GOVERNMENT PLANS to spend €39.4 billion on a seven year capital investment programme appears impressive until you realise that, 10 years ago, a similar programme was costed at €57 billion and, before the economic crash, that seven-year investment figure had risen to €184 billion. The backside is truly out of our designer- trousers.
Still, €39.4 billion is not to be discounted as an economic stimulus, even if spending for the coming year will be cut by €1 billion. The ability of under-pressure Government Ministers to present a reduced capital programme as good news was impressive, with Taoiseach Brian Cowen leading the charge. In an atmosphere of economic gloom and high unemployment, they sold the job-creating potential of the programme rather than dwell on the reduced amount of the State’s investment.
In a related development, Minister for Finance Brian Lenihan is attempting to ensure that credit will flow from banks to small and medium enterprises. Minister for Enterprise Batt O’Keeffe is said to be deeply unhappy at the performance of one of the bailed-out institutions, in particular, that it is refusing to lend to companies experiencing cash-flow problems. Protecting existing jobs as unemployment exceeds 13 per cent and income tax revenue falls has become a Cabinet priority.
The revised investment programme is probably the best that could be hoped for. At a minimum, it provides some certainty for the construction sector while the bulk of spending will go towards projects that underpin economic growth. Postponement of the decentralisation programme for the second time is to be welcomed, along with a suggestion that the national spatial strategy for regional development may be revived.
Cutting expenditure became inevitable when the property bubble burst and Government revenues collapsed. The National Development Plan 2007-2013 has been recast as a seven-year capital investment programme running to 2016. In these new circumstances, ambitious schemes have been jettisoned and, unfortunately, spending on social inclusion and health projects has been postponed. The focus has switched to the provision of transport infrastructure where value for money can be prised out of a stagnating construction industry. Nearly a third of all investment will be devoted to roads and public transport. But, even with construction costs falling by 30 per cent and more, some long-promised projects have been shelved
The Green Party has had a significant influence on investment strategy. Spending on public transport reflects its agenda, as does an energy saving programme for homes. Fianna Fáil continues to promote road development and there is a significant provision for leasing social housing. The bulk of environmental spending will go to water and waste treatment, reflecting Green policy and threats of EU sanctions. Money is provided for research and investment through education and enterprise. Farmers are being kept sweet with a €600 million tree-planting programme. In straitened times, the plan concentrated on the essentials.