We need to be more ambitious with capital spending- Brendan Howlin
Posted on May 08, 2017 at 12:57 PM
Last week Brendan Howlin wrote in the Irish Independent about how Ireland needs to be more ambitious with capital spending.
Over the five years up to 2021, the state will spend about €32bn on capital spending – building schools and hospitals, roads and houses, and all sorts of other projects. These projects create jobs, and they improve our social services at the same time.
Over the last few years, capital spending has been much lower than it should be. But even with lower spending than we need, the last Government was able to fund some ambitious projects. An end to long-term use of prefabs by 2020, the long awaited construction of the National Childrens’ Hospital, and the linking of the luas lines were some of the highlights.
As unemployment continues to fall, and our economy continues to strengthen, our ambitions should grow accordingly. My successor in the Department of Public Expenditure and Reform is a capable Minister – I have said that before. And Paschal Donohoe knows that we need to increase our investment in this area. He could hardly do otherwise, mind you, when the IMF, IBEC and ICTU are all in agreement on the need for greater investment.
Over the last few weeks, he has been consulting with the public on a mid-term review of the current capital plan. He has made some additional funding available for that review, but it’s nowhere near enough. The amount he plans to make available to boost the capital plan is €2.65bn – much less than a 10% increase on the current planned budget.
This isn’t enough, and I suspect Paschal knows that is the problem.
The Labour Party believes that much greater capital investment is required at this time than that envisaged in the mid-term review of the Capital Plan. We urgently need to tackle infrastructural bottlenecks emerging across Ireland, to make up for historical underinvestment, and to deal with the rapid growth within the domestic Irish economy, alongside the challenges we face from Brexit.
Our response to this consultation suggested that we need to scrap Michael Noonan’s proposed ‘rainy-day fund’. Instead of putting €3bn on account where it can yield no dividend at all for the public, we need to use this funding to invest in the infrastructure that our communities rely on.
Secondly, we have argued that we should use the proceeds from the sale of any portion of AIB to further boost the amount available for investment, rather than using these proceeds to pay-down our already falling levels of debt. Again, this could give us somewhere around €3bn to be invested.
Over the last few days, we have seen Fianna Fáil finally agree with the Labour position on this, and some Fine Gael figures also seem to be supportive. So next week, we will put this to the test, by calling on Michael Noonan to defer any sale of AIB shares until the proceeds can be invested in our infrastructure. We’ll see then where the other parties really stand.
Instead of having €2.65bn to invest in school and homes and transport, taking these two steps would give Paschal Donohoe over €8.5bn to spend over the next few years, without any negative risks to our economy. Indeed, an investment on this scale would boost our domestic economy, while at the same time providing much needed support for public services.
Things have been more than tough for the Irish people over the last decade. A rapid increase in the number of homes we build, the number of hospital beds we make available, and the quality of public transport, policing equipment and education facilities would at least assure people than their standard of living is about to improve significantly. That would be a just reward for all of their efforts over the last decade.
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