The Minister for Public Expenditure and Reform, Brendan Howlin TD, today announced additional Exchequer investment of €200m to fund new projects in a range of sectors including new road schemes, social housing to meet acute needs arising in that area and a range of tourist related works to help support long term jobs. It will also help to support a range of projects which commemorate the foundation of our State. As with previous investment packages, these projects will be spread around the country, and will create economic activity and employment on a regional basis.
The projects will be funded from the proceeds of the sale of State assets (BGÉ and ESB).
Speaking earlier today, the Minister noted that the construction industry is showing very promising signs of recovery which is helping to generate economic activity and create jobs. He welcomed recent figures which show that activity in the sector has increased in each of the last eight months, with the latest expansion the sharpest since December 2004. The rate of job creation in the sector has also increased continually over the same period.
Since July 2012, Minister Howlin has made a series of announcements in relation to additional capital investment as part of a stimulus package to help support investment in infrastructure and jobs. This additional investment has supplemented the €17 billion Exchequer capital programme (set out in “Infrastructure and Capital Investment 2012-2016: Medium Term Exchequer Framework”) and has been primarily focused on projects with a high employment impact and which can benefit local economies throughout the State. It was also predicated on the use of non-traditional funding methods e.g. private financing through the PPP structure and additional Exchequer investment through reinvestment of proceeds from the sale of State assets and the new licencing arrangement for the National Lottery.
The €200m investment being announced today is additional to the €3.3 billion capital investment that the Exchequer will be making this year.
On State asset sales, the Minister noted that significant progress is being made in the State assets disposals programme, some of the proceeds of which will be used to fund the Stimulus investment announced today.
The Government commenced a Capital Review in April 2014 and a new multi-annual capital framework will be set in the Autumn. The Capital Review will help to identify the key priorities and scale of capital investment required over the period to 2020 and will inform Government decisions on the areas where capital resources should be directed. It will also include an examination of the potential scope for using non-traditional funding sources to further augment capital investment. In advance of this, the investment announced today will seek to utilise asset sale proceeds available for immediate investment to supplement the existing Exchequer framework.
Notes for Editors
There have been three previous Stimulus Announcements:
· July 2012 - A €2¼ billion Stimulus Package which included a new €1½ billion PPP programme involving projects across the education, roads, healthcare and justice sectors;
· June 2013 - following on from this, announcement of €150m Exchequer investment in schools, energy efficiency and roads projects; and
· Budget 2014 - announcement that, along with the €200m already committed to the National Children's Hospital, some €200m would be invested from the Lottery Licence transaction.
Progress on State asset sale disposal programme
BGE
In late March, BGE entered into a definitive agreement to sell the Bord Gáis Energy business to a consortium comprising Centrica plc, Brookfield Renewable Energy Partners LP and iCON Infrastructure on the basis of an enterprise value of up to €1.1bn. The sale is subject to various conditions to closing, including regulatory and merger approvals, and is expected to close by the end of Q2 2014.
The Government expects to extract the vast majority of the transaction proceeds from BGE by way of dividends, but in a manner that protects BGE’s investment grade credit rating. The proceeds will be extracted in instalments, commencing immediately following completion, as funds are both available and required.
ESB
ESB announced in October 2012 that it would sell some of its non-strategic power generation assets on a phased basis, commencing in 2013. In February 2013, ESB announced its intention to sell its 50% shareholding in each of its international tolling plants - Marchwood in the UK and Bizkaia Energia in Spain. In October 2013, it further announced its plans to sell its two peat stations, West Offaly Power and Lough Ree Power.
The first transaction – the sale of ESB’s interest in Marchwood - was completed in November 2013, for a price that was in excess of expectations and which resulted in approximately €153m in dividends being paid to the Exchequer in January of this year.
On 30 April, ESB completed the disposal of its interest in the Spanish tolling plant, which resulted in a further special dividend of €44.175m being received by the Exchequer yesterday. This brings to over €197m the special dividends received so far this year from ESB from its overseas asset sales.
ESB is currently preparing for the planned disposal of its peat stations, under an arrangement which will see ESB continuing to operate and maintain the stations for the prospective purchasers, with existing staff. ESB has already appointed financial, legal and vendor due diligence advisors for this transaction, which is due to be launched shortly and completed in 2014.
Phase 4 Infrastructure Stimulus: Investing in Recovery and Growth
Transport Programme: Department of Transport, Tourism and Sport (€50m)
An additional provision of €50m will allow for road surface improvements and a rural public transport initiative. Road improvements include the N22 Macroom Pavement Strengthening and the M11 Shankill-Bray South, some minor improvements such as the N71 Goggins Hill Improvement Scheme in Cork and N77 Ballynasleee Realignment in Kilkenny. It will also allow for progression of the Athy Southern Distributor Road. This additional investment will yield economic benefits in terms of immediate job creation and longer term maintenance of valuable and essential transport assets.
Social Housing Programme: Department of the Environment, Community and Local Government (€50m)
An additional allocation of €50m will allow the Department of Environment, Community & Local Government to increase social hosing provision as follows: €20m on vacant units (800 units additional); €10m on capital projects largely directed to homelessness (c. 80) and €20m on Local Authority construction focused on highest need (c. 130 units).
Capital supports for the childcare sector: Department of Children and Youth Affairs (€5m)
Provision of an additional €5m will help to bolster the capital supports for the childcare sector programme. The types of works generally supported through this grant funding include:
· improvements to accessibility of services for children with disabilities,
· provision of natural outdoor spaces that promote active outdoor play,
· critical works to ensure that buildings are fit for purpose under the Childcare Regulations (open to community/not-for-profit services only), and
· small maintenance work to childcare facilities/outdoor play areas.
Commemorations programme: Department of Arts, Heritage and the Gaeltacht (€22m)
A sum of €22m will be provided towards the suite of Commemorations Projects. This will help to fund the 2015 costs associated with the 6 flagship Commemorations projects
· the GPO Interpretive Centre,
· Kilmainham Courthouse and Gaol,
· Military Archives,
· Teach an Phiarsaigh, Ros Muc,
· Tenement Museum,
· Richmond Barracks.
It will also fund the following projects which form part of the Commemorations programme:
· Redevelopment works at the National Concert Hall,
· National Archives of Ireland Project (Phase 1),
· Yeats 2015, and
· the Irish Parliamentary Party Monument.
Greenways: Department of Transport, Tourism and Sport (€10m)
A provision of an additional €10m in 2014 will allow for further investment in cycling Greenways. In the region of 4 to 5 additional Greenway projects will commence through this funding including the Dublin-Athlone-Galway route.
Lough Derg Development: Department of Transport, Tourism and Sport (€2m)
A provision of €2m will help to develop the potential of Lough Derg, on the Shannon, as a key tourism destination. The Lough Derg development plan involves the development of the tourism infrastructure for sightseeing, walking, cycling, and water based activities as well as the heritage, culture and food offerings.
Páirc Uí Chaoimh: Department of Transport, Tourism and Sport (€30m)
Cork GAA are undertaking a €70m redevelopment of Páirc Uí Chaoimh along with the development of a centre of excellence including a full sized all weather training facility and establishment of a local
Marina Park. This is the only capital project of scale being supported by the GAA in the Republic. A provision of €30m from the Exchequer will help to progress this project with the balance (€40m) being funded by the GAA.
Pyrite Remediation: Department of the Environment, Community and Local Government (€20m)
The aim of the Pyrite Remediation Scheme is to procure the remediation of certain dwellings with damage caused by pyritic heave of hardcore under floor slabs. The Housing Agency will be responsible for the testing of dwellings and the implementation of the remediation process. They will also be the contracting authority for the Scheme and will engage all necessary construction professionals, advisors and contractors to carry out the remediation of dwellings which are included in the Scheme. A provision of €20m (€10m in 2014 and €10m in 2015), will be made available for the scheme from the stimulus package.
Special Olympics Ireland HQ: OPW (€5m)
Funding of €5m would allow Special Olympics Ireland to consolidate their Dublin, Leinster and Eastern Region offices into a single new HQ office in the National Sports Campus (Abbotstown). This consolidation project will lead to significant annualised savings for the organisation.