Transport spending to be cut by €315m

The Department of Transport’s budget for this year has been cut by €315 million to €3.1 billion.

The cut, introduced under today's supplementary budget, will see €300 million saved on capital expenditure and the remainder on current spending.

The total spend on capital projects this year will be €2.4 billion, while current spending will fall to €705 million.

There will be a reduction of eight per cent – or €150 million - of the total budget for road construction. This will apply mostly to spending on regional and local roads. The overall spend on these roads this year will be €448 million, of which €332 million will be capital spending.

The capital allocation for national roads will not be affected. This is because all but €50 million of the total budget of €1.44 billion is already contractually committed.

The budget available to the National Roads Authority for road maintenance has been cut by €5 million to €44 million. A further €10 million will be cut in the public transport payments to CIE, bringing the revised total for this year to €303 million.

"This budget adjustment will result in an unavoidable reduction in the overall level of road improvement and renewal work in 2009," the Minister for Transport Noel Dempsey said in a statement.

The capital spend on public transport will be reduced by €150 million to €630 million.

"The reduced capital allocation for public transport will result in some delay in the implementation of a number of projects that are still in the planning stages," Minister Dempsey added. He said there will be "modest reductions" in the allocations for the railway safety, traffic management and accessibility programmes.

There will be no reduction in the €37 million that was allocated for road safety in Budget 2009.

Labour's transport spokesman Tommy Broughan said the cuts would lead to a "further decimation" of key public transport services.

While there was no Carbon Tax introduced in today's supplementary budget, Minister for Finance Brian Lenihan said it may be considered for inclusion in December's budget.

The Government decided against proceeding with a widely-anticipated car scrappage scheme to stimulate car sales. Ford Ireland said the decision not to introduce the scrappage scheme was "perplexing" as it would have resulted in increased revenue and lower carbon dioxide emissions.

However, the introduction of a VAT margin scheme for second-hand cars will be welcomed by those in the motor trade. Under the scheme, dealers will only be taxed on the margin of profit they make on sales after July 1st. Cars acquired before and resold after that date will be taxed on their resale price.