Brian Cowen (Laois-Offaly, Fianna Fail)

I move:

That Dáil Éireann commends the 2007 Estimates for Public Services (Abridged) published by the Minister for Finance on 16 November 2006.

The 2007 gross pre-budget Estimates provide for expenditure of just over €54 billion, comprising €46.7 billion current and €7.6 billion capital. This represents an increase of just over €4 billion or 8.1% on the 2006 forecast outturn. The Estimates represent the correct balance between making necessary provision for our public services and ensuring maintenance of a prudent and sustainable budgetary position. They build on the significant increase in public expenditure of recent years that has led to a real improvement in public services in many areas. On budget day I will set out additional expenditure measures in the areas of health and social welfare.

The 2007 Estimates must be viewed against the background of economic and social progress in the past decade. The economy has been transformed during the past ten years. It grew at an annual average rate of more than 7% in GDP terms between 1997 and 2005. Our debt to GDP ratio will be approximately 25.5% of GDP in 2006, the second lowest in the euro area. Ireland's unemployment rate of approximately 4.25% is one of the lowest in the European Union, where the average unemployment rate of 8% is nearly double the rate in Ireland. The level of employment this year exceeded 2 million for the first time in the history of the State.

We are spending €6,700 more on public services for every man, woman and child in the country than we did in 1997. This extra expenditure has led to real improvements in our public services. On the capital side, as a result of the increased spending, great advances have been made in the provision of new roads, radically improved public transport, new and improved schools and hospitals, more social housing and other essential infrastructure that has improved prosperity and enhanced quality of life. The following are just some examples of what has been achieved. We have made major progress on new motorways from Dublin to the south, Portlaoise, to the west, Kinnegad thus far, and the north, Belfast, which is nearly complete, resulting in significant savings in journey times. There has been major investment in roads in urban areas and non-national roads in rural areas.

Under the rail safety programme which we introduced upon returning to office, 760 km of track were relaid throughout the country by the end of 2005, the quality of rolling stock has been considerably upgraded and there has been significant enhancement of suburban rail capacity. The Luas has been built and carried more than 22 million passengers in 2005, more than 60,000 each day.

Since 1997, some 100,000 households or approximately 250,000 people have benefited from various social and affordable housing programmes. In the period 2000 to 2005, 76 new schools were built at primary and post-primary level, with construction under way at a further 23 new schools. Some 380 largescale refurbishment and extension school projects were completed, with construction of a further 54 projects under way. More than 6,000 small-scale projects involving upgrade works and minor extensions have been delivered. There have been other major improvements in areas such as water and wastewater services, child care and the provision of health facilities.

Major improvements have arisen from our increased investment in current expenditure in the past decade. The total patient throughput in hospitals has increased by more than 300,000 to over 1 million per year; waiting times for common surgical procedures have been dramatically reduced from years to two to five months; there are more than 3,000 home care packages for older people, where there was none in 1997; and there are more than 1,500 additional acute hospital beds in use.

The pupil-teacher ratio at primary level has fallen from 22:1 in 1996-97 to 17:1. At post-primary level, the reduction has been from 16:1 to 13:1 in that time. More than 7,000 extra primary teachers work solely with children with special needs. Alongside them, nearly 8,000 special needs assistants provide individual support for children with special needs compared with fewer than 300 when we entered office. At third level, there are 45,000 more places, wider representation from groups in society and increasing numbers graduating, particularly in the key areas of postgraduate and PhD studies.

These and other positive changes for the better have improved quality of life, enhanced social inclusion, improved access to opportunity and will support our economic development in the years ahead. They refute any assertion that there is little to show for the investment made by the Government.

Turning to the 2007 Estimates, for the third year in a row expenditure is forecast to be within profile, reflecting the Government's sound management of the public finances. In the 2006 Revised Estimates Volume the gross current spending provision was €43.8 billion. Latest indications are that outturn on current spend for this year will be €43.5 billion, or broadly on target.

On the capital side, when account is taken of €182 million which Departments currently indicate they will carry forward for spending in 2007, the capital cash spend will be €6.8 billion in 2006, which is an increase of 16% on the 2005 cash spend and shows the effort being made to build up the productive side of the economy. Of the planned increase of just over €4 billion for 2007, over €3 billion is for current spending on day to day services and almost €1 billion is for capital. The Exchequer capital allocation to address key infrastructural priorities for 2007 is €7.6 billion. This represents an increase of 12.7% on the forecast outturn for 2006. On a cash basis, when account is taken of forecast carryover spending into 2007, the year on year increase will be 13.6%.

The 2007 capital provision will fund a number of service improvements. The sum of almost €1.5 billion to be spent on roads will build on the substantial investment made to date by the Government and will fund the continuing upgrade of the major interurban routes to motorway or high quality dual carriageway standard. These routes are on schedule for completion by 2010. Overall eight roads projects of over 84 km in length are scheduled for completion in 2007 and six projects amounting to 212 km in length will commence.

An increase of 58% or €780 million in public transport demonstrates our commitment to investment in that area. This will fund key projects, including the further development and expansion of the Luas, the commencement of phase I of the western rail corridor and the Cork commuter services in 2007 and 160 new buses for Bus Éireann, in addition to the 100 new buses for Dublin Bus recently agreed.

The provision of €1.3 billion for housing will fund Government commitments under Towards 2016 to planned increases in social housing output targets of 27,000 social housing starts and 17,000 affordable housing starts over the period 2007 to 2009.

The huge progress made in recent years in the provision of environmental services has facilitated record levels of housing construction output and commercial development. The €427 million provided in 2007 will ensure further progress in this area and will, in particular, address the remaining schemes to ensure full compliance under the EU urban wastewater treatment directive.

The capital provision for education will be €707 million, an increase of 11%. This should enable approximately 80 new school building projects to be progressed during the year, together with about 160 large scale refurbishment or extension projects, and over 1,000 smaller scale projects.

In health, the gross capital provision of €657 million will fund a range of important capital services, primarily building and equipping of hospitals and health facilities generally.

A large increase in the capital provision for agriculture to over €275 million will support commitments under Towards 2016. A particular focus is on assisting the farming sector to restructure and modernise and to comply with environmental requirements. Key features include the provision of over €81 million for the farm waste management scheme, which will help farmers meet the requirements of the nitrates directive, and a 55% increase in installation aid rates, bringing the maximum payment rate to €15,000 to advance farm restructuring and modernisation.

On the current side the 2007 Estimate is €47 billion or a 7.4% increase on the 2006 forecast outturn. Over €2.4 billion, or 75% of the additional €3.2 billion, is being allocated to the three priority areas of health, education and social welfare.

The total current spending allocation for health next year is almost €14 billion, an increase of €1.4 billion or 11.3% on the 2006 outturn of €12.5 billion. The 2007 pre-budget provision for health will fund service improvements in key areas and will include €75 million to commission and open in 2007 eight new units in acute hospitals. A further €40 million is being provided in 2007 on top of the substantial increase in 2006 to meet a commitment to expand services for the elderly and there will be an expansion of primary care teams and of education and training for health professionals.

A further €130 million is being allocated for the office of the Minister with responsibility for children to cover four early child care payments next year, as compared with the three paid in 2006 when the scheme was introduced. An extra €120 million is also being allocated to deal with additional costs in the drugs payment scheme and €360 million is being provided for the long-stay charges repayment scheme in 2007.

The pre-budget allocation for social welfare is almost €14 billion. Social welfare is central to the Government's policies on social inclusion and makes a huge difference to the lives of many people in our society, with just under 1 million people receiving a welfare payment of one type or another each week. Under the Government, allowing for the cost of living, pensions and the lowest social welfare rates have increased by between 45% and 55% in real terms.

Almost €8 billion is being allocated for current spending on education and science in 2007 to make major provision for the education of more than 940,000 young people. This is an increase of €563 million over the 2006 forecast outturn, or 7.7%. Some €2.64 billion is provided in 2007 for current spending on primary level, €2.74 billion for post-primary schools and €1.8 billion for third level education. This will meet the cost of service improvements in a number of key areas, including 800 additional teachers in 2007 which will bring to almost 1,900 the number of new teachers provided since 2005 to reduce class size and help tackle problems of disability and disadvantage. It will provide for more than 1,400 extra special needs assistants who significantly improve the experience of education for disabled young people and a 13% increase in capitation grants for schools. It will also provide an extra €20 million for school buses, bringing the total allocation on school transport to €165 million. At third level €60 million will be provided for the strategic innovation fund, an increase of €45 million on 2006.

The total provision for the justice group for 2007 will be €2.4 billion, an increase of 9% on this year's outturn. The main element, €971 million, is in respect of Garda pay and provides funding for the increase in Garda numbers to meet the programme for Government commitment to a force of 14,000. Some €150 million of the justice provision is for capital, including provisions to further modernise the IT and communications equipment available to the Garda Síochána which is vital in the fight against crime.

The provision for day-to-day spending on agriculture is €1.4 billion and is the first year's funding of the seven-year package of rural development measures recently negotiated as part of the social partnership programme, Towards 2016. Again, the strategic focus is on modernisation and environmental requirements. Accordingly, enhancements and increases in grant rates include a 17% increase in rates for REPS, with a 2007 provision of €328 million, an 8% increase in compensatory allowances in disadvantaged area payments, with a 2007 provision of €257 million and an enhanced early retirement scheme with an increased maximum payment rate of €15,000, a 10% increase in that rate.

The commitment of €814 million for overseas development aid in 2007 meets our interim target of reaching 0.5% of GNP by 2007. This represents an increase of €139 million, or 21%, on the 2006 allocation of €675 million. Ireland's contribution rate of 0.5% compares favourably with current average figures of 0.3% in the OECD and 0.43% in the European Union.

Raising Ireland's performance level in science, technology and innovation is essential to our future competitiveness and continued prosperity. The Government is therefore allocating €755 million in capital and current expenditure for implementation in 2007 of the strategy for science, technology and innovation. This is an additional €66.4 million or an increase of 15% on 2006.

Budget 2006 announced a number of child care measures, including a new five-year national child care investment programme designed to create an extra 50,000 child care places by 2010. At least 5,000 of these places will be for school-going children before and after school hours and 10,000 will be pre-school education places aimed at three to four year olds. The 2007 child care provision is €142 million, an increase of €48 million or nearly 50% on 2006, to enable further significant progress to be made towards the achievement of these targets.

In my 2005 budget I announced a multi-annual investment programme for specific high priority disability support services designed to improve the quality of life for disabled persons, particularly in the key areas of health, education and training and access. To provide for further delivery on this commitment, the 2007 Estimates include provision for expenditure of €3.6 billion on disability-specific services compared to an estimated €3.3 billion this year. This is an increase of 10%.

The gross provision for 2007 to fund public service pay and pensions is some €18 billion, an increase of €1.2 billion or 7%. This represents 38% of the total gross current expenditure provision for 2007. The pay terms of the Towards 2016 social partnership agreement accounts for just over €740 million of this.

The 2007 pay and pensions bill of €18 billion is a significant commitment of resources. Of this amount, some €14.9 billion or 83% is in respect of the frontline services of health, education and security. The Government has permitted increases in the number of staff in these areas in recent years and I make no apology for this. These are labour intensive services and if we wish to get maximum benefit from enhanced capital expenditure in the areas of health and education we must adequately staff the resultant new or enhanced facilities and see a contribution from other parts of the service, which is happening.

Nonetheless, the taxpayer is entitled to full value for money in respect of this significant outlay. Accordingly, payment of the pay increases under Towards 2016 will be dependent, in the case of each sector, organisation and grade, on independent verification of co-operation with flexibility and ongoing change, including co-operation with satisfactory implementation of the agenda for modernisation set out in the agreement.

To date, the verification process has brought about real efficiencies and improvements in public services. The introduction of systems such as on-line motor tax systems enable people to pay their car tax on-line. The Revenue Commissioners on-line service reported processing 3.5 million returns in June this year and 7.8 million customer information requests. There are longer opening hours in health facilities in response to public demand involving earlier starts and later finishes, from 8 a.m. to 8 p.m., in a range of outpatient facilities such as dedicated outpatient diabetes, physiotherapy and cancer clinics, radiography departments, weekly late night dental clinics and antenatal classes in a growing number of locations. There is also the example of revised work processes in the Department of Social and Family Affairs which have reduced, among others, the average processing time for disability benefit from some eight days in November 2003 to five days in January 2006.

More generally, I have accorded particular priority to the issue of value for money since being appointed Minister for Finance and have introduced a number of initiatives which are designed to ensure more effective and efficient allocation and management of resources by Government and Ministers, Departments and agencies; better value for money for the taxpayer and greater accountability to the Oireachtas and the public.

We now have in place a value for money framework which includes the rolling multi-annual capital envelopes for public capital investment; revised guidelines for the appraisal and management of capital expenditure; public private partnerships to procure suitable projects; reforms to public procurement including moving to more fixed price contracts; additional value for money measures on procurement, ICT projects and consultancies announced in October 2005 which include individual accountability for major projects, peer review of ICT projects and reporting of project outcomes against budgets and timeframes; new arrangements for value for money policy reviews, in place of the expenditure review initiative, under which some 90 value for money reviews with an indicative coverage of 10% to 15% of Departments' and offices' budgets will be carried out in the period 2006-2008; a central expenditure evaluation unit in my Department to promote best practice in appraisal and evaluation generally and compliance by Departments and agencies with the enhanced value for money requirements; and reform of the Estimates and budgetary process announced in budget 2006.

Under the Government's Estimates reforms, from 2007 Ministers will submit to the Dáil an annual output statement in tandem with their Estimates which will enable the relevant committees, in considering the Estimates, to get a better picture of what outputs are being achieved at programme level for the funding for which approval is being sought.

The Government's 2007 Estimates are fiscally sustainable, economically appropriate and politically responsible. Maintaining stability has been the cornerstone of our economic success. Stable sensible policies have enabled us to generate the resources necessary to tackle poverty and social inequalities and to improve public services.

On budget day I will provide for a social welfare package and some additional expenditure on health. The Government will publish the National Development Plan 2007-2013 in January which will set out our seven year investment programme and financial framework for sustainable social and economic development over the medium term. I commend the motion to the House.

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