State spending on public infrastructure should be increased by at least €15 billion over the next six years to ensure future economic growth and development, a new report has said.

The study criticises the Government’s recently announced €27 billion capital investment plan for its lack of ambition and concludes that Exchequer funding of €42 billion is needed in the years to 2021 to make up for years of under-investing in public infrastructure.

The analysis, which has been carried out by Paul Sweeney, chair of the think-tank Tasc's Economists Network and former chief economist at the Irish Congress of Trade Unions, notes that Exchequer investment fell to its lowest level in 50 years in 2013.

Mr Sweeney said that while investment was picking up it was doing so from a very low base. He added that while the Government’s capital plan, which was announced amid much fanfare in late September, would see an increase in Exchequer investment in cash terms, as a percentage of GDP it would actually fall initially.

Calling for the establishment of an infrastructural commission to bring long-term planning back into government policy, Mr Sweeney said investment was required across a wide range of areas including affordable housing, public transport and education and training.

Mr Sweeney cited an IMF study on public investment that found that for every €1million invested there is a rapid return of €2 million.

“Investment in infrastructure is important because it underpins economic and social development and ensures future progress. Investment collapsed after the crash of 2008 and public investment by the State in 2013 was at its lowest level since records began. A major cause of the collapse was financialisation, but adequate public investment is a crucial part of the way out,” he said.

Mr Sweeney said that while public investment can be difficult to get right both financially and because of EU rules, it was essential that new strategies be developed.

"The level of cuts in public investment should never have been as severe as they were in Ireland. We failed to learn from the losses on economic growth imposed by the 1980s infrastructural investment cuts. And this failure to learn from history was within one generation," he said.

Mr Sweeney said he suspected that the Government's capital plan may lack ambition because of fear of European Union institutions with their "overly restrictive economic rules". However, he pointed out that the EU had a good record in the past on investment through the structural funds; had relaxed its rules on investment slightly; and become less ideological on other economic issues.

Tasc’s report concludes that while additional funds could be raised by increased taxation and borrowing, much of the extra investment should be funded by part of the proceeds of the planned privatisation of the bank shares currently in public ownership.