Noonan wants €750m capital fund to boost employment
Finance targeting 9,000 new jobs under plan
Published 14/07/2013 | 05:00
The Minister for Finance Michael Noonan is working on a €750m construction stimulus plan for the Irish economy, which could create up to 9,000 new jobs.
Mr Noonan has asked the secretaries general of key government departments to discreetly prepare proposals for his department on how best to spend the badly needed capital injection on employment-intensive new projects.
The Department of Finance is understood to have briefed members of the Troika on its plans for a capital-based employment-intensive stimulus project which has not been met with opposition.
Mr Noonan and his civil servants believe that post the Anglo Irish Bank/ promissory note restructuring deal last February, the State now has the flexibility to spend between €500m and €750m stimulating the economy.
The IMF in particular is concerned that Ireland's economy will languish in the doldrums if the State is not allowed to invest in new projects and support more employment.
The Department of Finance estimates that each €1m spent on capital stimulus creates between eight and 12 new jobs. This puts the range of potential new positions at between 6,000 and 9,000 jobs.
Mr Noonan is understood to be anxious that any proposals hit the top of this scale before being approved.
Standards & Poor's, the credit rating agency, revised its outlook for Ireland to positive on Friday while leaving our rating unchanged at BBB+, a notch above Italy but still eight grades down from the top rating of AAA.
The ratings agency predicts that Ireland's "potential growth rate is greater than 2 per cent".
A stimulus package in the order of €750m, however, could push Ireland's growth rate upwards by another 0.5 per cent helping Ireland in its climb back into the ratings agencies' favour as it hopes to exit the EU-IMF bailout.
Ireland's government departments will present their proposals to Noonan and his advisers over the summer in the run-up to the Budget in early October, when any new investment package would be announced.
Among the projects competing for capital investment are schools, hospitals and primary care units.
Having been starved of capital investment, each of the departments is expected to fight hard for its share. The additional capital investment will be on top of the existing spend already agreed by the State and the Troika.
Under the bailout plan, cuts and tax hikes are due to be about €3.1bn in the 2014 Budget and €2bn in 2015 or in total €5.1bn.
The promissory note deal reduces the total needed over the two years to €4.1bn, giving Mr Noonan the flexibility to spend up to €750m more.
He will require cabinet approval for his new funding plan but his main concern will be ensuring that nobody in Europe prevents him spending on job-creating stimulus rather than throwing away more money trying to fix Ireland's banks.