Tasc calls for additional €15bn in capital spending

Tasc has called on the Government to use proceeds from the planned sale of the State’s banking shares to pump €42bn of funding into public infrastructure projects over the next six years.
Tasc calls for additional €15bn in capital spending

The left-wing think-tank is advocating the €15bn top-up on the Government’s recently announced €27bn capital investment plan be approved to deliver “desperately needed” infrastructure after years of under-investment.

Chairman of Tasc’s economists’ network, Paul Sweeney, said the extra spend would be justified given that capital investment fell to its lowest level in decades in recent years.

“Ireland has been under-investing in public infrastructure in recent years. Exchequer investment fell to its lowest level in 50 years in 2013.

"Investment in infrastructure is vitally important because it underpins economic and social development and ensures future progress.

"This report shows that public investment can be difficult to get right both fiscally and because of various EU rules,” said Mr Sweeney.

“Nevertheless, it is essential and we need to develop new strategies to undertake public investment adequately and successfully.

“Some of these may seem akin to financialisation, but with a strong emphasis on public return and equality we can deliver good public investment projects, which in turn will lead to increased private investment,” he said.

Tasc’s recommendation echoes that of business representative body Ibec.

The business group recently warned that demographic demands created by a fast-growing population and exacerbated by economic recovery pose the “single biggest challenge for the next government”.

Ibec suggested Ireland should increase spending on capital projects to 4% of GDP rather than the planned 2.5% to ensure economic recovery “isn’t choked off by congestion”.

Tasc proposes funding the increased capital outlay by funnelling some of the proceeds from the sale of the State’s banking stakes in AIB, Bank of Ireland and PTSB into the infrastructure kitty as opposed to using it all to pay down the national debt.

Finance Minister Michael Noonan has indicated that the sale of the Government’s share in AIB will not begin until late summer or early autumn next year.

Mr Sweeney said the time was right to increase spending on projects such as social housing, public transport and schools given the low interest rates currently charged on the national debt.

If the Government were to heed Tasc’s advice, it would likely run into EU spending rules which have been criticised by Tánaiste Joan Burton among others as being overly restrictive, however.

Last month, Ms Burton said those eurozone fiscal rules which limit spending as “frustrating”.

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