Oireachtas Joint and Select Committees

Wednesday, 2 October 2013

Joint Oireachtas Committee on Agriculture, Food and the Marine

2014 Pre-Budget Briefing: Discussion with Minister for Agriculture, Food and the Marine

10:30 am

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

I thank the Chairman and committee for inviting me today. Last year we had a very useful discussion in advance of the budget. I hope members will recognise that we took on board some of the ideas from all parties and not just the Government parties in terms of how we would make some of the difficult savings that had to be made from the point of view of disadvantaged area payments and also some of the supports we tried to put in place for the more vulnerable sectors.

It is up to members to decide if they want to analyse the figures and make constructive suggestions as to what the next budget might look like and I will certainly try to take on board their views, where possible. Alternatively, members may decide to take a different approach entirely. Rather than give a long speech, I propose to give the committee the figures for the savings that need to be made for next year. I will also give some of my views on the various options available to us. At that point, I would like to get some feedback from the committee on what they think of the figures and options and the approach they would like to see the Department taking on the agriculture budget.

Some committee members will have questions on this year's figures. When the Exchequer figures are released later on today, members will see a current underspend in the Department. That was anticipated but it does not mean that we will have an underspend at the end of the year. We will not have any underspend. We are anticipating that if there is an underspend at the end of the year it could be in single figures but at most, it could be €10 million, mainly on the capital side. That will be money that we will carry over into next year, if we can. Given the fact that we have a total expenditure of well over €1.2 billion, we are talking here about a very small percentage of the budget. Obviously, we also have to make sure that we do not overspend because we literally do not have the money to do that this year. This is a constant dilemma at this time of the year for the Department because a huge amount of the expenditure happens in the last quarter of the year. We are trying to be as close to zero as we can be in terms of any underspend.

The crux of the issue is that we are being asked by the Department of Finance, on the expenditure profiles that have been outlined in the last number of years, to spend €168 million on the capital side and €1.02 billion on the current side next year. That essentially means a reduction of €28 million in current expenditure and of €25 million in capital expenditure, giving a total of €53 million in savings. Up until budget day we will be trying to change those figures where possible and when it makes sense to do so. We must try to make a case for that and we have successfully made a case in the last two years for increasing the capital budget for this Department. That is not to say, however, that we will be able to do it again this year but we are certainly going to try. It is important to note that of the Departments that saw a change in their figures last year, apart from the Departments of Health and Education and Skills, no other Department got an increased allocation. We are making the case for reducing the amount of savings we are being asked to make but we must have a very good case that is absolutely watertight if we are to succeed.

At present the figure to be saved between current and capital expenditure is approximately €54 million. In some ways, that is not as difficult a challenge as last year or the year before but having said that, we have had new challenges that may cost extra money next year that we had not anticipated. We have changed our mapping system, for example, which is causing problems for farmers who had, in some cases, unbeknownst to themselves, overclaimed which means that we have to claw back public money that should not have been spent. That mapping change also has a cost implication for the Department in terms of implementing the new system, which may also put some pressure on us next year.

We also potentially have some horse welfare considerations, following the fact that there has been a dramatic reduction in the number of horses slaughtered in slaughterhouses this year when compared with the past two years. We have tightened up the rules since the horsemeat scandal, which has resulted in a reduction in the number of factories slaughtering horses, as well as a very tight system with microchipping, identification, passports and so on. That is a good thing, but there is a resulting by-product with which we need to deal to ensure there is no welfare issue for horses that in essence have no market value. That is something we are examining. We are trying to assess the extent of the problem and there is a potential cost implication next year from that.

I have spoken publicly about the need for us to look at vulnerable sectors, such as the suckler beef sector, and examine ways we can provide support while at the same time making the savings we have to make. This is not a straightforward budget. The actual savings in terms of numbers may not be quite as big as last year, but there is still some pretty complex discussions to be had on how we do the strategic things we need to do for the sectors that need support. I would like to get committee members' blunt feedback on the areas they would like me to prioritise for supports. If savings are to be made, in what areas do they think we can make those savings? We will take on suggestions if they make sense.

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