User charges should be applied more widely and the Government should subject schemes such as road building and other capital spending projects to new "rigorous prioritisation", according to the OECD.
The OECD's Economic Survey of Ireland 2009 said the main economic challenges in rebalancing the economy include raising competitiveness, restoring the financial system to health, fiscal consolidation and avoiding high long-term unemployment.
In a section on boosting competitiveness and raising living standards, the report argued that while spending should be cut generally and money would be limited, the State should try to continue to upgrade items such as its roads, rail and communications networks - particularly through user charges.
The report notes public investment in these areas has been exceptionally high in recent years but says more is needed. However, in the short term "plans need to adjust in light of budgetary constraints", and the efficiency of infrastructure use could be improved.
It adds that infrastructure and education and training should remain a priority "where the benefits can be clearly established."
While tax credits for research and development have been increased in recent years, the OECD warned the cost effectiveness of this support should be evaluated. It argued "direct support" should be concentrated in fewer centres which should be of world class excellence, and with improved coordination between researchers and industry.
User charges cover a wide range of pay-as-you-go facilities from toll roads, public transport, to university fees. Overall spending on all infrastructure projects "should be subject to rigorous prioritisation through cost-benefit analysis and adaptation in the light of the changed economic outlook. User charges should be applied more widely".
Achieving environmentally sustainable growth is also a major challenge, according to the report which claimed it will be difficult for Ireland to meet its commitments to reducing carbon emissions. "While environmental policy has improved, there are significant weaknesses in management of waste" it added.
