Capital spending slashed to reboot economy

CAPITAL spending on roads, public transport, schools, health facilities and other infrastructure is to be slashed almost by half in what the Government presented as a “stimulus” to get the economy back on track.

A revised capital spending plan was announced yesterday, promising to invest €39 billion in infrastructure between now and 2016 – a drop from the €76.2bn capital spending promised in the National Development Plan (NDP) for 2007 to 2013.

Taoiseach Brian Cowen said the Government is aiming to get “the maximum bang for our buck” with resources that have reduced considerably since the NDP was drawn up.

He said the spending announced yesterday in the Infrastructure Investment Priorities 2010-2016 report is a “major stimulus for our economy” and “an important step forward on the path to economic renewal” and will create up to 270,000 jobs.

However Fine Gael said the €39bn is a drop of 45% from what was promised and could lead to 140,000 jobs being lost in the construction sector alone.

The revised plan will mean:

* About 20 schools will be built per year compared with the one a week promised in the original NDP plan.

* 10,000 “temporary school places” or prefabs will be provided up to 2016.

* Homes will be retro-fitted for energy efficiency in a scheme that has the potential to create 10,000 jobs.

* Spending on social housing will be reduced from the €17bn promised to €4.4bn, which will also be used to fund regeneration projects in Limerick and Dublin.

* Many ambitious transport projects announced under the Transport 21 initiative in 2005 will be stalled indefinitely.

Mr Cowen last night denied claims by Irish Rural Link that the new plan had an anti-rural bias because it proposes to stall the Western Rail corridor and review state assistance for regional airports. He said the Government was re-prioritising resources to spend less on roads and housing and more on education and enterprise.

Despite a cut in what was originally promised in the NDP, around 4.5% of the national wealth will be spent on infrastructure which the Taoiseach said is significantly higher than other countries.

“This is not the easy option. It is always easier for Governments to drastically cut capital spending in the face of a fiscal crisis. But we decided to maintain one of the highest levels of capital spending in the OECD.”