Going back to 1962 in that seminal document, Investment in Education, and the opening of the first regional technical colleges in 1970, our institutes of technology, ITs, have been a linchpin of Ireland's economic and social development. They have provided thousands of graduates to industries across the regions and in Dublin in the life sciences, medical technology, pharmaceuticals, retail management, culinary skills, tourism, technology and the professions. A recent comprehensive and substantive report by the Higher Education Authority, HEA, into the financial capacity of the institutes provides very stark reading. The report highlights the necessity and imperative of investing in third level education, a critical aspect of our infrastructure which is key to future jobs and, especially, attracting inward investment and creating raw material in graduates for our indigenous enterprises. The HEA is saying the sector is on its knees financially.

Since 2008, there has been a 34% reduction in State funding and a 24% increase in the number of students. Since 2012, capital funding has decreased by 49%. These are extraordinary figures. Staffing levels are down 12%. There is an immediate cashflow crisis. Ten out of the 14 colleges are experiencing particular challenges, according to the report. In aggregate, the sector is in deficit and will remain in deficit for the next five years. There is a continuing ongoing major deficit in capital maintenance and renewal. What is striking is that, by the HEA's own admission, science and engineering, the STEM subjects in the institutes, have been disincentivised by the funding model. This has been going on for years and people have been asleep at the wheel regarding the sector and its capacity to contribute to our economy.

The report states that substantial capital investment is required immediately to meet the additional quality physical space needs. It particularly identified ICT and science as areas where inroads could be made if the necessary funding were provided, and it would reinforce the technological mission of the colleges. The budget was a missed opportunity. Peter Cassells reported on the university and IT sector. For the future of the country, it is crucial that the Government gets to grips with it.

What is the Government's plan to deal with the crippling financial situation in which our ITs find themselves? How does the Taoiseach propose to create a new pathway for these institutes in the months ahead?

The third level sector has been a central plank of all Governments over the years. We have always prided ourselves on the quality of the young people who emerge from universities and ITs. This is in the context of the case Ireland continually makes for continued foreign direct investment. ITs have always been a little more flexible than universities in how they can lead and react to changing demographics and the need for new kinds of skills.

However, the Deputy has put his finger on a question that is broader than this particular problem because the need for capital investment spreads across a series of sectors and, given the perilous state of the finances for a number of years and the fact that we are now in a somewhat better place than previously but face a whole series of challenges, including the need for capital expenditure to build infrastructure across the country, the House will have to face this and discuss it in the period ahead.

There will be an investment of €36.5 million in the third level sector next year and €160 million over the next three years. That is the first significant investment in the sector in nine years, a period in which State investment in higher education fell by €463 million or 33%. The allocation being made by the Minister for Education and Skills will allow us for the first time to keep pace with demographic increases and to introduce targeted initiatives, in particular, in disadvantaged areas, skills research and flexible learning with thousands of students benefitting under each heading.

Second, to build on that initial investment, work has started on a new mechanism aimed at allowing Government to put in place a comprehensive multi-annual spending plan for the sector. The Ministers for Public Expenditure and Reform and Education and Skills are working on putting in place an appropriate multi-annual funding model for higher education and further education from 2018, in respect of which all the beneficiaries of the third-level sector can play a role. I expect the Minster for Education and Skills to bring that proposition to Government by the middle of next year.

Third, proposals need to be examined that can add to those two elements and put in place a sustainable plan for funding that can deliver a third-level system that can be world class for both the medium and long term. Earlier this year, the Minister published the Cassells report - I have said that we need to debate it in the House - and, as committed to the in the programme for Government, that report is now currently with the Oireachtas committee. Broad consensus is needed on the future direction and the Minister is working to build that consensus.

It is accepted, of course, that there is a need for investment in capital infrastructure. Some IoTs have managed, even with the difficulties they have had while others have not, and the deficit is there for all to see in the reports they have published. I can give the Deputy the details of how it is proposed to spend the €36.5 million in 2017. I reiterate that is the first significant investment in the third-level sector in nine years.

I am not convinced at all by the Taoiseach's reply. This is about strategic direction and how we should take the country back. In the 1960s, the likes of Donogh O'Malley, Paddy Hillery and Seán Lemass had a vision about how to take the country forward and that is why they set up the regional technical colleges. Their impact was extraordinary for the time. I attended an event last week hosted by the Dublin Chamber of Commerce and Cork Chamber of Commerce at which they were honouring Dick Lehane, who was one of the first employees of EMC in Cork. He invited personnel from the old Cork Regional Technical College, including Larry Poland, and Professor Noel Mulcahy from the University of Limerick as his guests, underlining their central importance in the growth of EMC, which now employs thousands of people in the country and has done for many years.

Strategic direction in respect of this sector is lacking and it was lacking in the budget as well. The reports are there. It is quite extraordinary that the HEA in its own report would state, "STEM provision has effectively been disincentivised in the IoT sector". That is the technology sector and it is not incentivised to provide courses in information and communications technology, engineering and science. That is an extraordinary position and a terrible indictment on the respective Ministers in charge of education in recent years to allow it to continue. It is clear that, according to the report, six of the IoTs face immediate sustainability challenges and four more are potentially at risk due to limited reserves. The HEA, a State agency, is saying that the sector is in a critical crisis situation and I get no sense that the Government grasps this or will deal with it in a comprehensive and substantive way.

The Government does get it and it understands what needs to be done here. I point out to the Deputy, as I have done before, that he was an esteemed Minister for Education and Science. The fact of the matter is that the taxpayers of this country were left with a €64 billion debt to pay back for banks after the catastrophic management of the economy. That is fact. We are emerging from that. The IoT review was based on an expectation of a static Exchequer contribution. That is not what the Minister, Deputy Richard Bruton, intends to follow through with.

I refer Deputy Martin to what the Minister for Public Expenditure and Reform, Deputy Donohoe, said in his speech on the budget:

Ensuring education remains the linchpin of our economic success requires an intensified focus on a sustainable long-term [funding] model for higher and further education. I am committed to this goal and building on the significant investment in education announced now.

He went on to say:

The Minister for Education and Skills and I are, therefore, initiating a consultation process on the design and operation of an Exchequer-employer investment mechanism to operate from 2018 onwards. This is also intended to drive continued reform, quality and performance across the sector, in line with the action plan for education.

The Government is not in a position to do everything one would like. There is almost €40 million investment this year for the first time in nine years and both the Minister for Public Expenditure and Reform and the Minister for Education and Skills have a clear plan about how this should be dealt with. We have to discuss the outcome of the Cassells report. The Minister expects to bring his proposition for longer term, sustainable funding of the entire third level sector to Government by mid-2017.