Richard Bruton (Dublin Bay North, Fine Gael)
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192. To ask the Minister for Finance the estimate for the level of private sector investment in 2021 compared with projections made in the pre-Covid-19 period; and the scope for filling the shortfall by accelerated public activity in direct investment or by the development of sectoral strategies. [16577/20]

Paschal Donohoe (Dublin Central, Fine Gael)
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At present, the Central Statistics Office (CSO) publish investment by asset class (including, machinery and equipment, building and construction, etc.) and not by economic sectors. In line with this, my Department also produces investment projections by asset class rather than by sector. Nonetheless, the nominal value for total gross fixed capital formation (GFCF) or total investment in 2019 suggest was €162 billion.

However, ‘headline’ investment figures are heavily influenced by the activities of a small number of large multinational firms which have limited impact on actual activity in the Irish economy. These activities include the on-shoring of intellectual property assets to Ireland and investment in aircraft by the leasing sector. Modified investment – which removes these distortions – is estimated to have been €44 billion in 2019. Public investment in 2019 is estimated to have been just over €8 billion. The difference of €36 billion represents a reasonable approximation of private sector investment excluding globalisation related distortions.

As set out in the Stability Programme update 2020, which incorporates the impacts of Covid-19, modified investment is expected to be severely impacted by the pandemic. It is projected to fall sharply this year and is not projected to return to its 2019 level until at least 2022. In direct response to Covid-19, there has been a significant increase in public capital investment primarily in health and business supports, bringing total projected public investment this year to just under €9 billion. Capital investment will also form part of the July Stimulus.

As well as committing to bringing forward the review of the National Development Plan from 2022, the Programme for Government makes a range of commitments directly related to public investment, notably in the areas of climate action and biodiversity; town-centric planning and compact growth; reorientation of transport investment in support of sustainable modal shift; retrofitting; and advancement of Project Ireland 2040 goals in relation to balanced regional development. The review will include an overview of the macro-economic context and justification for the planned level of expenditure taking into account demand and supply-side constraints, trends and developments in the construction sector before and during the Covid-19 period, as well as international comparisons.