Simon Coveney (Cork South Central, Fine Gael) | Oireachtas source

With the Chairman's permission, I wish to explain why there is a specific structural problem on the capital side. It is important that members understand why the expenditure ceiling is so rigid. We started last year with a ceiling for capital expenditure of €150 million. Forestry alone accounts for €110 million, which includes all forestry premia, at as cost of between €70 and €80 million, as well as afforestation and other grants. All of that is deemed capital expenditure. Taking out that €110 million left us with only €40 million to spend in all of our capital expenditure across fishing, targeted agricultural modernisation schemes and so on. This posed a fundamental structural problem in terms of meeting our obligations and liabilities. That is why we renegotiated an increase in the capital ceiling to €168 million last year. This will be retained in the coming years, notwithstanding the previous proposal that it be reduced. The reason there is a 27% cut is that last year we managed to carry over savings from the previous year of €27 million on the capital side, which pushed the capital envelope up to €195 million, which is where we need to be. Unfortunately, however, that carryover is not available this year because we have been much tighter in our allocations.

As I said, it is important to have a clear understanding of this structural problem on the capital side. While it is possible to transfer savings between current and capital budgets, we certainly do not want a situation where the entirety of our €114 million of savings comes from the current side. I am trying to deal with the structural problem on the capital side whereby the budget of €168 million is simply not adequate, but it is very difficult to secure an increase in that ceiling at the Cabinet table. The current expenditure ceiling is just over €1 billion, which does not include the single farm payment of €1.2 billion. We cannot allow that sector to bear all the cost of the savings we have to make. Attempts to address the structural problem in regard to capital will have a kick-on effect in other areas of expenditure.

Does the Chairman propose that I answer members' questions individually as they are put to me?