Business Opinion: Any prescription for the future of the economy inevitably calls for improved infrastructure. And rightly so. But there is less unanimity about how to pay for it - and signs of some serious head-scratching about this subject at official level.

A plan is needed, offering a clear multi-year funding programme and realistic project delivery deadlines. Such a programme would give businesses a clear idea of what would happen, which is crucial for their decision-making. For those companies interested, it would also provide transparent guidelines for involvement in public/private partnership projects.

Some of our infrastructure deficiencies are obvious to us all every day: clogged roads, a creaking public transport system and so on. Others are less obvious, but still important. For example the Task Force on Physical Science report, published last year, identified poor laboratory conditions as a key factor discouraging students from studying science at second level and recommended a €140 million two-year investment programme to address this.

There are two questions: arranging the delivery of big infrastructure projects and paying for them. The former is a very significant issue. Much of the money spent on investment over the past few years has been eaten up by higher inflation and delays and there are significant questions about the planning and delivery of projects such as the LUAS. No doubt the mid-term review of the National Development Programme, due to be published by the end of this year, will have much to say on these issues.

However, let's concentrate on the financing issue. The Minister for Finance, Charlie McCreevy, has committed to maintaining State capital investment at 5 per cent of national output. This is a high figure by historical standard, but it is the least required given the infrastructure deficit.

The question now is how to maintain or possibly even increase this investment level at a time of tighter resources.

Controlling current spending and thus leaving more resources available for investment would be one preferred Department of Finance formula.

Certainly the slowdown in current spending achieved over the past year was overdue, but it cannot conceivably be reduced below the current 6-8 per cent per annum growth rate. In fact, such are the problems in slowing overall spending growth, that the signs from the exchequer figures so far this year are that many departments have held back on capital investment instead.

So the danger is that the capital budget will suffer, or at least will be squeezed back below the optimal level. There are two ways around this. One is to encourage more so-called public/private partnerships - investments where the private sector takes on a large part of the funding and delivery of projects, in partnership with the public sector. The other option is to borrow more.

Public/private partnerships (PPPs) can work, international experience suggests. But equally they can go horribly wrong. So far the experience here is tentative - and mixed. A number of PPPs are being put in place for major road projects, although the failure of the financing consortium for the Kilcock-Kinnegad project to syndicate the associated debt suggests that the appropriate risk split between the public and private sector still has to be found.

Also, it appears that most PPP projects cannot be kept off the State balance sheet for EU purposes. For example a recent PPP programme to raise money for investment in schools saw funding raised at a rate more than it would have costed the exchequer to borrow itself, but the funds still counted towards State borrowing for EU deficit purposes. In this situation the question is why not borrow directly, unless you feel that the PPP structure can actually deliver the project in a much more efficient way.

The Department of Finance is thought to be mulling this conundrum and private sector sources pick up some signs of cooling enthusiasm for the PPP idea at an official level. However, it is worth trying to develop models in this area and looking at options such as directing some National Pension Reserve Fund money into infrastructure.

Nor, however, will the Department be keen to go down the route of borrowing - at least not more than an amount that will keep us well below the 3 per cent deficit ceiling set in the Stability and Growth Pact.

The fact that the French appear to be running the proverbial coach and horses through the pact should, however, give the Government pause for thought.

With the current budget strongly in surplus and our debt level low, there is a case for judicious borrowing, but only provided the investment produces the required economic or social return. The caveat here is crucial - borrowing to spend on vanity projects or on programmes that go way over time and over budget risks heading the public finances back into trouble.

And if the French and Germans can borrow over 3 per cent for three successive years, then it would be very difficult for the Commission to reject a well-argued case that a country with a low debt level should be allowed to borrow more for crucial capital investment.

What is crucial is that the current uncertainty about the funding and delivery of infrastructure is not allowed to drag on. We need a programme for delivering and paying for the key projects over the next five years or so.

It is not a subject suitable for chopping and changing each Budget day. It's too important for that.