Cowen admits fall in revenue could hit investment in infrastructure

THE GOVERNMENT’S infrastructure spending under the National Development Plan (NDP) next year could be affected by falling revenues, Taoiseach Brian Cowen hinted yesterday.

In the Dáil, Mr Cowen said spending under the NDP would “depend on the budgetary parameters as we go through the next seven years”, as has been made clear from the beginning.

“With respect, the assumptions which are set out in the plan are predicated on growth of more than 4.5 per cent per annum,” he told Fine Gael leader Enda Kenny, who questioned future information technology spending.

Cuts or delays in the NDP would be politically embarrassing for Mr Cowen, given his often-stated commitment to maintaining infrastructure spending.

In the Dáil last December, Mr Cowen, then serving as the Minister for Finance, told TDs: “Postponing or delaying it would be a major policy error. I am determined to roll it out as planned.”

Launching the NDP, the then taoiseach, Bertie Ahern, said €184 billion would be spent between 2007 and 2013, though he said the State had a responsibility to ensure that they are deployed “intelligently”.

Asked last night if the Government was still determined to keep to the targets laid out under the plan, the Department of Finance said: “At the moment, yes. The figures have always been subject to prudent budgetary policies.”

Already, the Exchequer’s taxation returns are €736 million behind target and the Department of Finance has already written off hope that €600 million of that can be recovered over the remainder of the year. Ministers are likely to get further bad news next week when the Exchequer returns to the end of May are produced, and there are now real fears that tax revenues could be €1.5 billion behind target by December.

In his Dáil reply to Mr Kenny, the Taoiseach said: “I have been making the point, generally speaking, that it is important that we prioritise investment to those areas which will improve competitiveness and ensure we continue to see investment coming to the country to create jobs and maintain and grow wealth for the country in order that we can develop public services.”

Up to now, the State has funded the majority of its capital spending from day-to-day revenue. Last year, for instance, the State took in €5.85 billion more than it spent on current expenditure.