Oireachtas Joint and Select Committees

Thursday, 9 May 2013

Joint Oireachtas Committee on Finance, Public Expenditure and Reform

Six Month EU Scrutiny Report: Discussion with Department of Finance

10:35 am

Photo of Thomas ByrneThomas Byrne (Fianna Fail)
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I might not take all of that time. I have a number of concerns. I will raise two of those issues this morning. The first of them relates to the multi-annual financial framework. People are starting to perceive a certain degree of backslapping on the political side about the brilliance of the deal that was done. I do not expect the witnesses to comment on that. The Irish Presidency has been congratulated on playing a role in concluding this deal. Some of that backslapping is reflected in Mr. Carrigan's speech, for example, in his remark that "the final outcome represents a good outcome for Ireland". That is in the report as well. The reality is that the multi-annual financial framework provides for a cut of between €34 billion and €35 billion in real terms. In my view, that is disastrous. The question of whether Ireland continues to be a net recipient of the EU budget is irrelevant at a time when the EU as a whole is spending less money. Nobody supports the maintenance of bureaucracy, obviously, but cuts have been proposed on the investment side as well.

Some people are starting to talk about the need for a move away from austerity, but that will not really be put into practice if the largest spender - the EU - cuts its budget. At national level, we absolutely accept that we have to reduce our budget deficit. However, austerity is not needed at every level of society, and particularly not at EU level. Cuts in the EU budget will have a real effect on investment, growth and unemployment in this country. It seems to me that people gave into the push to cut the EU budget, which stemmed from particular electoral difficulties being faced by the Tory party in England. I would like to know what the officials think of the criticism that is starting to be made. In my view, getting an agreement is not sufficient in itself for this country. We need a good agreement that is good for Europe and therefore good for this country as well. I would be very critical of the agreement to cut the multi-annual financial framework in real terms.

The second issue I would like to raise is the practical arranging of this year's budget. It will be held on 15 October, which is the deadline in the new EU legislation for the bringing forward of a draft budget. Is there any diminution in the status of this year's budget? Will the document published on 15 October be the draft budget that is required by the EU, with the actual budget to be adopted being set out in the Finance Bill to be published before 31 December? I suppose that is my question. If the answer to it is "Yes", does that imply any change in the status of budget day? Will the publication of the draft budget be followed by two months of political wrangling? That often happens after the budget when people want certain aspects of it to be changed. Will there be any diminution in the status of budget day?

Mr. Carrigan mentioned that the Finance Bill will be passed at an earlier stage to give effect to the financial resolutions. One assumes that any financial resolutions that are needed will be passed on the night of the budget. Will that stay the same? I have another question about the practicalities of this process. The Social Welfare Bill is normally enacted a week or two weeks after the budget. Will that continue to happen? I know it is a matter for the Department of Social Protection. Obviously, the social welfare budget will play a key part in the deficit reduction process. Will the Social Welfare Bill be open for wrangling until 31 December, which will presumably be the date by which it will have to be passed? Those are the two broad issues I wanted to raise.