Improved infrastructure to allow more houses to be built will be paid for by an extra €3 billion in next month’s budget, the Minister for Finance Jack Chambers has signalled. Better water and energy services will also be paid for out of this pot.
It comes amid growing concerns in the multinational sector about infrastructure deficits, as well as serious housing shortages.
Details will be announced on budget day, Mr Chambers told The Irish Times, but the money is expected to be sourced from the Ireland Strategic Investment Fund. It is held by the State’s investment managers and funded by the proceeds of bank shareholdings acquired when the State rescued Irish banks in the financial crash.
The move comes as the Government is feeling pressure from the powerful multinational sector to use the €14 billion Apple windfall to expand capacity in the economy in order to promote further growth.
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Mr Chambers, who is preparing his first budget after being appointed Minister for Finance in June, said demands to spend the €14 billion due to the exchequer after the Apple tax case were “reckless”, adding that the economic and taxation model in Ireland was producing “a small Apple every year in surpluses”.
Mr Chambers also said there was no further European Commission investigation into Ireland’s tax affairs.
“There’s no live or active case that we’re aware of from the European Commission,” he said.
Mr Chambers said there was concern in Dublin about some of the proposals by former European Central Bank chief Mario Draghi in a report published this week on the future of the European Union.
Mr Draghi warned a new direction was needed for the EU if it was to maintain its prosperity in the face of the challenges of a changed, de-globalising world likely to be dominated by competition on all fronts between China and the United States.
Mr Chambers said proposals to ease restrictions on State aid to promote strategic sectors “essentially gives France and Germany a competitive advantage”, adding that the Government would argue against it.
But signalling that a fundamental shift in the EU may be under way, Mr Chambers said: “Obviously, we’ll advocate for the single market and ... against excessive state aid and that protectionist outlook. But also, if that’s an inevitable shift within Europe, we need to make sure our enterprise and industrial policy evolves with that.”
Meanwhile, sources within the foreign direct investment sector said they would press home their view that infrastructure spending is the key priority for firms in interactions with the Government in coming weeks. There is what one source described as a “nervousness” around the State’s capacity to plan and deliver big projects in energy, water and other areas.
“If we have a windfall we should use it to execute plans that are already in place or plans that will make us more competitive,” said one industry figure, promising there would be “more urgency” in how this message is delivered in the wake of the Apple ruling.
This view is reflected by some around the Cabinet table who believe the Government should make a pre-election pledge to sink much of the windfall into these areas, believing the Government should nominate particular infrastructural areas that the money will be reserved for to the exclusion of other things to give “absolute confidence” to multinationals that their needs will be accommodated in the future.
“A very big decision that government is going to have to take is are we willing to use this money to address the issues that really in the short term will yield little short-term gain but are essential to our long-term future,” a Cabinet source said.
Industry sources say Ireland is facing increased competition from the Middle East for investment, where governments can make lucrative offers to firms to locate there, and even from within Europe, where member states are said to be using subsidies to attract investment. Meanwhile, other jurisdictions have caught up in areas where Ireland used to have a clearer strategic advantage.
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