The decision to freeze spending on transport infrastructure is one of the more questionable measures revealed by Mr McCreevy in the Estimates published this week. There is some merit to the Finance Minister's decision to ask Departments with high day-to-day spending requirements to live within their existing budget envelopes. Billions have been pumped into areas such as health over the past few years with little discernible improvement in services.
But few would agree with him that scaling back investment in infrastructure makes unequivocal economic sense at a time of faltering growth. Apart from its pump-priming function, such investment will remove some of the bottlenecks that are stifling growth.
Although the Minister for Transport has put a brave face on it, the increases granted to his department in the Estimates will allow the National Roads Programme to do little more than tick over. The allocation of €1 billion will let the National Roads Authority proceed with 26 projects that are already under way. However, unless significant additional funds are made available on Budget day, there will be no new projects started for the second year in a row.
Mr McCreevy hinted on Thursday that he might announce some money left over on Budget day for spending on "hard capital". Given the tightness of the Budget arithmetic it is difficult to see how he will find enough to make a substantial difference to the roads programme. According to the roads lobby an additional €500 million - on top of what was announced on Thursday - would be required to get 15 or so postponed projects started.
The Minister for Finance is unlikely to have anything like this sort of money available to him on Budget day. The best that can be hoped for is one or two projects, no doubt in locations that will pay a political dividend in the future. Similarly there is not likely to be any additional funds available for Luas, which is now not expected to start operating until 2004 at the earliest. The Dublin Metro project is firmly on the long finger.
There is an obvious solution to this problem. It is for the Government to borrow, either directly or indirectly, to fund infrastructure projects. Some €90 million of borrowings has been sanctioned for the Luas project in the Estimates, but to date Mr McCreevy has shown little enthusiasm for taking on significant new debt to pay for infrastructure, despite calls to do so from many quarters.
He is not altogether wrong to be suspicious of taking on borrowings, even for infrastructure, given the problem of ensuring that the funds are actually applied to the intended project and not dissipated elsewhere. If the last few years have shown us anything, it is the difficulty this administration has in managing spending to deliver an infrastructure commensurate with economic growth.