Analysis: Coalition hopes for bounce from capital plan

It is obviously no coincidence that the Government’s €27 billion goodie bag of infrastructural projects has been unveiled on the eve of the general election.

What better time to announce an array of plans ranging from a new rail link between Dublin city centre and the airport to other big projects such as the children’s hospitals, new maternity services, motorway improvements and flood defences?

With the budget to come in two weeks there is no doubt that the Coalition is trying to set the most positive mood music it can in the run-up to the election.

Electoral considerations are clearly at play but there is no arguing with the fact that a comprehensive capital plan is badly needed to underpin the economic recovery and ensure the level of unemployment continues to fall.

At the launch of the plan Taoiseach Enda Kenny spoke of the extra 45,000 construction jobs that will be supported by the plan and said this would be essential in getting that industry back of its knees.

The important question is whether the scale and ambition of the plan is appropriate to the circumstances now prevailing and if the resources are there to sustain it over the next six years.

The employers’ body Ibec claimed that while the plan contained lots of great projects it ultimately lacked sufficient ambition and scale to address the country’s growing infrastructure gaps.

In an effort to preempt such criticisms the Taoiseach was emphatic at the plan’s launch that it was an affordable and realistic approach to the challenges the country faced as the Government worked to secure the recovery.

Available resources

“But the recovery is still not complete and we must continue to manage the national finances carefully or risk falling back. We could not afford everything we wanted but this plan represents the best of what can be delivered with the available resources,” he added.

Mr Kenny pledged that the country would never go back to the bad old days of boom and bust.

“The days of Fianna Fáil blank cheques are gone,” he said adding that he had to turn down requests from Ministers and interest groups for projects because the money was simply not there.

“I am not placing Ireland back in hock again. This is an affordable, realistic plan.”

The question for critics of the plan, such as Ibec, who played a part in creating the unsustainable boom that almost ruined the country, is where the extra resources for an even more ambitious plan are to come from.

EU rules

The Government’s decision to spread the plan over six years was taken in order to maximise the amount of money it can spend under European Union rules. There is no question of breaking those rules at this stage in the country’s recovery, so it appears that the spend is about as big as it can be given the state of the economy.

One alternative would be to cut current spending but finding cuts in big-spending departments such as the Department of Health, which is already far over budget, is easier said than done.

The spread of capital projects across the country and all of 40 constituencies in the State clearly has a political aspect to it, particularly this close to an election, but it appears that the goodies are being shared out relatively evenly.

Given that the plan goes on until 2021 the next government, whatever shape it will be, will have an opportunity to renew the plan and its goals.

At the launch Tánaiste Joan Burton emphasised that economic recovery was not enough and there had to be a social recovery as well.

“Put simply, that means making life better for people in every community across the country,” she said, pointing out that the latest unemployment figures, released on Tuesday, showed another reduction.

Hearts and minds

“Incomes matter too, which is why as Labour leader I’m determined to ensure more take-home pay for low and middle-income earners in the forthcoming budget,” she said pointing to the next phase of the Coalition’s pre-election hearts-and-minds campaign.

While there will be considerable disappointment in many parts of the country about the omission of a number of proposed projects from the final plan the range of things that will be done should provide a boost to local economies in all regions.

Whether the Coalition parties will get their desired political dividend from the plan is a moot point but the important thing is that it now proceeds as quickly as possible so that the dividends will be delivered to people on the ground.