Public Expenditure and Reform | Public capital funds

To ask the Minister for Public Expenditure and Reform the extent to which public expenditure on the capital side remains vigorous and sufficient to meet demands and requirements; and if he will make a statement on the matter.

REPLY

As the Deputy is aware, my Department is responsible for allocating public funds across each area of Government spending and ensuring that expenditure is managed in line with these allocations by Departments.  

The National Development Plan (NDP) 2021-30, published last year, demonstrates the Government’s commitment to meeting Ireland’s infrastructure and investment needs over the medium term horizon. The NDP 2021-2030 provides €165 billion in public capital funding alongside a detailed and positive vision for Ireland up to 2030 as part of Project Ireland 2040.

In Budget 2023 I announced an additional €800 million for capital infrastructure projects and programmes next year, which will be made available under the NDP for core capital spending to help in delivering the largest, greenest and most ambitious infrastructure plan in the history of the State.  This represents a very substantial commitment of resources.

The Fiscal Monitor for October 2022, published on 2 November, recorded gross capital expenditure of almost €5.5 billion to end-October.  The expenditure figure of €5.5 billion does not include capital carryover from 2021 spent in 2022.   The amount of capital carryover spent to end-October amounted to almost €750 million, giving an overall capital spend of just over €6.2 billion for this period.  In year-on-year terms, gross capital expenditure is over €400 million higher, excluding capital carryover.
Capital expenditure by its nature tends to be lumpy, with a particularly high drawdown at year-end.  It is therefore not unusual for Departments to record an under or over spend against profile throughout the year.  There can be any number of reasons for projects to diverge from the profiles submitted at the beginning of the year, such as delays in planning, delays caused by the rising level of costs, supply chain disruptions, fuel costs and skilled labour shortages.  These factors may contribute to completion delays and therefore create a variance between the profiled drawdown of expenditure and the submission of invoices by contractors.

As such, capital carryover is in place to assist Departments with the management of their capital spend across years to alleviate pressures and delays caused by timing issues and the impact of unexpected occurrences.  This procedure is also designed to promote value-for-money in the use of capital funding, in particular by mitigating any incentive on the part of public bodies or Departments to spend any remaining capital allocation at end-year in an accelerated manner rather than surrender it to the Exchequer.