DEAR SIR: Colm McCarthy noted in the Irish Farmers Journal last week, that “it seems always to be either a feast or a famine with the capital programme in Ireland”, and we most certainly are in the midst of a famine when it comes to capital spending.

Limited capital expenditure growth has consequences for any society, but it is serious for a country like Ireland today, given its dramatic population growth. Since capital expenditure was initially cut in 2008, the population grew by a quarter of a million people.

This is double the population of Cork, our second largest city. At the same time, spending on capital was cut by two thirds and, despite some pick up, it is still only half what it was in 2008. This is barely enough to cover depreciation, let alone provide the new infrastructure that is needed to cater for our burgeoning population, due to grow by another one million in the next 15 years.

It is not surprising that the country is now under severe infrastructural capacity constraints. We are only building one new house for every seven households that are formed. Capital spending cutbacks are spilling over into many other areas too. Bed capacity in our hospitals is 40% of 1980 levels, despite the fact that an extra 1.3 million people now live here. Our Victorian era water infrastructure will require billions of euro in upgrades over the next decade.

The Government has the potential to spend an additional €7 billion over the next four years on capital, while adhering to the already-prudent European fiscal rules. This would add very little to the debt to GDP ratio and present a low risk to the public finances, but would support quality of life for our towns and cities. It is, therefore, a huge mistake for Government not to spend what is available to it.

Colm McCarthy alleges that excessive capital expenditure was a major factor in the recession, which struck in 2008. That recession was largely caused by uncontrolled bank lending which generated a housing bubble. It was also exacerbated by a range of international factors. The major infrastructure projects laid down during the Celtic Tiger era have stood the test of time and provide a valuable return in terms of economic activity, securing increased foreign direct investment jobs and improved quality of life for our citizens. Who could argue that the motorway network, the large number of town bypasses and local road improvement schemes, the LUAS tram system in Dublin, the second terminal at Dublin Airport and improvements to the railways, have not been money well spent. Without a doubt, every capital project should be subject to a rigorous cost-benefit analysis. For the past three years, IBEC has called on the Government to establish a national central body, with responsibility for developing long-term public capital infrastructure plans, auditing our infrastructure needs, specifying national priorities and advising on value for money. This process should be free from political interference.

For now, Ireland has a window of opportunity with a low cost of capital that offers the cheapest money in history to spend on critical infrastructure projects for the benefit of the Irish economy and society.