Commitment to infrastructure

Capital ExpenditureThe Government has promised to spend €36.3 billion on improving the State's infrastructure over the next five years, with €6.3 billion to be made available in 2005.

Next year's allocation will be boosted by a €237 million "carry over" from 2004, under new rules which allow Government departments to bring forward up to one tenth of their budgets to the following year.

The Government has also set aside €334 million in new funds for capital spending next year.

This helps to lift the overall total to €6.3 billion, or 20 per cent more than this year's cash out-turn.

The Minister for Finance, Mr Cowen, said this would allow the Republic to maintain infrastructural investment at nearly twice the European average for the years between 2005 and 2009.

The total €36.3 billion "capital envelope" for the next five years is €2.7 billion higher than the previous five-year allocation. It includes almost €10.2 billion in transport investment, with plans announced to extend the envelope period in this area to ten years in the future.

He said proposals along these lines would shortly be submitted by Government. The change is necessary because of the scale of projects and investment involved, Mr Cowen added.

The Minister also said he was "extremely conscious" of the need to optimise the value for money that could be drawn from the spending programme.

"I am determined to take whatever action is required to bring this about," he said.

The Department of Finance will soon issue revised guidelines to Government departments on "the appraisal and management of capital projects".

The previous minister, Mr Charlie McCreevy, said last year that the Government would be seeking to fix the terms of contracts awarded for public-sector construction Contractors were also to bear the risks of inflation or other increased costs. Mr Cowen said work was continuing on this front.

About €3.7 billion of the capital envelope for the next five years is to come from public-private partnerships (PPPs), even though Mr Cowen acknowledged that progress in this area had been slow in some areas.

His predecessor had a goal of funding 15 per cent of public capital projects through private money by 2008, with this to be driven by PPPs.

A year ago some 40 major infrastructural PPP projects were at various stages of procurement. This total currently stands at 18 projects.

Mr Cowen said the targets set last year for PPPs had been "adjusted" to reflect the length of time it took to bring such projects to the construction stage.

"This reflects the fact that, for various reasons, PPPs have been slower to get off the ground in some areas than was envisaged. We are actively examining how to resolve that issue going forward," Mr Cowen said.

Some €3.9 billion of next year's capital allocation will go on the Economic and Social Infrastructure Operational Programme that falls under the National Development Plan.

This will see €1.75 billion being spent on roads and public transport, €1.2 billion on housing, €350 million on water and sewerage and €600 million on health.

When current spending is added to the capital allocation, spending in education will amount to €6.8 billion, while research and development will get €451 million. Some €759 million will be spent on employment supports and training.

A €900 million allocation has been set aside in the five-year capital envelope for the roll-out of the decentralisation of 10,000 State employees from Dublin.

The decentralisation programme is "moving forward", according to the Minister.