing at a reasonable pace that can be affordable to the taxpayer both now and in the future, we have to take account of the current spending needs that exist. That is what we have looked to do year on year as well.