Michael Noonan (Limerick City, Fine Gael) | Oireachtas source

I have no embarrassment about my budgets, which have been crucial to the economic recovery that is now quite evident. The examination of individual measures in the budget has made a major contribution to the fact the economy is growing again and that there is, for the first time, a significant impact on employment figures in the recent labour force survey.

I do not agree, in principle, with the proposed amendment. I support the principle of ex ante and ex post economic impact assessment, including cost benefit analysis in formulating and evaluating tax proposals. I am opposed to the amendment on a number of grounds. Deputy Pearse Doherty seeks a cost benefit analysis of the entire budget but that is disproportionate. The main reason is the underlying principle of proportionality in cost benefit analysis. The level of resources invested in carrying out the analysis should be commensurate with the scale of expenditure involved. One of the measures in the Bill, the scheme of tax relief for investment in film, has already been subject to a full public consultation, to take the views of all interested parties, as well as the publication of economic models and substantial data and analysis. This was a transparent and comprehensive process, in line with best international practice for policy evaluation. Another measure, the living city initiative, will be subject to a full cost benefit analysis before the commencement of the scheme.

Since coming to office, I have instructed my Department to carry out a range of significant economic impact assessments of various tax and expenditure measures. In 2011 it published a review of all legacy property tax reliefs. In 2012 it published an economic impact assessment of film tax relief. I am including legislative changes on foot of that review in this Finance Bill. Only a few weeks ago my Department initiated a comprehensive review of the research and development tax credit scheme and invited interested parties to make submissions by Friday, 29 March. Each year, as part of the tax strategy group's process, a paper on tax expenditures outlining any major change is produced, discussed and subsequently published. Every year the costings for all policy changes are set out in section one of the summary of budget measures. The taxation annexes to the summary provide examples of the changes for different categories of income earners in substantial detail.

While the costs associated with the scheme of tax relief for investment in film and the Living City initiative certainly justify the full economic impact assessment, many of the tax expenditures in the Bill are not of sufficient significance in terms of cost to make the completion of such studies cost-effective. Therefore, it would not be of benefit to commit time and scarce resources to such an exercise. I do not have a difference in principle with Deputy Pearse Doherty. The test of proportionality should be applied and we have applied a cost-benefit analysis to those areas of the budget where a cost-benefit analysis would clearly benefit the policy direction we intend to take. That is what we have been and are doing. If there is a specific area to which the Deputy can point where a cost-benefit analysis would be required or be of benefit, we can consider it also. In general, I do not want to have the Department incurring that cost in terms of time and resources, unless it is necessary to do so. To do so universally across the budget seems disproportionate. However, I fully agree with the Deputy on focusing on specific areas, particularly new initiatives. The two pack which passed through ECOFIN in Brussels yesterday will bring forward new budgetary rules and we will be moving towards more cost-benefit analyses of key areas and a greater degree of independence in forecasting, as well as advancing the budget date to October.