Mr. Seamus McCarthy:

The annual finance accounts present the receipts into and issues from the Central Fund of the Exchequer, together with a set of statements and schedules that itemise the transactions. In addition the financial statements of the national debt, which are prepared by the National Treasury Management Agency, are presented in full as part 2 of the finance accounts. The accounts for 2017 were certified by me on 28 June 2018. I can inform the committee that the accounts for 2018 are expected to be certified in or around the same timeframe this year.

Chapter 1 of my report on the accounts of the public services is designed to summarise the transactions on the Central Fund recorded in the finance accounts in a more accessible format and to highlight relevant trends in such transactions. In addition, because the finance accounts do not include any kind of statement of financial position, the chapter provides an overview of key Exchequer assets and liabilities at the year end. Exchequer receipts in 2017 totalled €58.4 billion, representing an increase of €3.3 billion, or 6%, compared with 2016. Issues from the Central Fund in 2017 amounted to €56.5 billion, which was a year-on-year increase of €395 million, or just under 1%. The surplus of receipts relative to issues for the year was €1.9 billion. The gross national debt stood at just under €199 billion at the end of 2017. This was marginally higher than at the end of 2016. The cost of servicing the national debt fell from €6.8 billion in 2016 to €6.2 billion in 2017. That was a drop of 9% year on year. This reflects the impact of the refinancing of debt by the National Treasury Management Agency.

Members may wish to note that in 2017 the Department of Finance commenced publication of an annual report on public debt in Ireland. This provides useful information and commentary on the composition and evolution of Irish Government debt, on measures of debt sustainability, and on progress towards achievement of debt targets. As a consequence, I have reduced my own reporting on the public debt, which was intended to address the previous information gap.

Turning to the special report, in addition to many other responsibilities, the Department of Finance represents Ireland’s interest in the EU budgetary process and EU policy formulation. Schedules to the finance accounts show payments from the Exchequer to the EU and receipts into the Exchequer from the EU. However, this is only a partial view of Ireland’s transactions from the EU, which flow through many sets of financial statements. In fact, there is no single source that gives a complete overview of such transactions. Against the background of Brexit, negotiations for a new EU multi-annual financial framework and European Parliament elections, I felt it might be useful to provide such an overview. This resulted in the special report before the committee today.

As the figure which can now be brought on screen indicates, financially Ireland was a net beneficiary of the EU up to 2014. Since then, Ireland has received marginally less than it has contributed. Ireland’s contribution to the EU budget is linked substantially to Ireland’s economic activity levels, with elements related to VAT collected, customs duties imposed in Ireland, and gross national income levels. The Irish contribution in 2017 totalled €2 billion. The Department of Finance has projected that the contribution is likely to increase significantly in future years. Ireland received a total of €1.8 billion in EU funding in 2017. Over 80% of the amount received was in respect of agriculture and rural development. As members are aware, this funding makes a significant contribution to the viability of farming in Ireland. Approximately 90% of EU funding received in 2017 was administered through central government Departments. The remaining 10% went directly from the EU to public bodies, bodies in the private sector in Ireland or was spent on EU bodies operating in Ireland. I recommended that there should be annual reporting on a consolidated basis of Ireland’s EU transactions, but the Accounting Officer was not convinced of the need for this.

The 2017 appropriation account for the Vote of the Office of the Minister for Finance records gross expenditure of €34 million. There was a net underspend of €7.2 million, relative to the Estimate, which was for surrender at the year end. The appropriation account presents expenditure under three expenditure programmes. These relate to the costs incurred in 2017 in respect of economic and fiscal policy, on which the Department spent €18.9 million, banking and financial services policy, on which the Department spent €8.1 million, and provision of shared services, on which the Department spent €7.1 million.

The expenditure on banking and financial services policy recorded in the appropriation account does not include costs associated with staff seconded to the Department from the NTMA to deal with banking sector issues and certain related consultancy costs. Those costs are borne by the NTMA and are not recouped from the Department.

The Fiscal Responsibility Act 2012 requires me to report to Dáil Éireann each year with respect to the correctness of the sums brought to account by the Irish Fiscal Advisory Council. Chapter 22 is my report for 2017. I gave a clear audit opinion on the council’s financial statements for 2017 when it incurred expenditure of €607,000.