McCreevy is sacrificing the State's economic growth for the sake of a euro-zone pact that is in need of reform, writes Joan Burton
The FF-PD Government attitude to the financing of public infrastructure has to come under the spotlight urgently in the wake of last week's Book of Estimates.
For all the honeyed words about rolling programmes and billions available for investment, the true situation is evident in the extreme shortfall of resources under every investment heading contained in these spending plans.
Even if all the funds earmarked for 2004 are used (and in the light of the 2003 underspend that is a very big if), the total allocation for infrastructure falls far short of the amount needed and far short of the amount spent in past years - €69 million lower than 2002 .
AIB Treasury calculates a shortfall of 17 per cent, or more than €1 billion, in the capital budget for 2004 compared with the Minister for Finance's commitments two years ago.
In an overall spend of €40 billion, the share devoted to investment has been very seriously reduced and, now that the National Finance Development Agency is a dead letter, there is little prospect that alternative sources of finance will become available.
The Minister seems determined to maintain his foolhardy antagonism to additional borrowing for these infrastructure projects, even when it remains comfortably within the limits imposed by EU rules.
This Government speaks with numerous voices, all saying different things on the Hanly report and smoking bans among other things. Now there seems to be contradictory views coming from the Taoiseach and Mr McCreevy on their attitude to the EU's Growth and Stability Pact.
With only weeks to go to Ireland's EU Presidency we might expect our Taoiseach and Minister for Finance to have the same objectives.
In this newspaper recently, Mr McCreevy said, in respect of the EU pact rules, "over the next two or three years, I don't see any great push to change them".
By contrast, Mr Ahern suggested the pact was a barrier to investment. Not for the first time, the Bertie arm of the Government doesn't know what the Charlie arm is doing. So who speaks for Ireland in the European debate on this stability pact and its restrictions? Mr Ahern is as scathing as European Commission President Romano Prodi, who regards the pact as "stupid". Mr McCreevy, however, sees "no great push" to change the rules.
The Minister needs to adopt a different approach to the pact when framing his Budget. In budget 2003, he followed a fiscal policy based on a cautious interpretation of the rules and this is all too evident in the Book of Estimates. This must change.
We can and should make the case that borrowing for clearly-identified capital needs is wholly consistent with the pact rules. With a low debt/GNP ratio and with a massive infrastructure deficit, it makes sense for Ireland to borrow to invest.
What doesn't make any sense is to cut back on capital spending as this Government has inexcusably done during this year and to achieve a balance in its spending by the damaging device of raiding the capital budget.
The Exchequer returns show that capital and current spending are running below target. Day-to-day spending is €726 million below target for the first 10 months of the year - money that could have been spent on health, education or the fight against organised crime.
The underspend on the capital side is €763 million - 19 per cent below target for 2003. The inevitable result will be further loss in our competitiveness and fewer jobs in the future.
I'm sure the Minister has read the recent World Economic Forum review that downgrades Ireland's rating for growth competitiveness by a seven places in this past year from 23rd to 30th.
This forum is driven by people who share the Minister's outlook on economic affairs, so their judgment of his stewardship is one he ought to take to heart.
How can he explain why his National Plan has, in the judgment of this forum, failed in its single purpose of upgrading our competitive position?
Mr McCreevy has boasted how he takes a tough line with Brussels. On the Stability and Growth Pact he has adopted a surprising passivity. There is no need for Ireland to adopt such a restrictive policy on capital spending. We can push out to the 3 per cent limit to release €3 billion extra as long as the Government gets a grip on the most rudimentary rules of cost control and project planning.
France and Germany have not been so timid. Europe needs a credible set of public finance rules which provides for stability and growth. Our Minister seems prepared to restrict growth in the name of a pact so in need of reform
Joan Burton TD (Dublin West) is Labour spokesperson on finance