A major five-year investment programme, including new spending on transport, primary schools, the environment and other areas, is expected to form part of tomorrow's Budget.
The Minister for Finance is expected to outline a new approach to managing the State's investment programme. There will be less emphasis on short-term planning and more focus on long-term spending priorities. Five-year spending programmes are believed to have been agreed with several Departments.
Among the expected measures is a €1 billion programme to upgrade dilapidated primary schools over the next five years. By far the greatest allocation, however, will go to the Department of Transport, with €1.2 billion of State funds per annum being directed mainly at the roads programme.
This allocation rises to €7 billion when funds from public/private partnerships are included. Substantial investment will also be outlined in other key areas including the environment and possibly health. However, Mr McCreevy is expected to commit to keeping State investment at about 5 per cent of national output each year.
The investment programme - signalled during the Estimates - is designed to outline a medium-term spending plan for key infrastructure projects and head off criticism that the Government is underspending in this area. Mr McCreevy is also expected to outline a new approach to involving the private sector in infrastructure investment to top up Exchequer funds.
It has also emerged that new draft EU rules may allow Mr McCreevy to keep much of the State spending in this area off the Exchequer balance sheet in future years. The new rules proposed by an EU statistical body - still to be approved by EU leaders - would allow most road programmes built with private sector involvement to be kept off the State balance sheet.
The same would apply to some projects in education and to major transport projects such as the Metro. The rules, if approved, would make it much easier for the Government to borrow for major projects while not breaching EU rules. The proposed new rules will not be approved in time for this year's Budget. However, Mr McCreevy is still expected to go ahead with the five-year investment plan.
The almost €1 billion figure expected for primary schools is €500 million less than the Department of Education said it needs to fully upgrade primary schools. Of the 3,200 primary schools in the State, at least 400 are said by the teachers union INTO to require replacement or extensive renovation. The Government allocated €190 million to the primary school building programme in the Estimates, an increase of €25 million on last year.
In the Dáil last month, the Minister for Education, Mr Dempsey, said he favoured "putting in place a multi-annual capital funding envelope for the next four or five years . . . as this will enable my Department to provide greater clarity for all education partners concerning the progress of projects within the programme".
Mr Dempsey has acknowledged the significant levels of investment made in school buildings in recent years must be maintained if the elimination of substandard accommodation is to be achieved.
In the five years up to and including 2002, €1.2 billion was spent on primary and post-primary school buildings. In transport, an annual €1.2 billion programme to upgrade the State's transport infrastructure is expected to be outlined in the Budget.
Mr McCreevy has agreed to allocate this amount annually for the next five years, with roads and rail to be the main beneficiaries.
Officials from the Departments of Finance and Transport have been working on the "financial envelope" for the past few weeks. The Department of Transport was concerned its allocation might be reduced following large allocations for the Dublin Port Tunnel and the national roads programme in the past two years.