James Reilly (Dublin North, Fine Gael) | Oireachtas source

I move amendment No. 1:

In page 7, line 36, after “shall” to insert the following:
“, subject to the approval of the Minister given with the consent of the Minister for Public Expenditure and Reform,”.

As I indicated on Second Stage, I am bringing forward a technical amendment to section 10. This section amends section 33 of the 2004 Act which sets out the principles under which the HSE is obliged to deliver its service plan and gives the Minister the power to issue directions to the executive to take specific measures to implement the plan.
The Bill amends this section to achieve two objectives. The first is to require the executive to implement the plan and manage the services within the net determination notified to it by the Minister. The second objective is to reinforce the expenditure control mechanisms which will replace the system currently in place by virtue of the HSE having its own Vote.

This has been achieved through the first charge principle. Under this principle, if the HSE exceeds its budget in one year, that deficit is the first charge against the following year's approved budget. If the HSE has a surplus, it will be allowed to carry over the surplus into the following year. These changes are necessary because the HSE will no longer have its own Vote and therefore will not have the legal constraints that apply under the Comptroller and Auditor General Acts 1866 to 1998. The new provisions impose expenditure control mechanisms. Under section 34(a) of the Health Act 2004, as inserted by this Bill, the new provisions will also impose obligations on the director general to ensure the HSE operates within its budget.
I am bringing forward this amendment in the interests of proper governance and accountability. The amendment provides that the HSE will only be allowed to carry over a surplus with the agreement of the Minister for Health and the consent of the Minister for Public Expenditure and Reform. The purpose of the amendment is twofold. Its first purpose is to ensure that in managing its resources, the HSE has the incentive to balance its budget as far as is practicable. The amendment ensures there is no automatic impetus within the system for the HSE to build up surpluses. Given that the carryover of any surplus will require the agreement of two Ministers - the Minister for Health and the Minister for Public Expenditure and Reform - the dynamics of the system will encourage the HSE to aim to achieve small surpluses in order to meet its obligations to work within the budget set by the Minister and the obligations imposed on the director general under the provisions set out in section 34(a), which I mentioned earlier.
The second purpose of this amendment is to ensure the legislative framework governing the health sector is in line with Ireland's commitments under the Stability and Growth Pact, which was strengthened and reformed by means of the EU legislation commonly known as the six-pack as adopted in November 2011. One of the key additions to the pact was the introduction of the expenditure benchmark, which has the objective of limiting the growth in general Government expenditure to the medium-term potential growth rate of GDP. Additional Government expenditure above the expenditure benchmark is allowed if it is adequately financed through matching revenue measures. In order to ensure compliance with the benchmark process, the Government has set general Government expenditure ceilings and ministerial expenditure ceilings for the next three years. These ceilings are defined in terms of gross expenditure; that is, all moneys that are supplied out of supply grants and appropriations-in-aid plus money paid out of the Social Insurance Fund and the national training fund. The Government expenditure ceiling is calculated to be consistent with the expenditure benchmark. The Government decided to underpin the principle of ministerial expenditure ceilings by putting the mechanism on a statutory basis in the Ministers and Secretaries (Amendment) Act 2013.
The purpose of this amendment, therefore, is to ensure the Minister for Public Expenditure and Reform has to give his or her final consent to any carryover of savings. This will avoid any possible conflict with the 2013 Act and the Minister for Public Expenditure and Reform's responsibilities in respect of setting ministerial expenditure ceilings.