Oireachtas Joint and Select Committees
Wednesday, 21 September 2016
Committee on Budgetary Oversight
Current and Capital Expenditure: Minister for Public Expenditure and Reform
Before we begin, I remind members and delegates to turn off their mobile phones as the interference caused by them affects sound quality and the transmission of proceedings. Apologies have been received from Deputy Pearse Doherty and Deputy David Cullinane, who is being substituted for by Deputy Maurice Quinlivan.
I welcome the Minister for Public Expenditure and Reform, Deputy Paschal Donohoe, and his officials from the Department.
The Minister will be addressing the economic and fiscal position in the context of budget 2017. Before we begin, I bring to the attention of the committee that witnesses are protected by absolute privilege in respect of the evidence they are to give to the committee. However, if they are directed by the committee to cease giving evidence on a particular matter and they continue to do so, they are entitled thereafter only to a qualified privilege in respect of their evidence. Members are reminded of the long-standing parliamentary practice to the effect that they should not comment on, criticise or make charges against a person outside the Houses or an official by name or in such a way as to make him or her identifiable. I call the Minister to make his opening comments.
I thank the committee for inviting me here to discuss the economic and fiscal position in the context of budget 2017. The Government and I, as Minister for Public Expenditure and Reform, are very supportive of, and appreciate the need for, the Oireachtas having an enhanced input into discussions on budgetary priorities. It was in this context that I published the mid-year expenditure report in July to provide a starting point for all Members of the Oireachtas on budget priorities and to highlight issues for discussion.
I know the committee has had the benefit of meeting a number of experts to discuss the current fiscal position, and I look forward to hearing from the members and discussing with them the main priorities for budget 2017. I know that yesterday the committee discussed revenue matters with the Minister for Finance, Deputy Michael Noonan, and the broader macroeconomic environment. Allow me to highlight some of the main points of the spending figures for budget 2017.
As members are aware, the summer economic statement envisages that day-to-day departmental spending on delivering public services will increase by €1.3 billion to €53.1 billion. It also foresees capital investment increasing by €400 million to give a total capital envelope of €4.4 billion. This will provide for continued investment in our schools, health care facilities and transport network among other things. It also allows us to invest more in housing to address the very serious pressures that exist there. This combined increase of €1.7 billion means total spending will rise from just under €56 billion in 2016 to more than €57.5 billion next year. As set out in the mid-year expenditure report, this compares with a figure of €53.1 billion in 2014. That reflects the expenditure reductions required to repair our public finances due to the terrible economic circumstances we found ourselves in. This is not to say that we can return to the old ways of previous Governments. A key approach has to be to target investment in front-line staff with a laser-like focus on reform and value for taxpayers’ money.
While I am always aware of how much more investment is needed in this area, I am glad to say the State now employs more than 66,000 teachers, 10,000 doctors and 41,000 nurses in our education and health sectors alone, all up very significantly on 2013. This increased investment has come hand in hand with more reform and a focus on excellence in public service delivery. For example, the allocation this year of €500 million to the Department of Health to deal with its funding needs and issues was associated with an accountability framework for the acute hospital sector to help ensure sustainability for our health system in future years. Similarly, the publication last week of the Action Plan for Education and the plans to raise pupil retention rates in DEIS schools to the national norm show how reform and targeted improvement is key to our approach.
My primary focus in the approaching budget is to ensure public services can be delivered in a sustainable manner that is compatible with our obligations under the Stability and Growth Pact. As I referenced earlier on, the total expenditure for next year will be almost €56 billion. As well as focusing on enhancements to services brought about by incremental increases, we need to continue to focus on how we can get more out of what we are spending. As the committee will be aware, budget discussions are under way with all of my colleagues in Government. There are many issues and matters that are still open for discussion and that will be resolved in the coming weeks.
There are numerous competing demands for resources across our public services where genuine need exists for additional funding and resources. For example, I note that the committee in a number of its previous meetings has discussed investment in capital expenditure. The key focus in this area should be in identifying and supporting the projects that give the best value to the taxpayer and that can contribute to the development of a truly cohesive and fair society. It will be a challenging climate in the coming weeks in which to formulate a budget and, of course, difficult decisions will always be required.
In my short opening statement - I understand the Chairman wants more time for questions and answers - I have laid out the key figures in expenditure as I see them. I am here to answer the questions of the committee on any matters I have raised.
I have one question to start with. While the increase in expenditure is to be warmly welcomed, the key thing about it is looking at it in the context of demographics. In terms of demographics, how much additional expenditure, both on the capital side and the other side, will be available on top of the expenditure for what we really need to address? How much will be available to grow services in real terms on top of matching what we expect will be needed to remain on a stable basis? Will the Minister break down the figures that relate to that?
Of the expenditure increase that is planned for next year, €900 million is set to honour the commitments we have in continuing to provide our existing services. For example, the contribution of that is in demographics, the Lansdowne Road agreement and capital investment. The breakdown varies by Government Department, and that was all laid out in the summer economic statement by Department. For example, for the Department of Children and Youth Affairs, it is approximately €80 million. For the Department of Education, it is approximately €100 million. They are the figures we need to account for in demographics. In the space available for new policy initiatives, there is €610 million allocated in current spending. There is €250 million allocated for it in capital spending. In terms of choices that have already been made, out of that €600 million to €610 million of current spending, approximately €60 to €70 million has been allocated for the increased cost of housing assistance payment, HAP, and the higher level of rent supplement. Out of the capital figure of €250 million, €150 million has been allocated for accelerated delivery of the housing action plan by the Minister for Housing, Planning, Community and Local Government, Deputy Simon Coveney.
That has pretty much answered what I was going to ask the Minister. To follow on from Deputy Brophy's question, when we talk about a laser-like focus on reform and value for taxpayers' money, what I am conscious of in this committee is that we have the same amount of money from last year, that it does the same work and that we add more to it. I assume what we are talking about are efficiencies within the spend that we have already allocated. Will the Minister give me some examples of what this laser-like focus on reform and value is doing?
For example, most of what happened under the framework of commitments we have under the Lansdowne Road agreement, alongside the wage increases that are due to our public servants, tend to be associated with productivity changes as well. We now have an organisation of economists within my Department whose job it is to look at our capital expenditure to ensure it is meeting the requirements we have for it and that we are putting it into the forms of infrastructure that will get us the best bang for our buck.
More broadly, we must measure output from all areas of current expenditure. For example, when we meet to discuss where we are with health expenditure, we look at where we are with activity levels in our acute hospital group. We look at how many patients have been seen, how many operations have been performed and all of that. In so many different areas, we are seeing that our public servants have done more with less, with activity levels going up in our hospitals. More is happening in primary schools across a period when teachers had fewer resources than they did a decade ago.
The old practice in State agencies - I am thinking particularly of local authorities but it was seen in other aspects of public service - was that funding for roads, for example, was granted at the start of the year. Sometimes that would lead to spending later in the year to ensure that funding was not lost the following year. We all have some experience of those practices, as many of us are former members of local authorities. Has that method of doing business changed at local government and other levels? It is more than ten years since I have been a member of local government.
From experience of dealing with this process in my current and previous job, I know this type of behaviour, which has existed, has been dramatically reduced compared with previous years. The simple fact is that in many cases resources have been reduced compared with what we had in previous years. The road budget is a matter we must address, and the Minister, Deputy Ross, has been raising it with me. It will be raised in meetings of the transport committee as well. The investment in our local and regional road network has reduced and because of that, my experience is that people have work they want to finish but they cannot afford to do it. That is instead of doing work for the sake of having money the following year.
I welcome the Minister. I have a couple of questions and I will throw them at him one by one if that is okay. The fiscal space is estimated as being around the €1 billion mark. Does the Minister anticipate, similar to last year, that there may be an increase in that space announced on budget day? With three weeks gone in September, is there a sense as to how the month's figures are looking that may allow an increase?
I cannot give the Deputy a guide on the September figures at this stage because they are still being collated by the Department of Finance and they have not been shared with me. Assuming we do not change policy in any other area, I do not expect any kind of a significant change in the fiscal space, although it will depend on our September figures as well.
In previous years there was a tradition, particularly in health and some other areas, of Supplementary Estimates halfway through the year. That will not be allowed in 2017, as we are now on the preventative side, unless there are additional revenue-raising measures. How will the Minister ensure the expenditure plans of Departments will be prepared in a realistic manner? It has been our contention for some time that health Estimates in particular did not, to put it diplomatically, fit the profile of the Department. Given that the Government no longer has the parachute of increased Estimates, how will the Minister ensure his colleagues' Estimates and budget allocations are realistic?
It is precisely in recognition of the Deputy's point that we made a decision to increase the health Estimate earlier in the year by €500 million and make the funding available to the health service earlier in the year.
We do that when the Cabinet meets. We can see how that worked. It is the reason the health allocation for this year was changed in an early part of the year, as the health Estimate was increased by €500 million. We also increased the justice Estimate by €40 million because the ability to make such changes without an associated change in our ability to raise revenue will be dramatically reduced in comparison with previous years. I have flagged very clearly in the mid-term expenditure report that we have some other risks that must be managed. I have clearly articulated what they are. There is a particular need to repair our local road network in the aftermath of the flooding earlier in the year and there are also capital costs in the Department of Educations and Skills.
The question was how this would be managed across next year. That is why the meetings in which I am engaged with all my colleagues are so important. We need figures for current services that are credible. A major help in this area has been the introduction of the demographics parcel of funding already recognised in the summer economic statement. When I sit down with colleagues, we can point out the additional funding needed to allow current services to stand still, allow more pupils come to school or deal with people getting older. That area has been of major help for the discussions I am having now. There is still a need to have discussions with colleagues that are realistic. All my ministerial colleagues and I will have to come to the relevant sectoral committee and state how the money was allocated, including activities that were meant to be delivered, and it will have to be reviewed throughout the year. That is different from what we saw in previous years.
In previous years, if we did not have the luxury of Supplementary Estimates in health, for example, there would have be hospital closures and wholesale cancellation of services. Currently, after a very substantial allocation this year, there are no home help hours available in many parts of the country, including in Mayo. The Minister has outlined the policy but do Departments understand the new reality in advance of budget day? Although the Ministers may understand it, do the Departments understand that the emergency parachute is gone?
Yes, everybody is very clear that the flexibility across coming years is very different from where it has been in previous years. They know there must be significant changes in the performance of an economy and it generates big changes in revenue coming in. They understand why there must be a change in the revenue-raising end of what the Government is doing to create the kind of flexibility that was there in the past. There is an understanding in that regard. I am in the middle of all this and with the people I meet there is a very high level of appreciation for the need for the current services to be based on realistic funding Estimates. That is evident to me now.
In responding to Deputies Brophy and O'Connell, the Minister focused on measuring output and ensuring there is some sort of measurement for what is going in. The issue last week was uncovered by "Prime Time Investigates" of overcharging to the tune of €12 million in health by one pharmacy group. What controls has the Department put in place across government in this regard? Apart from the Comptroller and Auditor General, how many auditors are in place to examine where expenditure is going?
I cannot give a figure for the auditors available within Departments but within my Department I have a large team of officials working with each Department every day on spending plans and what is coming out.
The Deputy referred to the manner in which the Department deals with certain service delivery issues. We must have realistic estimates for the expenditure plans of every Department. It should be possible to produce realistic estimates because the economic environment is much more normal than it was in previous years. My officials work with all other Departments to ensure their plans are deployed.
In the specific area of health, we review the performance of each hospital group by examining the funding available to it and comparing that with the output it is expected deliver. The information is presented by the Health Service Executive and reviewed in detail by Cabinet sub-committees. We know how much funding is allocated to each sector of the health service and to each hospital group. We examine the performance of each hospital group by comparing real output with the outputs it is supposed to deliver. The Minister for Health, Deputy Simon Harris, and I have agreed that, given the additional €500 million I have made available to the Department of Health this year in addition to the many hundreds of millions of euro provided last year, we expect expenditure by the Department to be on budget this year. We also want to plan for next year on the basis of what I hope will be a normal budget for this year.
Did the Minister have any discussions about the programme broadcast last week as part of the "Prime Time Investigates" series on RTE? What is his reaction to the programme? A sum of €12 million would buy thousands of hours of home help.
I have discussions with the Minister almost daily on issues related to health expenditure. I do not recall speaking to him directly on the matter to which the Deputy refers. However, my officials have been engaging on this issue, which was discussed with me the day after the broadcast.
On the capital programme, many of those who have appeared before the committee argued that the current capital programme is not sufficiently ambitious and health infrastructure is in poor condition. The Minister is committed to carrying out a review of the capital programme in 2017. Will provision be made in the expenditure commitments for 2017 to increase capital expenditure, bearing in mind the pressure the capital infrastructure is under and the potential for capital investment to create employment? Has the Minister engaged with the European Commission regarding comments by the President of the Commission that governments may have leeway to increase capital expenditure? The President of the Commission had a few things to say on the issue.
The Deputy asked whether the capital expenditure figures for 2017 will change as a result of the mid-term capital review. The answer is "No". I expect the mid-term capital review to affect the figures from 2018 onwards and I would like that to be the case. In my experience of managing capital in transport, with the exception of local and regional roads, the time lag between making funding available and it being spent can easily exceed 12 months because planning and tendering take time. For this reason, I do not expect the mid-term capital review to change the 2017 capital expenditure figures.
What was the Deputy's second question?
The President of the European Commission recently opened the door to allowing flexibility with regard to capital budgets and expenditure limits given the potential of capital expenditure to create employment. If the Minister was given that ball, would he run with it?
We are running with it. The main area on which we are working with the European Commission is on trying to obtain full, absolute and ongoing clarity on what investment is treated as off balance sheet and what investment is treated as on balance sheet. The main area on which we are working in this regard is housing.
The country is heading in a completely unsustainable direction. We will be the furthest from meeting our climate targets of any country in Europe. We are failing completely to develop renewable energy in a way that one would expect from a country that is rich in renewable energy sources. The cost of this to the State has been estimated at €5.5 billion by a member of the climate advisory committee. Everything that we are doing is moving us in the wrong direction.
Yesterday, when I asked the Minister for Finance, Deputy Michael Noonan, what he intended to do about this issue, he stated it had nothing to do with him and was a matter for the Minister for Public Expenditure and Reform. I agree that the issue is related to a large degree with expenditure. As I stated yesterday, the scale of change required is such that we need to do what T.K. Whitaker and Seán Lemass did when they brought us from a closed country to an open country. Ireland needs to move from the current completely unsustainable model towards a sustainable model. This will be important for the economy not only because it would allow us to avoid fines, but because the rest of the European Union, China and the United States are moving in the direction of sustainability. Our failure to do likewise will damage Ireland in that we will miss out on an economic opportunity and incur moral damage to our reputation. That is my assessment.
There are three specific areas where we need to respond. In his previous role as Minister for Transport, Tourism and Sport, the Minister reversed the terrible mistake made by the previous Administration of not proceeding with plans for a Dublin metro and DART interconnector. Given that Dublin is about to reach gridlock and 70% of tax revenue is generated within a 30 km radius of the General Post Office, how quickly could construction of a metro commence? Why are we waiting for the city to grind to a halt instead of proceeding with the project? Does the Minister intend to allocate money for construction of a metro in next year's budget?
I have just come from a demonstration to mark the terrible loss of the life of Donna Fox while cycling in Dublin city centre recently. Less than 1% of the transport budget is spent on walking and cycling, yet according to the Government plans, sustainable modes of transport will account for 10% of journeys by 2020. We are doing nothing to achieve this target. The Dodder greenway and Tolka Valley projects have been pulled, as have similar projects all over the country. Practically no money is being provided for measures to promote sustainability. Investors, including modern companies setting up in Ireland, want us to make these kinds of investments because they want their employees to be able to cycle to work. We are not doing anything to facilitate them. If we are to meet our target, 10% of the transport budget, as opposed to less than 1%, should be spent on sustainable roads. Given the Minister's knowledge of this area, what ambition does he have to make the necessary radical shift towards sustainability?
The Sustainable Energy Authority of Ireland, SEAI, has indicated that Ireland would need a threefold increase in the budget for retrofitting homes if we are to meet our targets and avoid paying large multi-billion euro fines. Despite this, the Department that manages the retrofit programme has fewer civil servants than the section that manages the sick pay bill for the public service. The Department of Agriculture, Food and the Marine has thousands of civil servants managing single payments and other process issues, yet we do not have public service resources available for understanding the growing digital and clean energy economies, both of which present critical technological and market challenges. Will the Minister engage in the radical transformation of the entire public service that is required to start taking seriously the environmental crisis we face?
On the Dublin metro project, I moved the mid-term capital review forward because I recognise the need to review and increase capital expenditure levels. The Minister for Finance and I increased capital expenditure for the next few years by €5 billion. I moved the review forward specifically in recognition of the need to better develop high capacity public transport solutions. I will not comment on the role of the proposed metro in the review because it has not commenced yet but I want it to be completed early next year.
I fully appreciate the role of public transport in providing a competitive edge for the economy and organising society in a good and decent way. It has a major contribution to make in achieving climate change targets and presents many opportunities.
If Deputy Eamon Ryan had presented a broader analysis, he would have recognised that, as a result of the Luas cross-city project, an additional 10 million people will be carried on public transport next year. The project will fundamentally change the configuration of light rail in the capital. Hundreds of additional buses have also been purchased in recent years to try to improve the frequency and design of public service routes nationwide.
In respect of the recent decisions by the NTA on greenways and, particularly, cycleways in urban areas, which offer an alternative to private transport, I am engaged with the Minister for Transport, Tourism and Sport on this matter because we need to differentiate between greenways and urban cycleways. Greenways are fantastic. I have been on them and they deliver an immense set of benefits but urban cycleways such as the one to which the Deputy referred provide a new form of non-private transport through major cities and I will engage with the Minister on this.
With regard to the organisation of our public service to respond to the climate change challenges and opportunities, I am meeting the Minister for Communications, Climate Action and Environment tomorrow. One of the matters he has raised with me is investment in, and making progress on, the retrofitting of existing buildings, not to mention building standards for new buildings. My experience of this sector in terms of how it works across our country is that civil servants in his Department have been successful at harvesting and organising a large number of private sector organisations and companies to deliver work to standards it sets. If more officials are needed to ensure this is done better in the future, I will talk to the Minister about it but my anticipation is that he will speak to me about the funding for the roll-out of the scheme and for higher quality in the scheme rather than seeking more staff to oversee the roll-out.
I would love to have the faith the Minister has set out but my experience of dealing with his Department five years ago is that the officials fought tooth and nail to stop the metro that I had fought tooth and nail to retain in the four-year plan before the Department successfully pulled it under the former Minister for Transport, Tourism and Sport, Deputy Leo Varadkar. Similarly, I recall going into the Department on numerous occasions and having to fight tooth and nail having come from back from the US, Japan and elsewhere with the latest thinking in terms of where the new clean and digital economies were going. At every turn I was told by some official or other that "We do not think that is right" or "We are not too sure and we are going to wait". The Department needs to step up to the plate if it is fill the boots of Whitaker, which it should aim to do.
I agree with the Minister's assessment that the way to do this is through the review of the capital plan. This needs not only to be scaled up massively but its focus must also to shift away completely from what is currently unsustainable. The current plan has no sustainable direction and, therefore, the scale of change I would seek over the next year and a half of the review is an about-turn, which I do not doubt the Department can do. I do not wish to be too critical of the public service but I am being honest in my assessment. Other former Ministers might give their views.
This is not just a Dublin issue. We have to get this right in all our cities. Cork, Limerick, Galway and Waterford should come up with their pitches for sustainable investments, particularly in respect of transport, housing, energy and water. These are they key components we need to get right. They should be asked to input those projects into the review but they must be sustainable. If any city thinks that it will be successful over the next 20 or 30 years, which is what we are investing for, by going in an unsustainable direction, which we are doing in every case, then I would question the city authorities and the Departments that are advising them because they are missing out on what is happening in the world.
We have allocated in excess of €440 million for energy efficiency and renewable energy measures. That funding is in place. I understand, from what he is saying, that the Deputy wants the funding to be increased for the reasons he outlined.
With regard to metro, in fairness to my predecessor at the Department of Transport, Tourism and Sport, he had to make choices during a period in which resources were not available to him.
In fairness to my predecessor in that Department, he made the choice to go ahead with Luas cross-city, the benefits of which will accrue next September and October.
The Deputy has been good enough to acknowledge my role with regard to the metro project and my view on it. The key for me was the delivery of a high-capacity public transport solution for as much of the city as possible. I put in place a process that took almost 12 months. We reviewed everything and worked with the Department of Public Expenditure and Reform. Its officials acknowledged the need for that project and it is back in there. The Deputy asked about the timeline for it and I am sorry I did not reply to that question earlier. I anticipate that the planning, procurement and tendering phase of the project could take between two and four years. However, that is not a reason to defer it or to fail to proceed with it. Projects of that scale take that long to work their way through the system. That will be an important theme in the capital expenditure review, which will commence shortly after the budget.
The Minister touched on on-balance sheet and off-balance sheet spending. What planning has he and the Department done regarding potential off-balance sheet spending? I am thinking, in particular, of recent conversations about the Ireland Strategic Investment Fund, ISIF, and the NAMA reserve. The fund has €5.4 billion and the NAMA reserve amounts to €2.4 billion. There are conflicting opinions as to whether that can be used in the context of the mandate of those organisations. They have to generate a commercial return and must impact positively on the economy.
There are also conflicting opinions on whether the money can be considered to be off-balance sheet. The Department of Finance told the housing committee last May that ISIF expenditure impacts on the expenditure benchmark. The Minister for Finance confirmed that when he addressed the committee as well. However, the Irish Fiscal Advisory Council contradicted this. Mr. Eddie Casey told the same committee that the ISIF was set up with a statutory mandate to invest on a commercial basis and that "investment by ISIF on this basis would not impact the calculation of compliance with the fiscal rules". We have also had conflicting opinions from Europe. Mr. Micheal Tutty, former vice-president of the European Investment Bank, said his understanding was that Government expenditure funded from the ISIF or NAMA would count against expenditure but funding from the ISIF for housing development undertaken by entities outside the general government sector would not count.
We are probably all in agreement that we need to do whatever we can to make the argument that those funds can be used for off-balance sheet spending. What has the Department done to put that argument together given the conflict surrounding this issue? We cannot seem to decide whether this can be done. Clearly, there is a large pot of money involved. As the Minister for Finance said, getting the money is not a problem; the problem is using it for that purpose.
This is an area I approach with great caution and it is important to be careful about how we handle it. One of the key factors in the horrific banking crisis that countries all over the world had to deal with was the establishment of all kinds of entities that were off-balance sheet and ended up having a causal effect on the quality of balance sheets. That was mostly the case in respect of banks rather than nations. Just because something is off-balance sheet does not mean it will not have some effect on how the creditworthiness of an entity is evaluated. That is one of the defining lessons we have had from what happened to banks.
We need to be clear that if something is off-balance sheet, it must be definitively off-balance sheet not just for next year and the year after but for the medium term because large amounts of capital expenditure being reclassified and coming on-balance sheet have a significant effect on the ability of the State to go ahead with plans to which it is committed. I will not proceed with projects unless we have that absolute certainty because if that were to change, it could cause immense difficulty in the future.
The Deputy asked about the status of projects on and off-balance sheet and she mentioned a number of funds and what we have done about them.
I know that many of the organisations to which the Deputy refers have to deliver a commercial rate of return on activities and projects for which they are lending. I am certain that that is the case, even though they are bodies for which the Minister for Finance has responsibility. My working assumption is that the activities of many of them will be on balance sheet.
Going back to something on which I touched briefly with Deputy Dara Calleary, we are considering using housing projects as pathfinder projects to see if can we secure absolute clarity from bodies such as EUROSTAT and the European Commission on what is on and off balance sheet. We are doing this and using housing projects not just because of the level of social need that we know that we have to meet but also because many of them generate a rental income which should give more flexibility in how they are accounted for. I am being very cautious because I do not want to find myself in, or put a future Government in, a situation involving an investment of hundreds of millions of euro that I believe or it believes is off balance sheet and where the position changes, causing great difficulty for the Government of the day.
I know that in the case of social housing if rent payments were to be subsidised, that would bring it on balance sheet at a later date. I know about the difficulties being faced and my question was well answered. We need to try to do what we can to clarify the position and if the matter can be progressed, it should be because there is a substantial sum of money available to address the problems we face.
The Minister has touched on the issue of spending in the health sector. My colleague mentioned the additional €500 million allocated. At one of our previous meetings when representatives of the Irish Fiscal Advisory Council briefed us, there was a cautionary tone. They spoke about the €2.4 billion budget package. When pressed, they said it was at the upper limit of prudent spending, but they also said clearly that were there to be additional spending in a supplementary budget throughout the year, it would push us over the limit and pose a risk to the economy and the country. I am sure the Minister is conscious of this. Can we be guaranteed that there will not be a supplementary budget, in particular, for the health service, that the budget we will pass in October will be realistic and that supplementary funding will not be required throughout the year?
The council's words are ringing in my ears. I am well aware of its advice and perspective. I take seriously the views of such bodies on the need for sustainability in public spending and prudence and care. I know the council’s strong views on the matter. I am also aware, however, that when we do not have the right levels of investment and do not deliver the public services people need, I will have to deal with the consequences. I have to try to manage both aspects. That is what we have tried to do, particularly in the health service in the context of the changes we have made. The Deputy asked me if I could give a guarantee on the health budget. Few of us can offer guarantees on anything. I have been absolutely clear that I expect the health service to come in on budget this year. I made funding available as early in the year as possible on entering office, as opposed to waiting to see what the potential overrun was and then plugging the gap. I expect the figures I have laid down to be met. I am not just saying this to the committee, I have said it beyond here. The Minister for Health, Deputy Simon Harris, and I have said it. It is the expectation that has been passed on to those who are running hospitals and all others involved in spending money in the health service.
In the section on targeted investment the Minister touches on the action plan for education saying investment is key to the approach taken. Following the Cassells report, what is the Department doing in the funding of third level education? I appreciate that the Government has not taken a decision on which option, if any, of the ones outlined in the report is preferable. In the interim, however, it is important in the budget to invest in the third level sector. Trinity College Dublin was once ranked 45th in the university world rankings, but it is no longer ranked. We have a problem and the matter should not be left until budget 2018 to be dealt with.
As the Deputy understands, the lead Department in responding is the Department of Education and Skills. The Minister and his officials are responding and engaging with me on their current and capital needs as part of the normal Estimates process. I am trying to reconcile this with the fact that everybody else is doing the same.
On the Cassells report, the Minister has not yet come forward or identified what he believes is the leading option. The report poses a challenge for the Oireachtas and the response rests with all of us if we believe the higher and further education sectors will be the engines of future productivity and employment, not to mention the learning from which we all benefit. How will we pay for it, if other countries are paying in other ways? I expect the Minister to come forward in due course and identify what he believes is the main option and the best way to do it. Ultimately, it will require the support of more than the Government to make it happen. It could be one of the many litmus tests of the new political approach on which people expect the Oireachtas to deliver.
I appreciate that this is part of the brief of the Minister for Education and Skills, but as time passes, it becomes less likely that we will hear his thoughts or views on the Cassells report prior to the budget. In the interim, while we await his opinion in order that we can progress work on the issue in a cross-party way, there is a need for funding to be provided in the budget. In the absence of a direction from the Minister, it will come down to the Department of Public Expenditure and Reform to decide.
I welcome the Minister and his officials. Tax expenditure could feature in the budgets of the Departments of Agriculture, Food and the Marine, Justice and Equality and Communications, Climate Action and Natural Resources. Does the Minister have any role in that regard?
When the Minister for Public Expenditure and Reform hears from the Minister for Finance what he is doing on taxation matters or is going to do in the forthcoming Finance Bill, does his Department not want to have an input in that regard? We spoke about the metro project and the huge infrastructural deficit across the country, including, for example, the roads to the north west. Surely, it is incumbent on the Department of Public Expenditure and Reform to have a role in that regard?
I certainly pass on my views. The Departments of Finance and Public Expenditure and Reform work closely together, but part of the reason the relationship has worked so well in the past six years is that each of them has a different job to do.
Let me explain our roles, as opposed to getting involved in dealing with allegations of superiority or inferiority. I cannot see how I could win in answering that question. The Minister for Finance and his Department, among other things, are responsibile for dealing with the overall macroeconomic situation.
It is the role of the Minister for Finance to assign functions as between taxation and expenditure. While he, of course, asks for my views, it is his role. My job to manage the expenditure side.
I presume the Minister will be involved in intense negotiations with other Ministers in the next week and a half. He has stated some of them are realistic. Does that mean that some of them are unrealistic? For example, I understand the Minister agreed to a package in the summer for the Minister of State at the Department of Health, Deputy Finian McGrath, to make available more places for children on the autistic spectrum, but there still are huge deficits within the disability sector. Members have been told that the Minister for Children and Youth Affairs, Deputy Katherine Zappone, is introducing a new child care system, given the massive child care costs in Ireland, the second highest in the OECD. As for the Minister for Education and Skills, Deputy Richard Bruton, members have referred to issues at third level. Moreover, is it not the case that the Minister for Social Protection, Deputy Leo Varadkar, is responsible for more than one third of total expenditure?
Are some of them being unrealistic? While I am not sure what the Minister for Education and Skills, Deputy Richard Bruton, actually wants to do, he has a programme or an action plan. I presume the Minister has costed the action plan and indicated that he will provide funding to deal with the issues that are to be delivered on in 2017. In the case of the Minister for Social Protection, Deputy Leo Varadkar, many members believe the previous two Governments imposed savage cutbacks on the most vulnerable Irish citizens. While some may have claimed to have protected social welfare rates, with the introduction of new charges and so on, people have suffered in real terms. This year, they are hoping that, at long last, the Government will be able to give a real bonus to those in receipt of social welfare benefits and assistance payments. Does the Minister categorise other Ministers or is he working with them in a progressive way across the board? Who is being unrealistic?
That is similar to his earlier question about superiority and inferiority and he should consider how I answered it. Each Minister who comes to me is highly realistic in what he or she seeks for his or her Department. They all are aware of the issues and social matters to which the Deputy has referred and all of them are doing their very best to try to make progress within the Department for which they are responsible. While they all are realistic, putting all of it together creates a need for resources any Government would struggle to meet. I am trying, with the funding available to me, to do my best to make progress on the priorities Ministers raise with me. That is what I am trying to do.
I have two brief final questions. I have listened to the Minister's comments and the additional money in the health budget was welcome. However, has he received a proposed budget from the Health Service Executive for next year that will cover some of the territories I mentioned such as the disability sector or matters such as meeting the seasonal upsurge, all of the backlogs identified, waiting lists and so on? I asked this question of the Minister for Finance, Deputy Michael Noonan, but does the Minister have a view on whether the proceeds from future State assets that will be sold off should be hypothecated to feed into the capital budget? In other words, we could spend additional funding on capital projects if, for example, we were to dispose of any part of the banks we own.
On the Deputy's first question, from the point of view of process, I do not get the figures directly from the HSE. While it is the Department of Health that primarily engages with the executive, I note that it has raised with me all of the matters the Deputy has raised. The Minister for Health, Deputy Simon Harris, has raised with me and my Department the different issues raised by the Deputy.
On the future sale of State assets and hypothecation, I am generally not in favour of the principle of hypothecation because I find that once it occurs one area, there is a wish for it to happen in other areas also and in general one ends up with little flexibility. That said, if the State receives additional funding in the future to do some of the things to which the Deputy referred, the priority must be to consider how we reduce the debt that allowed the State to own the asset in the first place, particularly if it is a bank. I also wish to see us continue to rebuild capital investment in Ireland and to do this we need funding. In the context of the Government's current plan, countries of this size typically spend between 3% and 5% of national income on capital investment. Our capital spending is at a figure of approximately 3.2% to 3.3%. By the end of the life cycle of the current capital programme, it will be approximately 3.8% to 3.9% and we will be in the middle. However, the point of which I am aware and which the Deputy makes is that this is after years of the level of capital investment being reduced and that we are blessed with a young and growing country. I acknowledge that there is a need and I am trying to make progress in meeting it. As I stated, it is one reason the Government made available an additional €5 billion for capital investment purposes.
I also welcome the Minister. Does he accept that Ireland has one of the lowest ratios of public expenditure to GDP among the 28 member states of the European Union? In that context and to take up the Minister's previous comments, during the lifetime of the previous Government the story on capital expenditure certainly was that much of it was dictated by demographics and population growth. Happily, as a country, there are many additional young children, as well as a lot of older people. While that is really positive for the country, it obviously requires expensive investment in education, social protection measures and a whole set of areas, including the health service. I am upset to see school programmes in areas set out in the census as having the highest rates of population growth in the country and possibly in western Europe apparently being delayed and long-fingered, albeit, I hasten to add, in the most polite way possible. Does the Minister have or can he provide members with a list of all the projects now being long-fingered? I ask because I believe this is the case having contacted quite a lot of people about the matter.
What is evident in respect of the provision of facilities for older people is that development of the projects is being strung out to such an extent that we may only be at or near planning stage by 2021.
I wish to refer to a specific issue in the context of the Government making many comments on the need for better resources and facilities for the Garda to fight crime. I believe the Minister for Public Expenditure and Reform is the lead Minister for the Office of Public Works. I am shocked and horrified that everything regarding the Garda centre of intelligence operations located in Dublin city, in Harcourt Street, is entirely up in the air. People working there do not know when they are leaving or staying. As the Minister is aware, there are long-standing plans to provide a replacement headquarters, but as far as I can discern, it will not happen any time soon. This is a time of incredible activity on the part of criminal gangs, both armed and unarmed, as well as on the part of ordinary criminals in terms of the use of highly sophisticated methods in carrying out robberies and engaging in fraud. I ask the Minister to comment on this matter today, if possible, or perhaps later.
Another issue that has not been discussed thus far is the question of our support as a society for endowment of the arts. There was an endowment of the arts by the previous Government in the commemorations of the 1916 Rising, which was fit and proper. Will the Minister agree to continue that endowment for the broader arts sector in 2017? As a country, we are very happy to have achieved such great success with various tourism projects. Much of the attraction of Ireland for both capital investment and tourists has to do with our strong standing in the arts.
The committee will have to reach conclusions and I will be asking my fellow committee members to support this because the arts community now supports it. Will the Minister agree to do that and continue the endowment by the previous Government into this Government, particularly the capital funding for the arts?
With regard to the Apple tax case, does the Minister or his officials have a figure or an estimate on the likely level of contribution Ireland will have to make to the European Union, without the Apple judgment, as I believe we are about to become a net contributor, and what will be the likely impact of the Apple judgment in relation to that? I have one further question which I will put to the Minister after he has addressed these questions.
I will deal with each of the questions in turn. I will begin with the Government expenditure as a percentage of national income and how Ireland stacks up versus peer countries. I do not accept that Ireland is low in relation to it and this is one of the very reasons I have asked my officials to devote a chapter to this topic in the mid-year expenditure report. Two different factors emerged from the analysis. The first is that Ireland is in a different place from many of the peer countries to whom we were compared, most notably in having two characteristics. First, we are far younger and we do not have the same level of investment in the Army and armed forces as other countries do by virtue of our neutrality and the attitude towards the deployment of our armed forces. The second point of difference is in how we measure our national income. There is a chart laid out on page 14 of that report which I will forward to the Deputy which expresses our national expenditure as a percentage of the gross national income of the State. That analysis shows that Ireland is roughly in the middle of peer countries in how we invest because of the difficulties we have in using GDP as a measurement of national income. That information is there. With regard to the point that the Deputy-----
No, I am just going to finish off answering the questions and I am happy to come back to anything then. With regard to the facilities for schools, and I acknowledge the Deputy has raised this matter with me on behalf of her constituents, we have a pipeline of projects that are coming through at any point in time for educational facilities and facilities for the elderly. It is absolutely not the case that any project is being put on the long finger. However, I am aware of the concerns being raised around a school in the Deputy's constituency. The Minister for Social Protection, Deputy Varadkar, has also raised it with me and it is a matter I will look at. It is not a case of any project being long-fingered. We have a pipeline of projects coming through and we have to match that with the resources available at any point in time.
With regard to facilities for the Garda, I am aware that facilities and services for An Garda Síochána are primarily a matter for the Tánaiste and Minister for Justice and Equality but, as the Deputy correctly said, this is a facility which is being managed by the Office of Public Works, OPW, for which I am responsible. The Deputy's question acknowledged that. The OPW is engaged in trying to resolve this matter at the moment. It is my understanding that it involves a facility that we do not-----
I am sorry. It involves a facility and building which, I understand, we do not own. We are engaged now in negotiation on that matter. Given the sensitivity of the work that goes on in that building and the personnel involved, I accept the importance of the need for a secure facility to do that work. I accept that. If there is a further update I can give to the Deputy or the committee in that regard I will. I know the matter is being treated seriously by the OPW. Earlier in 2016 we made an additional €40 million available and across the same time we made funding available for the Department of Health precisely to try to give better support to the Garda to respond to the cycle of murders which occurred earlier in 2016 and to respond to the concerns around burglary. With regard to equipment, a big focus of the previous Government was on investment in IT and investment in new cars for the Garda. I can see the effect of that. I can see the vehicles that are out there-----
The Deputy put a point to me about the arts. Of course the arts community wants the further €50 million made available to it last year to be maintained. Of course it does. I understand why it would want that to be maintained. However, the challenge I have, and I am engaged in this with the Minister for Arts, Heritage, Regional, Rural and Gaeltacht Affairs, Deputy Humphreys, is how we maintain and how we deal with that need versus all the other needs I must manage at the moment. I am engaged in that matter with the Minister and I, like the Deputy, have a great appreciation for the contribution made by the arts. I know the funding challenges which face the arts community, but I am dealing with many different needs at the moment, and I am working on trying to come up with a fair settlement.
The Deputy raised the issue of our future contribution to the European Union for 2017. I do not have that figure available to me now, but I will get it today or tomorrow for the Deputy. It is something which the Department of Finance manages and we will get the figure for the Deputy directly. I believe I have addressed all the questions.
My other question pertains to correspondence I received today. I was asked to raise this specifically with the Minister, but it is an issue for everybody involved in politics.
As a new mother who is returning to work in the next six weeks I am looking at the cost of €1,000 a month to pay for child care for my baby. Add this to my mortgage on a property I bought ten years ago which is at least €150,000 in negative equity for which I paid first time buyer tax at that time of €12,500. Then there is property tax and water charges ... I agree we have to pay for water, this is just another bill and worry to a very long list. So I find myself paying large volumes of tax, yet I have no relief on the things I should be getting relief on. Why should I have to pay tax on the money I need to earn to place my child in care? I can't not work. I have a mortgage, health insurance, monthly bills, the costs of a new baby - nappies, wipes and formula alone are about €35 a week. But yet this government insists that I should have to pay tax on money I need to earn to pay for childcare. Childcare is not a luxury.
I know the Minister is very sympathetic to this issue but can we have a real conversation about how we progress in relation to child care? For the purpose of information, the Minister said he was progressing discussions with Ministers but has he reached agreement with the Minister for Children and Youth Affairs, Deputy Zappone, on the provision of child care?
I thank the Deputy. I meet constituents of my own every day who are dealing with the kind of real pressure which the Deputy has described. I absolutely understand the stress and anxiety it causes people as I know the Deputy also understands. Why do we ask people to pay their taxes? It is because it contributes to the public services that are essential for meeting our citizens' needs. Of course I understand that child care, the rising cost of child care and issues around the quality of child care matter very much at the moment. The Minister, Deputy Zappone, has very good strategies and plans in that area and she is talking to Government about it. The Deputy asks if I have reached agreement with the Minister yet on funding for next year. I have not and I am doing that with everybody at the moment and I would anticipate I have a bit to go yet before that happens.
I welcome the Minister and his officials. Before I get into some of the aggregate figures, I want to mention four segments for consideration. The first is the voluntary sector and specifically section 38 organisations. As the Minister is aware, workers in section 38 and section 39 organisations took the same public sector pay cuts and more, but they have not had any restoration. The Lansdowne Road agreement provides for the community sector forum which is ICTU and the Minister's Department. They have written repeatedly to the Minister and his Department and have repeatedly been turned down for the forum that is provided for. Perhaps the Minister could put this issue onto his agenda. I really do believe it is something to do. The voluntary sector workers have taken an extraordinary beating over the years. They have had no pay restoration and there needs to be a very serious look at the various voluntary organisations having core pay restoration in order that they would at least see some rise in line with public servants.
That is the first thing.
I echo what Deputy Burton said on the arts. We are at one sixth of the European average, which for a country that clearly cares deeply about our arts and our heritage is dreadful. There is a quote, apocryphally attributed to Churchill, which is brilliant. It is alleged that when his mandarins came to him during the Second World War suggesting they needed to cut funding for the arts to pay for the war effort, he said, "Then, what are we fighting for?" While it turns out he did not say that, he should have. It is a brilliant idea. While we need to provide housing and there are many very serious things we as legislators and the Minister need to look at, we must not forget our souls while we are doing so.
The third point is just an idea. It is to do with Brexit. I have been talking to many small and medium enterprises, SMEs, in Wicklow and throughout the country. An economist in IBEC told me yesterday that the multinationals account for 90% of our exports. While indigenous SMEs are, therefore, responsible for 10%, they also account for 50% of export related jobs. Things are beginning to happen below the surface and I encourage the Minister to look at some funding, probably very small, for Enterprise Ireland, EI, and local enterprise offices, LEOs, to begin to reach out to SMEs to start to prepare them for what may happen. It would help them to start looking at different markets.
The fourth matter is a bugbear of mine, which is the privatisation of the broadband network. It is penny wise and pound foolish. If additional money is to be found for capital, we should keep it in public ownership. It is highly likely that what we will see is exactly what happened when we sold Eircom. We will see monopolistic behaviour, lack of necessary investment and monopolistic pricing throughout the country.
I will get into the aggregate figures in a second, but I put those four areas to the Minister first.
My understanding is that it has, but I will come back to the Deputy on it in case I am in any way misinforming him. The Deputy asked me about wage restoration. One of the challenges is that many of these organisations were outside the Lansdowne Road agreement. In the case of some of them at any rate, wages are raised in other ways. Future wages in those organisations will in many cases be matters for them rather than me. I will come back to the Deputy on the forum and how this matter has been dealt with.
I ask the Deputy to let me finish answering the question. I am happy to take more questions then. My understanding is that the forum has met and is dealing with the matter. A wide variety of issues are being raised and that is one of them. One of the challenges in this will be that I am responsible for people who are paid for by the State directly, and for groups which draw funding from many different sources, of which the State is one. Clearly, responsibility for the wages of their employees is a matter for them.
On that point, we will have to agree to disagree. It is not credible for the State to say that while it provides 100% of the funding for essential services which are provided by voluntary organisations in the community, the wages have nothing to do with the State because the employees of those organisations are not public sector employees. They obviously do. During the recession, serious cuts were taken by public servants and section 39 workers because core State funding to these organisations fell considerably. The only way they have to increase wages is through increases in core funding from the State. It is not reasonable, therefore, for the Minister, or anyone in his position, or for us as legislators to say it is not really our problem. It really is our problem.
It is reasonable to outline what I have said. I have never said it is not my problem. What I have simply said is that there is a distinction between the people the State employs and those it does not. That is a reasonable point of view. At no point would I wish to wash my hands of any indirect responsibility for those individuals because I am aware of the very good work they do. I have many such projects in my constituency and I see the very good work they do. In many cases, they do work which the State either did not do or cannot do as well. I will come back to the Deputy on the forum because I do not want to mislead him.
On the arts, I am not aware if Winston Churchill said the following, but if he did not I know the Deputy will correct me. I think he said that the mark of greatness is the ability to hold two mutually incompatible views at the same time. This is what strikes me when we get into dealing with all of this. Of course, people want more funding for the arts. I want to see more funding delivered to many parts of society, but I must reconcile it all. Of course, the arts community wants to maintain the €50 million. I understand that completely. If I were in their shoes, so would I. However, that was €50 million that was made available for a unique commemorative year in the history of our State. I have to reconcile that funding with the other things the Deputy is talking to me about. The following may be something the committee concludes on later in this process. As I look at all the competing and worthy needs the Deputy has raised, of which there have been many, if guidance can be provided to me regarding how we can maintain that €50 million while delivering all the other things Deputies have raised, that is input I would like to hear. I understand the need that is there and why the sector wants this, but I have to reconcile it with all the other demands on me.
I refer to Brexit and privatisation. I agree with Deputy Donnelly on Brexit. In particular, I agree with him regarding the effect it will have on small companies. We are already seeing the signs of this in agriculture in particular. One of the things that struck me in the aftermath of the Brexit period is that the Government said when it happened that we did not expect the world to change the following day. However, big things are shifting that are going to affect us in the medium term. The people who are beginning to experience this are small and medium-sized companies that have to sell to other countries and the UK and which need to be able to plan for the future. I am aware of this matter. The Minister for Jobs, Enterprise and Innovation, Deputy Mitchell O'Connor, is raising it with me. One of the main themes the Taoiseach has asked me to address is what we can do on budget 2017 to begin to Brexit-proof our economy. I accept the point Deputy Donnelly raised and that is something we will be able to return to.
Deputy Donnelly asked me about the privatisation of the broadband network. I share a different view on this. This was a decision that was primarily made by the Minister for Communications, Climate Action and Environment, Deputy Denis Naughten, although I fed into it. If I look at the future of the network, we are talking about a portion in respect of which this choice has been made. We are also talking about a portion of that network which will be regulated in a different way, conscious of the learnings we have had on this in the past. That is one of the reasons that led the Minister, Deputy Naughten, to make this decision.
The history of regulation from ComReg is atrocious. It may be that we will learn how to regulate better, but I doubt it. I move to the next question I have which is around the balance. There has been a great deal of focus on the €1 billion fiscal space and the €660 million that comes under the Minister's consideration. Less time is given to the other 99% of public spending, which is the business-as-usual aspect of it. I have two questions in this regard. The committee met the Irish Fiscal Advisory Council, IFAC, which provided analysis after our meeting setting out its stand-still forecasts. In other words, this is the increase in spending required by the State to do nothing new. Worryingly, the profile IFAC gave the committee matches almost exactly the projected spending increases. For example, the summer economic statement has projected spending for next year of €54.405 billion.
IFAC says the standstill figure is €54.255 billion. That profile matches right out to 2021. If IFAC is correct - those on the council are a smart bunch who are doing sophisticated analysis - then the entire projected increase in current expenditure for public services, almost down to the last €1,000, for the next five years will be required to do nothing. As I am sure the Minister knows, his Department's analysis includes payments under the Lansdowne Road agreement and demographics. IFAC analysis also includes Lansdowne Road and demographics but it includes €700 million more under demographics. IFAC analysis also includes an index-linking of social protection payments over a five-year period at very modest inflation, which is not an unreasonable assumption to make. The other item included is public service wage inflation, which is pitched just at the rate of inflation. The council's standstill position has zero real increases in wages or social protection payments but, almost to the euro, the analysis it presented to this committee indicates that just doing that will require everything we have.
My second question is related to the first and concerns balance. My view is that we are not spending enough on the arts. If we are only spending one sixth of the European average, then clearly that is unreasonable. The question the Minister posed is reasonable, namely, if we want to give €200 million to the arts or to reach the European average, where do we cut? Education does not have enough funding. There has been asset-stripping at third level according to one university president. Health care is an obvious area where we are not getting value for money. Our health care system is clearly sick. We voted through €500 million this year, with very little analysis. We voted through over €600 million towards the end of last year. The Minister himself pointed out that we have a very young population. Depending on which analysis one looks at, we have either the second or fourth highest spend on health care on Earth. When one adjusts, which departmental officials have done in the expenditure review, for the fact that we are younger and, therefore, healthier, we are completely on our own and outstrip everywhere else, including the US.
There are clearly areas on which we should spend more money, like the arts, education and the voluntary sector, for example. There are also clearly areas where we could almost certainly provide the same level of service for a lot less money, the obvious one being health care. There is always a lot of talk about where more money should be spent. Where does the Minister think less money needs to be spent in order to improve areas such as housing, education, the arts and the voluntary sector?
I thank the Deputy for his questions. I will start with the first. We make a provision for demographic expenditure in the outlook for the State. The clearest example of that is where we are in 2017. We have a figure laid out of €900 million that Deputy Brophy quizzed me about earlier, a portion of which is for demographics. That is then laid out in the summer economic statement across the forthcoming years in terms of how we expect that to roll out.
Where there is a point of difference between myself and IFAC is on the role of indexation and the automaticity of future expenditure increases. I believe that making expenditure increases automatic in terms of income payments or other payments that we make available to people will take us down a path which leads to the kind of difficulties that we are trying to get out of at present. It must be a political choice, for which the Minister of the day is accountable to the Oireachtas, as to whether we make changes to income payments to citizens. The moment it becomes automatic, it reduces the ability of a Government to make changes in expenditure based on its political views. It also creates the kind of sustainability problems that we are doing our best to get out of. Furthermore, in terms of the reform agenda on which the Deputy has challenged me, if we end up in a place where there is an expectation of expenditure automatically increasing in particular areas, year after year, it becomes more difficult for the government of the day to deliver the kind of reform the Deputy wants. I take a different view of the concept of indexation and automaticity which has, in turn, influenced the difference between IFAC and myself regarding some of the figures.
I totally accept that we need to budget for demographics in the future, which we have done. The broad point that the Deputy made at the start of his contribution contains a lot of truth. The increases in expenditure to which we are referring here, which will be 3% to 3.5% for next year, are a fraction of how much money we are already spending. Much of the debate tends to be on the increment as opposed to the stock of public expenditure. That leads on to the next point that the Deputy put to me regarding where I believe too much money is being spent. Every time I sit down with a Government colleague and every time my officials sit down with their counterparts from other Departments, our approach is to get them to show us how the money they have is delivering a better return. Every discussion I have with colleagues centres on that point. Very rarely do the meetings that I have with my colleagues, particularly those I am having at present, begin with me asking them to explain how additional money will deliver additional services. I begin by asking them to tell me how the funding they have can go further and, in particular, how the demographics and capital allocations that many Departments assume they will get can go further. All of the discussions begin thus.
On the question of which Departments are spending too much, I believe every Department could do more with the funding available. That is the attitude I adopt with all of my colleagues because I believe we must have a relentless approach to efficiency. While great improvements have been made in recent years in that area, we must keep on challenging ourselves to do more.
Deputy Donnelly said that there are areas in the Department of Health in which we could make efficiency savings. I ask him to give me the detail on that. If one looks at that area, one will see that the majority of expenditure is on wages. The money goes to people we employ. I would be very happy to hear the Deputy's observations on how we could achieve more efficiencies in that area than we are achieving currently.
I thank the Minister and wish to respond briefly to what he has said. On the indexation point, I agree with the Minister. I do not think it should be automatic and that is not the point I was making. I believe it is a political decision, so we are agreed on that. The point I was making is that, regardless of whether it is an annual budgetary decision, the figures we have from IFAC clearly show something that we need to understand. Were we to index payments for the next five years, in other words, increase payments in line with the rate of inflation to avoid any real decreases and keep things in real terms exactly as they are today, IFAC's analysis indicates that we would have to use up everything that is projected for increases in current expenditure. Does the Minister accept that?
I have a differing view to IFAC on indexation. I will have another look at the figures to see if the scale of the gap to which the Deputy refers exists. So much of the analysis put forward by IFAC is based on the concept that increases in expenditure have to be automatic and I disagree with the council on that. It is certainly my understanding of the figures I have seen that indexation accounts for much of the gap to which we are referring.
I thank the Minister and his team. In light of everything the Minister has said and some of the discussion we have had here today, are we not heading into a do-nothing, change-nothing budget? When people shout out on behalf of particular sectors, the Minister acknowledges that in an ideal world we would have greater spending or investment in those sectors but he goes on to say we do not have the money because we are working within the envelope or the fiscal space. He says we are not going to have the funds to put into everything that should be funded. I do not think that is a very happy prospect, especially in light of the legitimate claims for extra investment or expenditure under a series of headings. I would be interested to hear the Minister's response to this. I would say that in most cases, such extra spending would actually be good for the State, from a financial perspective, in the medium to long term. Are we being constrained by fiscal space to the point where we are not capable of doing things which would be good in the medium to long term but which we are not allowed to do because of the short-term cost involved? To me, that is just bad economics. It is not good for the future that we are in this straitjacket.
I will give an example. The Minister and everybody else says that even though we should move towards funding the arts to the tune of 0.6% of GDP, which is the EU average, we cannot afford to do so. By the way, we were the only people to allocate extra money to the arts in our budget submission last year. We know from the contribution the arts make that there is a sure-fire return at every level from investment in the arts. The costs that ultimately arise in all sorts of areas like crime and policing are the knock-on consequences of children and young people not benefitting from investment in areas like the arts in their local communities. I could also speak about the benefits of such expenditure for our reputation in the arts and for tourism, etc. It is a sure-fire winner.
I will mention housing as an another example. The Minister can come back to me on this. As a result of the constraints on having an upfront, major, direct public programme of building local authority houses, as we used to do once upon a time, the vast majority of the Government's housing plan - between 70% and 80% of it - depends on sourcing social housing from the private sector via the housing assistance payment or leasing arrangements. The Minister will argue that the Government cannot afford to provide entirely for local authority housing, as we are suggesting, because that would breach the expenditure limits and we do not have the money to pay for it upfront. I suggest that such an approach will prove to be completely stupid in the medium to long term. If we do it our way, there will be a greater upfront cost, but the State will end up with an asset and the rental revenue from that asset will come back to the State. If we do it the Government's way, most of the rental revenue that is going to derive from the State's investment in social housing, but not local authority housing, will go out.
In the end, it is not very good economics. The rental revenue is not going to go to us. It is going to go to the vulture funds or private developers from whom we lease stuff, for example, under the Part V arrangements, or the new 30:30:30 arrangements I understand we will have on public land. That is what the housing plan is saying. Previously, public land was used for 100% public housing. Now it is going to be used for 30% public housing and 60% private housing. We will be leasing it back off the vulture funds and private developers. Rather than investing in something that will lead to money coming back in the medium to long term, we are providing for a system in which money will be going out every year. I do not think that is prudent. I think it is stupid. This stupidity is being imposed on us by those who are obsessed with staying within the fiscal space.
I would like to mention a few other areas, such as forestry, that I do not have time to go into in detail. I do not understand why we do not have a massive afforestation programme. We would get a sure-fire return if we were to upscale our efforts in that area. The Swiss invest in banks, forests, chocolate and a few other things. That is seriously what they do. Banks buy up forests as a sure-fire investment. When the last Government was considering the sale of our forests, banks were trying to buy them. We are not able to expand our forest estate. I would like to comment on this. As far as I am concerned, it is madness that Coillte is essentially constrained by European rules from expanding our forests.
This country's approach to public transport seems to involve its delivery by means of privatisation. If we are going to deal with the threat of climate change and get more people to use public transport, surely we need lower fares and a model of public transport that is not driven by profit. That means a higher level of subvention for public transport and cheaper fares. This is essential if we are to avoid the penalties about which Deputy Ryan spoke. That would be a critical start. We need to invest in the public system. That means a higher level of subvention. Instead, we are relying on the privatisation model.
I could go through a whole series of other examples, but I do not have time to do so. We are told that we spend more than any other country in the area of health. I want to know how much of that is going to the private sector. I suggest the amount is very significant. If the money going to the private sector were stripped out, it would be evident that it is not the case that more money is being invested in this country's public health system than in the health system of any other country in Europe. In such circumstances, we would probably find that the level of investment here is about the same or possibly even less. A huge amount of money is being sucked out of the system by private profit-taking.
I will conclude by asking why we cannot expand the fiscal space. I would say there are many ways of doing this. I know the Minister will not accept some of my suggestions. He will not break the fiscal rules. He will not agree not to pay back several billion in interest on loans next year. We believe such repayments are odious. The Minister could look for extra tax revenue from sectors that can afford to pay more. If we do not take such measures to expand the fiscal space, every one of the key sectors that is being short-changed will not get the investment or expenditure it needs. That is just a fact.
I think we should tell the EU we need to do these things and if it is not willing to let us do them or it is going to constrain us in doing them, we cannot be part of such a Union. We could see how it responds to that as a start.
Exactly what the Government threatened when the EU dared to touch the 12.5% corporate tax rate. I think it was the Minister who said that could be the one thing that would drive him out. The tragedy is that the only time the Irish Government, and the Minister specifically, threatened Europe with the possibility of leaving or proposed the idea of telling Europe we might leave under certain circumstances was when it dared to touch the 12.5% corporate tax rate. I suggest we should take a similar approach on grounds that would be more meaningful to the majority of our citizens.
I would not like to attribute any of their comments to him. I certainly did not say that. I said on many occasions during the period in question that despite the great difficulty and challenge we had to manage, I was convinced that Ireland's continued membership of the eurozone was essential to how we would help our economy to grow and continue to improve the services we provide to the people we represent. I do not resile from that point of view in any way now. My outlook on this matter differs from that of Deputy Boyd Barrett. We have differing ideologies and political views. That is essential to the workings of this committee and the Oireachtas as a whole.
Deputy Boyd Barrett believes we can break the fiscal rules and tax people more without it having a material effect on employment and the standards of living of our people.
I am laying out what I believe is the Deputy's point of view. We have a different view on the matter. I do not believe we can increase taxes to fund the expenditure in the way the Deputy wants without having a negative effect on the lives of many of the people I represent. He is talking about significant increases in expenditure that would either break the fiscal rules, which will have another negative effect on us, or require taxation increases on which the Deputy would come into this House and criticise me.
The Deputy has couched all this in terms of fiscal rules and so on. I responded in that space to him, but in terms of where I differ from him further, even if we were in a situation where there were no fiscal rules, and for most of our membership of the eurozone, those rules were either not implemented or not well crafted, we still must live within the tax revenue we have for this year, the tax revenue we believe we are likely to have for the next few years, and what we can afford to borrow. Leaving aside the fiscal rules, that is the space within which we have to trade and invest.
I started off by saying that because of these constraints, we are not able to make what any person would conclude to be sound investment for the medium and long term. That was my point. The Minister is acknowledging that investment in the arts is good and brings a return but that we may not be able to do it. The same argument could be made about third level education. Everybody is shouting for it. The Minister will say that he acknowledges it would be a good move to invest more in our universities and in our schools but that we may not be able to do it. We certainly have not done it in housing, and it is questionable whether we will be able to do it, but fiscal rules were cited as a reason we could not do the large-scale direct public programme for which some of us have been asking. We cannot do it on housing, the arts or forestry, which never gets a mention but is very important. We cannot do it under all those headings, even though there is an acknowledgement that it would be sensible and sound in the medium to long term. Is there not something wrong with that thinking? That is my point.
I have acknowledged our different political views that get to the points he is making, but will he acknowledge, for example, under public transport, on which he quizzed me, the investment we already have that is being funded from the resources that are available to us and the resources that are available under education to our universities and institutes of technology? In terms of where we differ, I believe I have to spend money we either have now or are likely to have in the future without imposing a taxation burden on people I represent and am privileged to serve that would be detrimental to their standards of living and our ability to grow and keep jobs in our country.
In terms of each area of expenditure the Deputy spoke about, we should acknowledge the fact that we are planning to increase capital expenditure in the State by a further €5 billion - up to €27 billion or €28 billion.
The Deputy touched on housing. Will he acknowledge the fact that under the local authority housing plan, the local authority houses that will be built are Exchequer funded? They have been built by the State. We should look at what is happening in Dominick Street and Dolphin House. We should look at the local authority housing plans that have been announced by the Minister, Deputy Coveney, for the length and breadth of the country. Those initiatives are funded by the Exchequer.
We are having to give something to the private sector in O'Devaney Gardens. We discussed this with the Minister the other day. In terms of the planned sites which are publicly owned, in order to get a small bit back we are having to give away a public asset, and the revenue generating potential of that public asset, because of the constraints the Minister is willing to accept, or possibly because of an ideological predisposition. That is bad economics.
There are other considerations apart from economics. If we consider the public housing projects that are under way, it is my view and that of the Minister, Deputy Coveney, and of many parties in the House - I believe it is likely to be the view of Dublin City Council - that if we are delivering significant urban regeneration projects, we should have mixed tenure on them. We should have private and public housing located beside each other. That is not giving away an asset or something else to the private sector. It is saying that if we want new communities built that will be vibrant and prosperous in the future, we want public housing tenants and private residents to be living beside each other. That is not bad economics; that is good planning for the future.
I welcome the Minister. I have listened to many of the points, which I had listed also, so I will not repeat them, but it struck me that people have quickly forgotten that this country was broke in 2011, and it is a miracle that it is where it is today after five short years. We forget that people marched into the Department of Finance and took over this country. That jogs memories so that we will not forget what actually took place. We now have some independence back, but to listen to some contributions one would think we had won the lotto. I have a list as long as my arm, which I could throw out for discussion, but if we are to be realistic as to the future of this country, we should not engage in auction politics. Of course, the arts are important, as are all the other good ideas, but everybody in the country should remember that five short years ago we were broke, and there was no Government in control. The IMF was in control. Does the Deputy not remember the photographs of people walking into the Department of Finance? That is the reality.
I will not go over what was said earlier but the Minister made a point about identifying and supporting projects that represent the best possible value for the taxpayer. We are so narrow in our thinking, in terms of public transport, housing and development, that we see Dublin, but if we move seven or eight miles outside it, it is the country. There are people travelling over an hour every day to and from work in most cities in Europe. I can get on a DART in Glenageary and I am in town in 22 minutes. If I wanted to bring my car in, I would be sitting in traffic and would arrive in here after an hour. Issues like public transport are essential, and it brings development and potential development into regions. My point is to ask the Minister if there is a real plan to invest fully in proper public transport so that we will not have to depend on the situation where every house in Dalkey, Glenageary, Dún Laoghaire and Monkstown is sold to cash buyers. A former local authority house in Dalkey is for sale at €750,000.
This is reality. If we want to help young people have homes of their own in the future, we must start looking outside. In most other capital cities, it is no great deal if one has to travel for 45 minutes or an hour to work on public transport. Is planning going on to invest in public transport to cover areas 30 miles outside Dublin, so that people can be brought in via bus lanes or by DART? A person can walk from one side of the city to the other in 20 minutes. Let us be real when it comes to the limited amount of money we have to invest. We should consider regular services using bus lanes, so people can get in and out of the city rapidly. I would like to know if there is any forward planning in that respect.
Yes, there is. The National Transport Authority has published a greater Dublin transport strategy, which outlines various projects it believes need to be delivered to address the matters to which the Deputy referred. He mentioned in particular how we can introduce shorter travel times between Dublin city, County Dublin and adjacent counties. The NTA wants to electrify the existing hard-rail network so that rail services going in and out of the city get to DART frequency and speeds. That is a key part of what it wants to do.
The next part concerns the metro project about which I was asked earlier, and there is also the expansion of bus rapid transit and more bus lanes. Therefore, the strategy is there and much progress has been made, including what is currently under way with the Luas cross-city scheme. My understanding is that between 80 to 110 new buses have been purchased for Dublin Bus per year in recent years, so progress has been made in that regard. I accept, however, that we need to increase investment in that area. That is why when the budget is completed we will move right into the capital review to examine capital expenditure for 2018 to 2021. By looking at that, I hope we will be able to make progress on some of the priorities to which the Deputy referred. I am convinced that a higher quality of public transport is essential to how we will organise not only Dublin, but many other cities also.
That is the point I wished to make. I would hope that a proper five-year plan could be published in the near future, outlining the sort of proposals that will bring about confidence. In that way, people can invest in housing outside areas that are becoming so expensive. This is probably one of the most serious issues out my way as Deputy Boyd Barrett would confirm. A deposit for a young couple wishing to buy a home can range from €60,000 to €100,000. It is just out of control. We may talk about other priorities, but there is no greater priority than giving young people an opportunity to buy their own home. I concur with Deputy Boyd Barrett's point about bringing local authorities back into action. That was the biggest mistake we ever made.
I am a product of a local authority house and a mad sales scheme. When my parents died, I was the sole survivor because my sister predeceased me. I sold my house to a girl living in the same villas, but I could have got vast sums of money for it. We are selling off local authority houses and, by all means, tenants should be given an opportunity to buy the houses. It is a good idea but if they wish to sell, or the tenant passes on and it is left to children who have their own houses, they should be obliged to sell it back to the local authority at an upgraded value. It is the simplest thing in the world. We are building houses and then losing them to the private sector. It is a daft system but it can be rectified. We need to start examining that sort of thinking.
It is a good thing for local authorities to help people who are not in a position to help themselves. Local authorities should not be taken out of the housing situation, but it is wrong to sell off such housing stock to the private sector. With a bit of proper thinking, that situation could be rectified. I would like to see people being able to buy their local authority houses, which is a good thing. However, if they want to sell them on, they should have to offer them to the local authority for an updated value.
We had a situation in the past when we built hundreds of houses. I was on Dublin County Council from 1974 and we were building thousands of council houses in Dublin, but they have all gone into the private sector. This sort of thing is unsustainable. I know we are currently dealing with the budget, but after the budget this committee should delve into these sort of areas. We should talk to Ministers and listen to suggestions. Public transport is vital if one wishes to get away from the rat race with everybody trying to buy in the same area. It is not a big deal if one has to travel 15 or 20 minutes extra when one has a proper home.
For those sceptics who thought that the new politics were not real, it is interesting to see the last speaker agreeing with Deputy Boyd Barrett. That is a flippant comment and, in fairness, I know that Deputy Seán Barrett's view is genuine.
I am here from Limerick today on behalf of Deputy Cullinane who, unfortunately, cannot be here. I have a couple of questions for the Minister and hopefully he can answer them. What are the outstanding capital investment issues the Minister sees and how can they be addressed? What is the Government's additional spend on capital this year that is over and above the commitments already given in the five-year plan and how will they be funded? Is the plan adequate in the Minister's opinion? What does the Minister think of comments by the Irish Fiscal Advisory Council and the European Commission that Ireland needs to commit more funds to public capital investment and that the current plan does little more than address the depreciation of public capital stock?
As regards outstanding capital projects and requirements that need to be met, housing is crucial. This is why we have already chosen to allocate to housing so many of the resources the State might have available to it over the next five years. Of the €5 billion in the fiscal space that is available for capital expenditure, we have committed over €2 billion to building homes. The availability of homes in the right places is of crucial importance.
As I said earlier, we will have to return to the question of integrating that with improved public transport. As to whether additional capital expenditure will be available for this year as a result of the mid-term review of the capital plan, the answer is "No". The increased expenditure and funding availability will be from 2018 onwards.
I was asked if I believe the current plan is adequate. Given that we are seeking to increase investment in the area, this clearly shows that I believe current investment needs to be increased. That is what we are trying to do and are doing, but I know that colleagues will want to see that go further.
With regard to what the European Commission has indicated to us on its views in respect of capital expenditure, we will increase capital expenditure to approximately 4% of our national income, which is roughly in line with what countries comparable to Ireland spend at present, over the lifetime of the plan. What would be of help to us, and what we are working to obtain, is greater clarity on whether something that is off-balance-sheet now will remain so. Clarity on this will be of help regarding how we increase investment further. We are using housing projects as a way to gain this full clarity.
I have a number of questions. It was reported on the front page of yesterday's edition of theIrish Examinerthat the European Commission gave a rather strong rebuttal to the Government on the new first-time buyers initiative and the suspension of water charges. In light of this, and the evidence the committee has heard from experts who previously came before it to the effect that the housing issue is fundamentally and primarily a matter of supply, what are the views of the Minister and his Department?
No decision has been reached by the Government on the first-time buyers grant. The Minister for Finance, Deputy Noonan, will bring forward a proposal on this. He shares the view that if we bring forward an initiative in the area, it is very important that it contributes to supply because we need more homes to be built.
We know the views of the Commission on water charges. We know the legal advice and the Commission's view on the legal need for some form of charging mechanism. If we end up funding water infrastructure from general taxation, it will directly compete with all of the other needs on which colleagues have pressed me this afternoon. We will have to add it to the list that includes housing, education and so on.
There has been much comment and speculation in the agricultural media on downward pressures on agricultural capital spending. In particular, I am thinking about investment in the targeted agricultural modernisation scheme, TAMS, which the Department operates to help farmers with capital projects they are aiming to construct. I wish to relate to the Minister the importance of this matter. Recently, when I was driving home, I heard that the price a farmer received for a litre of milk in 1988 was equivalent to 28 cent per litre but that the price now is 23 cent. I do not suggest that capital funding should be used to replace a proper price for a product but, for the sake of farmers who have laid out plans for capital investment and are dependent on the funding, I hope the speculation in the media is incorrect.
At the height of the recession, a retirement scheme for farmers was in place, as was an installation scheme for new entrants. Approximately 70% of farmland in the country is owned by people who are over 65 years of age. This was not much of an issue at the height of the recession because many people who had been leaving agriculture to go to other sectors were staying at home. If we are serious about developing agriculture and retaining these young people, the Departments of Agriculture, Food and the Marine and Public Expenditure and Reform need to reactivate the installation aid scheme and the early retirement scheme, which were suspended and not officially scrapped. A mechanism needs to be put in place to ensure a transfer of ownership from one generation to another, which is now probably from grandparents to grandchildren because our ownership ages are quite out of line with much of the rest of the EU.
I absolutely appreciate the importance of agriculture and food production to our society and economy. I have met the IFA, and the Minister for Agriculture, Food and the Marine, Deputy Creed, has raised these matters with me. The normal challenges faced by farmers are exacerbated by price and income volatility, the potential early consequences of Brexit and the farmers' needs for new markets. I understand all of this. In my earlier contribution, as the Chairman acknowledged, I stated that some of the earliest effects of Brexit on employment are now being seen in the food and horticulture sectors.
With regard to the particular schemes referred to by the Chairman, I cannot give him an answer at present. I am aware of their importance. The Minister for Agriculture, Food and the Marine, Deputy Creed, has raised this and other matters with me. What I will say on capital expenditure is that if we are to respond properly to what Brexit means for our country it cannot be a Dublin response. It must be a proper national response from the country because the effect will be national. As such, I understand that agriculture will be crucial. I am dealing with the Department of Agriculture, Food and the Marine and the Minister, Deputy Creed, on specific matters.
Some of the matters relating to the ownership of land and transferring land within families were addressed by the Minister for Finance, Deputy Noonan, through tax measures in recent budgets. I will take on board what the Chairman has said.
I do not believe anybody asked about new recruits to the public sector and those who have come into the public sector in recent years. There have been indications on pay restoration for younger teachers, nurses and gardaí. Will the Minister briefly outline what has been set aside and what impact it will have on the fiscal space? The issue of retention was brought to prominence for me at a meeting with a group of parents advocating on scoliosis at the Department of Health. A new multi-million operating theatre in Crumlin, which was completed before the beginning of the year, is still not staffed. The HSE is recruiting overseas while we have hugely expanded waiting lists, particularly for children with scoliosis, which is a devastating condition. To use nurses as an example, they are significantly better paid in other jurisdictions, including the UK, which is where the HSE is seeking recruits for the operating theatre. Does the Minister have any comments on this and on the improvement in pay for younger teachers that has been flagged by the Minister for Education and Skills, Deputy Bruton?
With regard to the effect of demographics on our ability to recruit, in my opening contribution I referred to the fact that we are now recruiting for all front-line services. In some areas we are back to where we were pre-crisis and we are beginning to make progress in others. We expect to need to hire 648 more teachers to deal with the effect of demographics on our schools. We have the resources in place and the ability to do this.
With regard to the wage levels for public servants and new entrants, we have reached an agreement, through the Department of Education and Skills and the Minister, Deputy Bruton, with the INTO and the TUI on the restoration of a degree allowance and integrating this into the salary package for new teachers.
That matter is subject to ballot and agreement by the members of both unions but, in principle, we have reached agreement.
In regard to what it means in terms of the pressure we are under in different sectors at the moment, the answer varies by sector. In many parts of the public service we advertise, many people apply and we are able to hire them and keep them within our country. Gardaí are a very good example of this. It is tremendous to go through different Departments and meet new civil servants who have just joined in the past year or two. While I do not want to in any way denigrate those members of the Civil Service who have been with us a few years longer, it is great to see a mix, which is healthy for everybody. Since April of last year, we have employed 449 more doctors, 884 more nurses and 2,250 more front-line staff. Those are front-line improvements that have been made. We are trying to work with all the unions that are inside the Lansdowne Road agreement. Where there are particular matters that are affordable for us to reach agreement on, we will work with people to do it.
It is to do with the Minister's role on public expenditure and reform. The Ministers, Deputy Donohoe and Deputy Varadkar, and Deputy Kelly, when they were Ministers in the Department of Transport, Tourism and Sport, worked night and day to ensure that, where there were issues, those issues were resolved.
Yes, absolutely. What I want to know in regard to the budget is what proposals there are to ensure that the hardship which is being suffered at the moment in Dublin, particularly on the northside, by those such as pensioners and others who have hospital appointments, and also the traders in Dublin city, who every day coming up to Christmas lose a day's trade-----
It is devastating for them. As I said, the Ministers, Deputy Donohoe and Deputy Varadkar, and Deputy Kelly ensured matters did not go down the strike route. We now have a different Minister with a different ethic and ethos. The bus drivers give us great service in Dublin and I want to see them permanently back at work. The Minister spoke about public service reform. Has the Minister proposals that would sort this out and stop the suffering, especially for pensioners?
I understand the genuine difficulty people face when the buses are not running. It is a huge problem, not only for those trying to get to work but, to agree with Deputy Burton, for elderly members of our community who are trying to go about their daily lives, get to appointments and so on. The challenge they face is a very big problem.
Not to make a flippant point on a difficult issue, my recollection is that four different strikes took place during my tenure as Minister for Transport, Tourism and Sport. The only answer to any of them then, and it continues now, is the role of the Workplace Relations Commission and the Labour Court. It was through their interventions that we played a role in resolving those matters. I expect and believe it will be the same for these issues. The Minister, Deputy Ross, has my full support in dealing with these matters at the moment because they pose great difficulty to the people who rely on these services, as Deputy Burton has said.
For what it is worth, the bus workers believe the low level of subvention is what is at the back of this dispute. I just want to put that on the record.
My question concerns the public sector pension levy and restoration in that regard. In my opinion, it is legitimately a very sore point with public sector workers that, as well as everything else that was imposed on everybody - the USC, pay cuts and so on - there was also this public sector pension levy. I know there has been some restoration for the lowest paid. The question is whether the Minister envisages lifting the burden of this really punitive austerity levy off the backs of those earning under €70,000. I am not urging him to do it for the higher paid, but for the low to middle area of the public sector, as the emergency is over, they should not have this punitive levy continuously imposed on them.
I am not envisaging, nor will I be, any further changes in either public service pay levels or the public service pension reduction, PSPR, in budget 2017 on top of what has already been agreed as part of the Lansdowne Road agreement.
I thank the Minister for attending and for the early publication in July of the expenditure documents, which have been very useful for the committee. I thank the Minister's officials for their presence. There are a number of other items which we will deal with first at the next meeting, which is next Tuesday at 2 p.m., when we will consider the report. We hope to have a document circulated by Friday and members should get amendments to the clerk by close of business on Monday so we can get cracking next week to produce our document.
This is the base document. We agreed we would have a base document from the consultancy. Members should have amendments to that in by the close of business on Monday. We will have the discussion after that.