Minister for Public Expenditure and Reform Brendan Howlin has confirmed the deferring of a number of infrastructure projects and said the “flagship” National Children’s Hospital will be funded by the National Lottery.
Metro North, Thornton Hall prison and the Grangegorman DIT campus project are among the projects that are being postponed in the Infrastructure and Capital Investment 2012-2016 plan, although the plan to link the two Luas lines in Dublin will proceed.
According to the plan, the entire capital investment for the duration of the plan will be €17 billion. Next year's budget has been cut by €755 million to €3.9 billion. This will fall to €3.3 billion in 2013 and €3.2 billion in the following three years.
The launch of the medium term exchequer framework was attended by Taoiseach Enda Kenny and Tánaiste Eamon Gilmore, as well as Mr Howlin. All three stressed that “jobs, schools and hospitals” were the Government’s priorities.
Mr Howlin said the construction of the new national children’s hospital at the Mater Hospital campus in Dublin would begin in 2013 and the construction period was “just over two years”.
Mr Howlin said he will seek an upfront payment for the National Lottery licence when it comes up for renewal on January 1st, 2012. He said he would bring details of the funding arrangements to Government early in the new year.
In the past there have been staged payments for the licence. But Mr Howlin has asked to see if it would be possible to require the successful bidder to pay the entire licence fee at the start of the process. A source suggested that could generate somewhere between €400 million to €600 million. The estimated cost for building the new hospital is €650 million.
Mr Howlin said existing planned levels of health capital investment will remain, allowing for the replacement of the Central Mental Hospital and the National Project for Radiation Oncology at St James's Hospital.
He described the plan as “not a true measure of our ambition” but said that €17 billion over five years was a significant capital investment by any standard.
Mr Kenny described the plan as “realistic” and based on the reality of the economic situation. He said he would love to be able to say that all projects the Government would like to proceed would go ahead, but he could not do so.
“This plan is based on what the country can afford,” he said. He said some very good projects were being changed or put on hold until the public finances improved. “This is about choosing what the country needs most in the next few years and deferring others until resources become available.”
Certain large transport projects were being postponed, he added.
Mr Kenny said the Government’s priority is job creation. “Jobs are the very core of the plan. We all know that doing a day’s work gives us more than an income,” he said. “Just as importantly, it gives us dignity, purpose, confidence. The very qualities and attributes we need for our country to recover and prosper again, this time correctly, sensibly, sustainably.”
Mr Kenny pointed out that Metro North was first agreed by a Fianna Fail-led Government 11 years ago, and “even during the boom years there was plenty of failure to deliver”.
He said Government remained committed to certain infrastructure projects in Northern Ireland, “even if they require longer timelines”.
Mr Gilmore said the plan was “a clear and honest statement” that acknowledge the state of the country’s resources. He said while the demand for infrastructure projects was arguably lower in the downturn, nevertheless the capital programme was in line with European norms.
Mr Gilmore said he had no doubt some people would be disappointed about individual projects, “but we have to be very straight with people”.
Other major transport projects that will not go ahead are the A5 motorway to Derry, which was a cross-Border initiative. However, work will begin on linking the two Luas lines in 2014. This will incorporate a line extending to Broombridge.
Mr Howlin said demographic changes over the next 10 years will result in 70,000 extra pupils in Irish schools. To accommodate these extra students, the plan allocates €1 billion for 40 extra schools – 20 primary and 20 post -primary. Funding will also be provided for extensions and refurbishment for a further 180 existing schools.
Mr Howlin said although Grangegorman DIT was “still a priority for the Government”, it would not be possible to proceed with it in the near term
Some €3 billion will be invested in water and housing by 2016, while €800 million in supports will go to the agriculture sector over the next five years.
Fianna Fáil claimed the cuts would cost 9,000 jobs next year alone.
The party's public expenditure spokesman Seán Fleming said the plan contained no reference to job creation and would leave Ireland with one of the lowest levels of capital investment in the European Union.
Sinn Féin's Peadar Tóibín warned Ireland will lose its competitiveness in attracting investment as a result of the reduction in funding.
"Over the next 10 to 15 years what we're seeing is a debt for competitiveness swap," he said.
The Green Party accused the Government of making "the wrong call" in "abandoning" what it described as "critical" public transport projects.
Saying the country could not afford "not to start them now," party leader Eamon Ryan said the Government had got it "badly wrong".
Tom Parlon director general of the Construction Industry Federation said that 26,000 direct
construction jobs would be lost next year.
"It seems that the Government deemed it less politically risky to abandon these jobs than to
look at additional savings in current budgets in which excess and duplication have been
highlighted on a huge scale," he said.