Seán Fleming (Laois-Offaly, Fianna Fail)
Link to this: Individually | In context | Oireachtas source

76. To ask the Minister for Public Expenditure and Reform if the capital plan will deliver infrastructure investment of less than 2% of gross domestic product per annum and result in many necessary projects not taking place; and if he will make a statement on the matter. [2444/16]

Brendan Howlin (Wexford, Labour)
Link to this: Individually | In context | Oireachtas source

The levels of investment provided for in the Capital Plan must be put into context and set against a backdrop of long term public investment policy. 

Exchequer capital investment peaked in 2008 at over €9 billion. This was at the end of a period of unprecedented levels of public capital funding that were directed towards addressing long-standing infrastructural deficits. While the severe fiscal challenges certainly contributed to the subsequent reductions in capital investment following this period, there is also wide recognition that a considerable amount of Ireland's infrastructural deficits and bottlenecks, particularly across the roads network, had been largely addressed. 

The Government's Capital Plan "Building on Recovery: Infrastructure and Capital Investment 2016-2021" announced an Exchequer capital spend of €27 billion over a six year period.  If we add investment from the wider semi-state sector, and PPPs, total state backed investment amounts to €42 billion over the period. For Ireland, GNP is a better indicator for the size of the Economy that GDP, and at the time of publication of the capital plan, state-backed capital investment constituted a forecast average of 3.5% of GNP per annum over the relevant period. This is set to be reviewed given the recent updated economic projections published in Budget 2016.

It is also important to situate State capital investment within the broader context of the total level of investment in the economy. The ESRI in its Quarterly Economic Commentary for Winter 2015 published last month pointed out that the present investment rate would appear to be in line with its long-run steady state rate.

The scale and profile of the Exchequer component of the Capital Plan was developed with reference to the Government's medium term economic growth forecasts and is fully consistent with Ireland's fiscal targets over the coming years. As the Deputy will be aware, this represents a step-change in public investment, setting a course for a return to the normal, long run capital investment levels required to meet social needs and sustain a modern, growing open economy - the feasibility of which is attributable to the successful achievement of fiscal and economic stability in recent years, and the requirement to maintain that stability.