Vol. 542 No. 6
72 Mr. McGrath asked the Minister for Finance the updated cost projections of the national development plan compared to when it was launched; the expected costs of national development plan projects at the end of 2002 compared to the original estimates; and if he will make a statement on the matter. [25631/01]
The National Development Plan 2000-2006, NDP, provided for public investment of £40.6 billion, or 51.6 billion, in 1999 prices. In 2001 prices, the cost of the NDP as published is estimated at £47.6 billion or 60.4 billion. This estimate is based on the increases in construction prices for 2000 and 2001 contained in Construction Industry Review 2000/Outlook 2001-2003, which was published recently by the Department of the Environment and Local Government, and on the actual increase in the consumer price index for 2000 and my Department's forecast for 2001.
An exercise similar to that used to estimate the cost of the total NDP at 2001 prices has been carried out in respect of 2002 based on projected average price increases, which shows that the cost of the NDP in 2002 prices would be of the order of £50 billion or 63.5 billion.
I accept that inflation in the construction sector has been in excess of that anticipated at the time the plan was prepared. However, there are clear indications of a significant easing of construction industry inflation on foot of the general economic slowdown. This will assist a better return in terms of output for plan investment in the infrastructure area. It should be borne in mind that the NDP is a seven year plan.
The Government is committed to the implementation of the NDP, particularly the infrastructure programme which is crucial to the future competitiveness of the economy and thus to Ireland's continued economic and social progress.
Will the Minister confirm that the actual projected cost overrun will be at least 25%, based on 2002 prices? Will he compare that to the rate of inflation over the corresponding period? What is the increase in that regard? How will the Minister complete the projects in the plan? Will he slow them down or pull some projects? What efforts will he make to seek additional funding from the Exchequer to ensure that the projects named go ahead?
The NDP is a project related plan. We have singled out the projects which will be part of the plan, and the Deputy will have noticed that the plan acknowledged that the yearly provisions to fund the plan would have to take account of the prevailing economic and budgetary situation. The Deputy is correct in that the cost of the total NDP at 2001 prices in respect of 2002 would be of the order of £50 billion. That is a 25% increase over the £40.6 billion. That is based on the review conducted and published by the Department of the Environment and Local Government, Construction Industry Review 2000/Outlook 2002-2003. Inflation in the construction sector, therefore, in the past number of years has been considerably higher than the general inflation in the economy, but in recent times there has been an easing of construction inflation due to the general economic slowdown. The plan is a project based plan spread out over a seven year period and, therefore, those projects will be completed. I hope that inflation in the construction sector will be lower in future years so that the overall cost plan will not increase in line with the figures for this year.
Is the Minister saying he will slow down the rate of progress of these projects, does he intend to pull out some of the projects, or will he put in additional Exchequer funding to ensure that all projects are carried out in time? It is important to the economy that these works are completed.
I agree the completion of the national development plan is very important for the progress of the economy. When the economic upturn comes, we need to be in a position to benefit from it. The funding of the £40.6 billion for the national development plan was over a number of areas. A small percentage comes from the European Union – roughly 10%. A percentage also comes from the public private partnership process and the remainder was to be funded through the Exchequer. A combination of those three factors will complete the national development plan, which was subject to overall budgetary and financial constraints. Up to now, the plan is more or less on target, some areas better and some worse—
It is not on target. The Minister should not say in the House—
These are priority Questions. Deputy Mitchell should not interrupt.
The problem is not in relation to funding – there are other factors involved.
Deputy Jim Mitchell is not in order in interrupting.
Perhaps some Deputies should use their influence and speak out in situations where the national development plan is being held up for reasons other than funding. It is intended to complete the national development plan, on the basis of the three funding elements, over the lifetime of the plan.
Will the Minister concede that all of the projects are being delayed because of poor management by his Department and the Government generally? Road projects are already running six, eight and ten months behind, because of the failure of the Government to negotiate with the farming organisations on compensation – that is the major factor in relation to roads. There is also a hold-up because the Department is not monitoring increased costs. Is there a unit in the Department looking at inflation in the construction industry, in relation to national development plan projects? From a Minister who is usually so forthright, I have not had my question answered. Does he intend to slow down all the projects or pull out of some of them? Will he give a straight answer on that?
The time has expired. We must proceed to the next question.
There is a tracking system in the Department of Finance for the major infrastructural projects and we have a very accurate procedure for assessing value for money. I reject completely the suggestion that the Department of Finance has been responsible for any of the hold-ups. I agree there are hold-ups but they are not caused by the Department of Finance. With regard to the road projects, Deputy McGrath should use any influence he has with the farming organisations in his constituency to encourage them to come to an agreement with the National Roads Authority.
We must move on to Question No. 73.
