Building on Recovery: Infrastructure and Capital Investment 2016-2021 Statement of the Minister for Public Expenditure and Reform Mr Brendan Howlin, T.D. on 29 September 2015
Today, I am pleased to say that at its meeting earlier today the Government has agreed its 6 year capital investment framework, Building on Recovery.
It represents an exchequer spend of €27 billion over six years. Key investments will be made in transport, education, health and enterprise. In every part of the country, these investments will boost our competitiveness, create jobs, and upgrade our social infrastructure.
If we add investment from the wider semi-state sector, and off-balance sheet mechanisms like PPPs, total state investment amounts to €42 billion over the period, an average of 3.5% of GNP per annum.
Capital Plan Overview
Clearly, we have come a long way as a country. The Capital Plan I announced in 2011 contained necessary reductions in expenditure to help address the dire fiscal position we were in. We needed to reduce expenditure in the short term to give us the capacity to invest in the long term.
As recent Exchequer figures have shown, those difficult but necessary decisions are beginning to pay off. I am happy to announce that today the Government can revise upwards its capital expenditure commitments for the remainder of the decade.
Of the €42 billion worth of investment set out in this Programme, €27 billion will be invested through direct Exchequer spending. This represents a significant increase – some €10 billion – over the previous 5-year Plan.
Decisions to allocate funding were made following a lengthy review process, which included input from stakeholders at the National Economic Dialogue. The analysis identified capacity constraints, infrastructural bottlenecks and areas where demand pressures were building. It informed the investment decisions contained in this Framework, directing funding where it is most needed and looking to maximise the economic and social return to the taxpayer.
The Investment Framework marks the beginning of a return to normal levels of investment. In order to sustain growth, we must invest. But we must invest in the right way. We will make affordable, sustainable investments that boost the productive capacity of our economy, improve public services and lay the foundations for future growth.
This plan is not a departure from the prudent management of the public finances that has been the hallmark of this Government. Rather it is an affirmation of that approach. The fiscal rules – enshrined in both national and European law – ensure that increases in expenditure reflect the underlying strength of our economy. Building on Recovery is entirely consistent with this approach.
Today’s Capital Programme supports this Government’s No.1 priority: getting people back to work.
An estimated 45,000 construction jobs will be directly supported as a result of the Exchequer investment set out under this Plan. The Government has also committed to spending €3 billion supporting business and innovation through our enterprise agencies over the 6 year period. The IDA, Enterprise Ireland and Science Foundation Ireland support 320,000 jobs in this country. We will continue to support these agencies by providing funding for grants, equity investments and innovation supports.
In order to grow, businesses need fast, efficient transport networks. In the decade up to 2008, Ireland addressed many of the infrastructural deficits that had been constraining economic growth. Large scale investments were made in our road network, public transport links and airport facilities. As Europe’s fastest growing and most dynamic economy, it is essential that we preserve our competitiveness by building on these key investments.
In recognition of the fact that large transport projects have long lead-in times, the Government will provide a 7 year capital envelope to the Department of Transport, Tourism and Sport. A total of €10 billion will be available to the Department over the period. By 2022, we will have doubled the level of annual investment in the transport area to €2 billion per annum. I am pleased to be joined this afternoon by my colleague, the Minister for Transport, who will set out the details of the transport element of the plan.
The proportion of our citizens that are over 65 is increasing. This poses challenges to our healthcare system. To meet these challenges, there will be large scale investment in healthcare facilities. By 2021, €600 million will be spent every year upgrading our hospitals and residential homes. This level of funding restores capital expenditure in the health sector back to its previous peak.
The Capital Framework also provides funding for the relocation of the Dublin Maternity Hospitals, as well as Limerick Maternity Hospital.
Under the Plan, an additional €300 million will be invested in upgrading residential facilities around the country to meet HIQA standards. These facilities will not only provide an excellent standard of care and recovery, they will ease the pressure on our hospitals and improve efficiency across the system.
Finally, the Department of Health will begin work on the new Central Mental Hospital, which will be delivered through a Public Private Partnership arrangement.
It is a testament to the Government’s commitment to the health sector that at the time of our greatest financial challenge, we have committed to funding new national hospital facilities for the newborn, for children and in the mental health sector.
Our young and growing population will allow us to sustain our recovery over the next decade and more. But we must ensure that public infrastructure is in place that will support our young families. Nowhere is this more important than in Education.
Between 2012 and 2014, this Government has built over 84 new schools and 55 large scale school extensions. The Capital Investment Framework continues our commitment to Education. We will spend over €3 billion in the next six years investing in our children’s future by building new schools and upgrading existing school buildings.
These new and upgraded buildings will be fit for 21st century learning. Today’s Capital Plan provides over €400 million for the installation of wireless networks in all schools, for investment in IT hardware and for a programme to replace the remaining prefabs in schools.
Many of the record number of pupils due to complete school over the coming years will inevitably go on to college. We must plan for this fact and invest accordingly. A total of €350 million will be invested in third level, including a new €200 million PPP investment in our Institutes of Technology.
An Garda Síochána is embarked on a programme of substantial reform. A critical priority for this Government is to support that process of reform through increased expenditure on Garda information technology. We want to remove any impediments to the development of a modern, state of the art police force. To support that goal, over the 6 year period of this Plan we will invest over €330 million in Garda ICT systems and technologies and €46 million on new and upgraded Garda vehicles.
This Government is committed to ensuring that our economic recovery benefits all our regions. Investment in ICT is critical to our national economy. The Department of Communications, Energy and Natural Resources has recently agreed the National Broadband Plan. The Plan will utilise significant private sector investment and be supported by an initial €275 million investment by the Exchequer. It will ensure that every business and household in Ireland has access to high speed broadband and help to connect communities, spread growth and support local business.
Given the pressing need to recommence a house building programme abandoned by previous Governments, additional allocations to support social housing were announced as part of last year’s Budget. Through direct Exchequer spending and local Government investment, around €3 billion will be provided in support of the Social Housing Strategy. The Government is committed to using every available source of funding to address the shortage of social and affordable housing.
Climate Change and Flood Risk
As a country we have a responsibility to play our part in reducing reliance on fossils fuels. We also have legally binding renewable energy targets and could face costs of up to €600 million if we fail to meet those targets by 2020. To help avoid these costs, €444 million will be spent on energy efficiency and renewable energy programmes over the six year period.
The effects of climate change are already visible in towns and villages across Ireland. To protect vulnerable communities, the Government has prioritised the introduction of a new flood risk management programme. By 2021, spending on this programme will be €100 million per annum.
As we approach the centenary of the 1916 Rising, it is appropriate that we complete all planned works on our important heritage sites, and provide additional funding for commemoration projects. Under the Capital Framework an additional €31 million will be provided to complete these works.
Under a new phase of our PPP programme, projects with a combined value of around €500 million will be developed in the Justice, Education and Health sectors. The programme will build on recent successes, utilise the significant level of expertise that has developed in the area and leverage Ireland’s positive reputation among investors.
To coincide with the new PPP programme, the Government will introduce a PPP Investment Policy Framework. The Framework will limit expenditure on PPPs to a % of annual capital spending. It will provide transparency and clarity and ensure the long term interests of the taxpayer are protected.
The Capital Investment Framework sets out a responsible, affordable and sustainable way forward. It maps a route to continued economic recovery and will provide the bedrock of future growth. Now is the time to build on that recovery.