Phil Hogan (Carlow-Kilkenny, Fine Gael) | Oireachtas source

I congratulate Deputy Michael McCarthy on his appointment as Chairman of the Joint Committee on the Environment, Culture and the Gaeltacht and look forward to working with him in the period ahead. I thank the joint committee for the invitation to discuss the Estimates for my Department for 2013. The Government’s expenditure reform programme has provided for enhanced engagement by committees on expenditure issues and, as part of this process, I am keen to hear members' views and proposals on the difficult choices which must be made in the context of budget 2013.

I have arranged for briefing material to be made available to the joint committee, which I hope will assist members in their deliberations. It sets out the structure of the Department’s Vote, both current and capital, reductions in expenditure that have had to be implemented in recent years, and the financial parameters in which we must operate in the period ahead. I look forward to members' engagement and hearing their ideas as to how my Department should achieve its expenditure ceilings in 2013 as well as 2014 when further savings have to be made.

In recent years, the Department has developed and maintained a strategic focus on contributing to economic recovery and employment and assisting those in need of support through the various programmes for which it has responsibility. This has been done in the context of a sharp reduction in resources following the financial crisis that began in 2008. Total funding for the Department’s programmes has been reduced by slightly less than 50%, from nearly €2.7 billion in 2009 to €1.36 billion this year. In tandem with reduced programme expenditure, staff numbers have declined substantially, as have the day-to-day costs of running the Department.

Notwithstanding these reductions, the funding available to my Department remains significant and a key priority is to maximise efficiency and secure the best value from the resources available to us. The Department continues to be the second largest capital spending Department, having spent €861 million in 2012, a figure which does not take account of €34 million carried forward from 2011. Within our capital programme, expenditure on housing and water services predominates. The Leader and EU-related programmes are also vital to achieving rural development and enhancing cross-Border co-operation, respectively.

The current spending provision for 2012 amounts to €467 million. Achieving reductions in current expenditure is highly challenging given the non-discretionary nature of much of it. As a result, there are major areas where unavoidable commitments arise. These comprise the rental accommodation scheme, for which €135 million has been committed, local authority housing leasing costs on existing units, for which €20 million has been committed, the capital loans and subsidy scheme loan charges of €71 million, departmental pay of €50 million and agency pay and pensions of €31 million. These current items amount in total to €307 million, with the remaining €160 million of the €467 million used primarily for the local and community development programme, which accounts for €55 million, and accommodation for homeless people, which accounts for €50 million. These two programmes are of particular importance in countering and dealing with social disadvantage.

Capital expenditure has declined from €1 billion in 2011 to an estimated €861 million this year, with the bulk of the savings falling on the housing and water services programmes.

Savings are being realised on the current side of the Vote by replacing the Exchequer contribution to the local government fund with the revenue from the household charge. There are also other savings of the order €34 million in voted current expenditure in 2012. In addition to the Vote, the environment fund is also an important but relatively modest means of financing current spending related to environmental requirements, while the local government fund delivers vital resources to local authorities.

Turning to the years ahead, the Government, in the comprehensive review of expenditure and capital review processes in 2011, published spending ceilings for all Departments. In the case of the Department of the Environment, Community and Local Government, these provided that capital expenditure will fall from €861 million this year to €760 million in 2013. Current expenditure will fall from €467 million to €416 million. The spending limits were set at €558 million capital and €383 million current for 2014.

In terms of planning capital programmes, the investment framework provided envelopes for investment in housing and water services in the period 2012 to 2016. This investment amounts to in excess of €3 billion in respect of the combined programmes. The Department has a broad and diverse agenda that presents particular challenges in identifying areas for savings on the scale that is needed given the State's extraordinarily difficult financial position. The Minister of State, Deputy Jan O'Sullivan, will speak about the spending pressures in the housing area.

It is vital also that we have a modern, adequately resourced water services sector which provides the critical infrastructure needed to support economic recovery, employment creation and environmental protection. As part of this, we need to press ahead with strategic water and waste water schemes in the greater Dublin area and with the water conservation programme, responding to critical investment needs during the period of transition to Irish Water. As the committee is aware, the programme for Government commits to a fundamental shift in the way water services are organised and funded in Ireland. The establishment of Irish Water to take over responsibility for the delivery of water services from local authorities will require resources at an early stage to help deliver on the commitment.

Provision needs to be made for the Leader rural development programme, which achieves important economic and social objectives and facilitates take-up of EU funding. The PEACE and INTERREG programmes, part-funded by the Department, remain key measures to promote a better future on the island of Ireland.

On capital spending, Ireland has been dealing with a substantial legacy in relation to unlicensed local authority landfills and illegal dumping sites, and significant work remains to be completed. Given the existing European Court of Justice judgment against Ireland and to avert a referral of the case back to the court for the imposition of potentially very significant fines, it has been necessary to agree a comprehensive programme of measures that must be implemented to satisfy the terms of the judgment. Progress in delivering on our commitments in this regard is being closely monitored by the legal services of the European Commission.

On the current side, we have unavoidable resource requirements in respect of Ireland's upcoming Presidency of the European Union. The Department of Public Expenditure and Reform has indicated that additional funding will be provided as required to meet third party costs associated with the Mahon tribunal.

I hope I have a given the committee a clear outline of the challenges in 2013 and beyond and touched on the wide variety of issues which must inform consideration of Estimates as far as my Department is concerned.

I have kept my remarks brief in order that we can have a full debate on the issues across the Department's programmes. The Minister of State, Deputy Jan O'Sullivan, will complement what I have said by going into more detail in her area of responsibility in housing and planning.