Written answers

Thursday, 22 March 2018

Department of Public Expenditure and Reform

Capital Expenditure Programme Review

Photo of Bernard DurkanBernard Durkan (Kildare North, Fine Gael)
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23. To ask the Minister for Public Expenditure and Reform the degree to which the capital review programme has been revised; the extent to which specific expenditure proposals have increased or decreased over particular areas; the extent to which this may impact on economic performance; and if he will make a statement on the matter. [11265/18]

Photo of Paschal DonohoePaschal Donohoe (Dublin Central, Fine Gael)
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A very substantial programme of work has been undertaken by my Department over the last year in relation to capital expenditure culminating in the publication of the National Development Plan (NDP) last month. The evidence-base and approach taken to the public capital investment plans in the NDP were strongly informed and guided by the assessment of key issues contained in:-

- The Review of the 2015 Capital Plan published last September which confirmed the compelling case for increased public capital investment and identified priority sectors for increased investment.

- The Infrastructure Demand and Capacity Analysis prepared by the Irish Government Economic and Evaluation Service in my Department published alongside the Review of the Capital Plan which assessed on the basis of available evidence the quality of Ireland’s public capital stock and key drivers of future infrastructure demand.

- The IMF Public Investment Management Assessment (PIMA) for Ireland which highlighted that while, by international standards, infrastructure management practices in Ireland are generally well developed there are a number of areas where significant improvements can be made to ensure that public investment is efficient and value-for-money.

The NDP sets out €116 billion in total public capital investment over the ten years of 2018-2027. This includes €91 billion Exchequer investment and €25 billion commercial State Owned Enterprise investment. Approximately €60 billion of this Exchequer investment is new additional funding for the period 2022-2027. I have also provided additional funding over 2019-2021 in order to permit the four new Funds announced in the NDP to be established with effect from 2019. The aggregate amount involved is €765m over the three year period.

The OECD and IMF find that the productive capacity of the economy and its growth potential can be raised by changing the composition of expenditure in favour of capital spending. Against the backdrop of the current cyclical position of the economy, with the labour market approaching estimates of full employment, stronger than projected growth could potentially lead to overheating pressures. However, the scale and pace of increased capital expenditure envisaged under the NDP is intended to minimise the contribution of public capital investment to overheating risks in the coming years. In addition, it is important to recognise the impact of the very substantial public capital programme contained in the NDP on the supply side of the economy and productivity – the key driver of long-term economic growth.

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