State 'could tap €20bn' in private cash for projects
IRELAND can avoid the devastating effects of a capital spending collapse if the new Government embraces private investors, according to a major report.
The report, published yesterday and penned by accountants KPMG and employers' body IBEC, comes after the outgoing Government announced plans to cut capital spending to just €16bn over the next four years, in a move that was slammed by construction groups.
IBEC's director of policy Brendan Butler says the new Government could tap up to €20bn in private cash for infrastructure projects to be built over the next decade, creating well over 80,000 jobs.
"I don't think the Government ever properly embraced public private partnership at all," Mr Butler claims. "You could use it for infrastructure, health, education, broadband, for all sorts of projects."
Mr Butler insists there "wouldn't be any problems" raising cash for projects, despite the economic conditions, "once the right model" to reward the private sector was found.
"Certainly, investors within Ireland have indicated that they would be interested; investors abroad tend to separate physical infrastructure projects from the reputation of the country involved," he adds.
IBEC and KPMG also suggest the European Investment Bank (EIB) might be temporarily allowed to fund more than 50pc of projects, or might facilitate a "project bond mechanism".
The Government should allocate money to public private partnership as part of the annual budget exercise, the report states. It also recommends the establishment of an authority to determine what infrastructure would be delivered, and how this would be done.
"Ireland still needs investment in infrastructure," the report stresses.
If the Government properly leverages private infrastructure investment, Mr Butler says Ireland will benefit from a "huge amount of jobs" and will get the projects completed at rock bottom prices.
"There's never been a better time to do this."
The report warns that Ireland's recovery prospects could be retarded if the next Government does not ensure capital spending remains high.
"Despite the economic crisis, the demand for infrastructure remains high and the existing gaps are such that the pace of economic recovery will be greatly reduced if infrastructure is not maintained," the report says.