Thursday, 20 June 2013

Ceisteanna (4)

Seán Fleming


4. Deputy Sean Fleming asked the Minister for Public Expenditure and Reform the impact on job creation he expects from the July 2012 stimulus plan and the recent announcement regarding capital spending; his views on the extent to which these plans will make up for the ongoing cut to the Exchequer capital programme; and if he will make a statement on the matter. [29860/13]

Amharc ar fhreagra

Freagraí ó Béal (12 píosaí cainte) (Ceist ar Public)

The stimulus package announced in July 2012 included investment of €1.4 billion in a new public private partnership, PPP, programme. This investment is additional to the direct investment by the Exchequer in infrastructure which was outlined in the medium-term Exchequer framework published in November 2011. Earlier this month, and as a follow on to last year’s package, I announced an additional Exchequer investment of €150 million to fund school building projects, local and regional road maintenance and retrofitting of local authority housing.

Investment in projects included in both announcements is expected to support significant numbers of jobs across the country. Previous analysis of each sector indicates that the investment in the PPP pipeline may support in the region of 13,000 direct jobs and many more indirect jobs. It is envisaged that the additional Exchequer funding of €150 million, which I announced last week, can support in the region of 3,000 jobs over the period of the roll-out of both projects. These initiatives will of course also create much needed social and economic infrastructure and aid economic recovery. The Exchequer projects, in particular, involve mostly smaller scale capital works which are known to be labour intensive.

I am anxious that projects associated with both packages can be rolled out as quickly as possible so that we can create the extra jobs on the ground without delay. In relation to the PPP projects, it is well recognised internationally that these are large-value investments and by their nature are complex and take time to develop and deliver both for the public and the private sector. From the public sector side, my Department is working closely with the National Development Finance Agency, NDFA, and sponsoring Departments to progress projects and to accelerate delivery of the programme.

My Department, together with the NDFA and the sponsoring authorities, are also looking at how to maximise job creation as part of each tender competition and in line with procurement regulations. With the NDFA, we are also examining ways to encourage SME participation by facilitating access to the programme. The NDFA is working with Enterprise Ireland to organise awareness-raising events for SMEs, one of which was held last week.

Additional information not given on the floor of the House

The projects identified for delivery through the additional €150 million Exchequer funding will begin to be rolled out over the summer. While this additional funding was only recently announced, I expect that it will have an immediate impact as most of the preparation work for the relevant projects is already well advanced. The capital plan has, by necessity, been reduced in recent years to contribute to fiscal consolidation. However, it is important to note that since the publication of, Infrastructure and Capital Investment 2012-2016: Medium Term Exchequer Framework, in November 2011 no further cuts have been made to the capital programme. That publication was the result of a major review of capital expenditure. It prioritised investment in infrastructure which would be most beneficial to supporting economic growth, thereby supporting sustainable employment growth in the medium term, meet urgent social needs and maintain our existing stock of infrastructure. It also took account of the fact that €70 billion had been invested in the previous decade.

The State will spend some €17 billion over the period of the framework on capital projects throughout the country and this will help support employment in many key areas. Much of this investment will be in smaller scale locally based projects and, as I have already mentioned, this kind of less expensive re-fit, refurbishment, and upgrade works can be more labour-intensive than larger capital-intensive projects.

At the time of publication of the report I noted that, should a funding source become available, there was much more that I wanted to deliver through investment in infrastructure. The deal I negotiated with the troika with regard to the proceeds from the sale of State assets and the recovery of the PPP market are allowing us to progress additional projects which we could not include in the five-year framework. All of these measures which I have taken represent a significant commitment to continue to invest in infrastructure, create jobs and improve quality.

The Minister will understand my frustration in respect of this second question, because I have asked him about the impact on job creation but he has not given me any figures. I genuinely am finding-----

I have given figures to the Deputy.

I mean specifics with regard to the numbers of jobs created. I wish to ascertain how that compares with-----

I gave figures to the Deputy, namely, 13,000 jobs in respect of public private partnerships, PPPs, and 3,000 jobs from the stimulus package I announced last week.

Yes, but that is for the package over the five-year period from 2012 to 2017. My question related to the reduction in the Exchequer capital programme, which has been reduced by €1 billion from €4.5 billion when the Government came into office in 2011, to the current figure of €3.43 billion. There must be a commensurate reduction each year in the number of jobs. The essence of my question was whether this new additional funding will go anywhere near making up for the actual reduction in the capital expenditure. There is no point in stating the Government intends to invest an additional amount under a PPP if it also is reducing capital expenditure by a greater amount. I seek confirmation from the Minister because he stated the €150 million he announced recently was additional funding. However, as I understand it, it forms the first phase of the stimulus package announced last year. Does this then represent the first phase of the Exchequer element of the stimulus plan or is this a new stimulus plan on top of the €850 million?

Yes, it is new money.

While last year's stimulus plan has not yet happened, another one is being announced. Will there be an annual stimulus plan? That really is what I am trying to ask the Minister because the annual announcements seem to happen but the actual jobs and follow-through in respect of job creation does not seem to happen. Overall, does the Minister believe this additional stimulus plan will go some way towards making up for the reductions the Government is making on the other hand in respect of the capital budget?

Let me be clear. The Government made decisions back in 2011 in respect of the capital plan to reduce the quantum of money in order to lessen the reduction in current expenditure. For example, rather than taking a further €1.5 billion out of social welfare this year, as Fianna Fáil had planned, the Government took additional money of approximately half a billion euro out of capital funding. The capital projects that were delayed were those major heavy capital projects in the transport area that are not actually job-rich projects. There is a significant difference in the job benefit between such projects and, for example, the €150 million spent on the stimulus plan I announced last week. Projects that will retrofit 25,000 houses across the country or build new schools or repair the county roads, for which there is a €50 million project, are much more beneficial in terms of real jobs now than would be €150 million spent on planning for a project such as the access tunnel to the airport or similar very big infrastructure projects. To answer the Deputy's question in general terms, the Government made rational decisions to protect current expenditure as best it could because the Government did not think the volume of cuts the previous Administration had planned in social welfare and other areas could be taken. Second, the Government is releasing other capital to have jobs-rich projects through the sale of State assets, through further funding the Government is negotiating with the European Investment Bank and other lenders and hopefully through releasing moneys from our own banks, now they are in a more robust position to support PPPs.

Finally, I wish to make a helpful suggestion to the Minister with regard to the capital programme. I have examined the figures for the capital programme in the Estimates on a Department by Department basis over the past couple of years and note that even this year, it still is planned to invest €1 billion in transport, €700 million in environment, of which funds for water services may comprise quite a bit, €400 million in health and perhaps a smaller amount in education. Will the Minister consider examining the totality of the capital budget and these additional stimulus packages to ascertain whether the right mix of capital expenditure is in place across the Departments? A massive amount was invested in transport over the years and there may be a case for now spending a smaller proportion of the total on road and rail projects than was the case over the past four or five years, as some additional infrastructure has been put in place. Perhaps a greater amount could be invested in health and education, where it may be needed to cater for the younger population. Do those Departments that historically had high capital expenditure still come in with fairly high projections? The Minister should take a holistic approach to ascertain whether, were he starting today with the aforementioned €3.4 billion plus his stimulus plan, that would be how he would break it down. I am worried that the State may be trapped in the old spending patterns.

The Deputy has a point, which is the reason the Government did look afresh. The Deputy is correct, in that there is a predilection to look at the traditional projects. While roads, hospitals and schools fall into that category, they are needed. For example, the next project I wish to advance before the end of the year on the road side will be the N17-N18 in the west. That is an important regional link to a part of the country that needs infrastructural investment. However, the Deputy is correct and the Government must examine other types of projects, whether they are in energy or in retrofit generally. There also is a strong argument to look for capital investment in education outside the normal school focus. I certainly am open to any suggestions in that regard, as well as to suggestions from the other side of the House in that regard.

We will now return to Priority Question No. 2 in the name of Deputy Mary Lou McDonald.