How much of a difference will the €27bn capital plan make?

It was far short of the €80 billion gold-plated programmes announced by the Fianna Fáil-led governments during the boom years. But the programme for capital spending announced by the Government last week had an unmistakable message: The recession is over. Austerity is over. We can splash the cash again. And we are putting a total of €27 billion of money where our mouth is.

There is always a political element to a Government spending announcement. It goes to the essence of what they do. But the plan announced on Tuesday at Heuston Station had a very naked political edge to it.

The reason behind that was obvious: there is an election in the offing, either next month or early in the new year.

Obvious cuts

During the recession, the first and most obvious cuts were in capital spending. Most of the main motorway arteries had been completed by the time the economy took a dip.

There were grandiose plans for the railway and mass transit sectors including a big plan for a Dart Underground. All of those hit the cutting room floor.

Only a few big ticket projects continued during the recession, including the Luas upgrade, the campus at DIT (after it was initially long-fingered) and work on the National Children’s Hospital, with the help of the proceeds from the sale of the lottery licence.

So does this plan signal that the State has finally broken free of the shackles of austerity? Not quite. If you look at the figures, the total looks impressive but there has been a little creativity involved.

Fiscal rules

For one, capital spending programmes traditionally run for five years. This one has been extended to six.

In addition to another year, EU fiscal rules set targets based on an economy’s performance over a number of years. As the Irish economy is improving each year, the set of figures will be stronger, allowing a good bump of spending in the final year.

Also, once you begin to trawl through the figures you see that many aren’t new and featured in previous programmes. The children’s hospital, for example, is a project that is already up and running. Many of the motorway improvements were also previously announced.

Some critics have also said there was a bit of “trick of the loop” to the main element of the plan: the €2.4 billion Metro North project. Work on that is not expected to commence until the very last year of the plan and it will not be in operation until 2025 or 2026, a decade away.

Sure, there is more spending than there has been seen in the past seven years.

That said, the Government was careful not to give any impression of being spendthrift. Taoiseach Enda Kenny promised that he would not put the country in hock.