It is time we started to think big. Building by-passes here and there is not enough: we must start building roads, complete routes between one city and another...

These were the words of the Tanaiste addressing her party conference last April. The words ring very hollow in the light of what we now know of the Government's spending plans for the next seven years.

The plans, incorporated in the National Development Plan 2000 to 2006, the broad outlines of which were published in this newspaper yesterday, are cautious in the extreme and suggest a serious lack of ambition and imagination.

Over the past two to three years a consensus has emerged that we need to invest more in the infrastructure of the State. Our roads are terrible, our standards of water supply and waste-water treatment are inadequate, our public transport system has been starved of cash for decades.

For years there was little we could do to improve our lot other than to use the money given to us by richer European countries. But now all that has changed. Now suddenly we have the opportunity to stand on our own two feet. We are the first generation of Irish people who can decide what we want as a nation and then go out and pay for it.

The Government plans capital spending of £33.5 billion over the next seven years, or approximately £4.8 billion per annum. This sounds like a lot of money, and indeed it is. However, we already spend £4 billion per annum in the public capital programme. The investment proposed in the NDP represents a year-on-year increase of little more than 10 per cent.

When you consider that capital spending has increased by more than a quarter in each of the last two years, it is clear that somebody, somewhere, has applied the brakes. What does this mean in practice? Take public transport. Dublin's traffic is at a standstill from early morning until late evening.

Every other major urban centre suffers from similar gridlock. We urgently need an attractive public transport system to encourage people to leave their cars at home. All of the evidence suggests the bus system cannot, of itself, do the business. Public transport usage on the DART corridor is twice that in areas served by buses only. The conclusion is clear. People prefer trains.

The Fianna Fail/Labour government recognised this fact when we made provision for two Luas lines in the national plan. We always knew at the time that two were not enough but in 1994 it was all we could afford.

All that has changed. There is no persuasive reason why we shouldn't build a comprehensive Luas system covering the main arterial routes in the city. This should be supplemented by expanding the suburban rail system to cover all the commuter towns which serve the capital.

Sadly, the Government plans to do nothing of the sort. Indeed, we now know that the Department of Finance has expressed its concern at the escalating costs of the Luas project.

Meanwhile, the Government is evaluating a rail link to Dublin Airport and has tentatively suggested that private money could be attracted to build it. Does anyone seriously believe that we don't need a rail link to the airport? It has been patently obvious for decades that such a link is needed. Now is the time to get the cheque book out and get it done.

The plan provides £500 million over seven years for investment in mainline rail. Again, it seems impressive until you realise that most of this is required just to make the existing network safe and that real improvements will be confined to the three main routes. Anyone who thinks that the bumpy ride to Sligo or Westport is on the way out will be very disappointed. It seems that even in the Ireland of the 21st century it will not be possible to travel from Galway to Limerick by train.

The plan makes provision of £4 billion for roads. £1 billion of this will come from the private sector, and presumably these roads will be tolled. Much of the rest will go to deal with the backlog in projects identified by the National Roads Authority in an Assessment of Needs study carried out last year.

In my view that assessment is already out of date in that it underestimated the likely level of car ownership. It also quite understandably underestimated the level of economic growth and our capacity to pay for improvements in the system. The result is a programme which is far less ambitious than it should be. To borrow Mary Harney's terminology, it is a programme of by-passes, not a programme of whole new routes.

Only 10 per cent of the total spend proposed in the NDP will be administered by the two new regions. Most of this comprises existing measures in the Local Urban and Rural Development Programme and what the Department of Finance calls "smallscale local infrastructure". Indeed, even these measures will be effectively controlled by the Department of Finance in that the regional assemblies will have little or no role in the vital area of the project selection. So much for regionalisation.

Throughout much of last year, interest groups in the west fought an effective, and ultimately successful, campaign to retain Objective 1 status for the Border, midlands and west. This "victory" will prove worthless if those areas are allocated a proportionately smaller share of the exchequer funds which make up the bulk of moneys allocated under the plan.

The Government insists it is committed to "balanced regional development". Nonetheless, it goes on to say it will be necessary to assess the capacity of the regions to absorb projects. Those who thought that the battle for the west was already won should think again.

Needless to say there is much in this plan that is good. The provision for childcare, properly used, could make a real difference. The commitment to invest in research and development is positive, if overdue.

But mostly it is a plan of limited ambition. It illustrates, above all else, that we have not yet adapted our mindset to suit our new economic circumstances. The mindset of the poor mouth lives on. Charlie McCreevy has long opposed increases in public spending, and it is obvious that he cannot bring himself to make the investment that the country so desperately needs.

No doubt Mr McCreevy will trumpet his plan as a triumph. It is anything but. The truth is that if we allow for the fact that the proportion of our national income which is required to service the national debt will inevitably fall over the next few years, it is very likely that the proportion of GNP which goes to capital investment will actually diminish. At a time of unprecedented need and opportunity that is nothing short of a disgrace.

As a people we have a choice, a choice denied to previous generations. We can channel our increased wealth into private consumption or into the public services which contribute so much to our quality of life. Where we strike that balance will determine how this country will fare in the 21st century. I believe that this Government has got it horribly wrong.

Observers have been surprised at the apparent conversion of Mary Harney and the PDs to social investment. Now we know just how superficial the PDs' supposed conversion is. At a time when bold and brave decisions were needed, we have been presented with a conservative package, bereft of vision. Radical or redundant, Mary? I think we now know the answer.

Derek McDowell is Labour Party spokesman on finance