Leo Varadkar (Dublin West, Fine Gael)

As the Minister for Finance recalled in his speech, yesterday was the 90th anniversary of the signing of the Anglo-Irish Treaty and the restoration of Ireland's independence as a nation. This time last year, Ireland lost her sovereignty and was forced to enter into a programme of financial support provided by the IMF and EU following a decade of greed, excess and misgovernment. The task that falls to this new Government is evident. It is to restore Ireland's independence in the short term and our prosperity in the long term. Ninety years since independence, this new Government faces a challenge almost as daunting as that faced by our forbearers, who founded this State and provided its first Government. Some - one as recently as last night - shirk that challenge but in contrast, we welcome it.

No Government wants to raise taxes or reduce spending. It will not make us popular and we are not doing it because we believe that it will create jobs or stimulate the economy. We are doing it because we cannot afford to fund the State. We have a structural deficit of €12 billion, which has nothing to do with banks, bondholders or even the interest on our national debt. The €12 billion figure is the gap between what we take in taxes and other revenues on the one hand and what we spend on public services, pensions, welfare and infrastructure on the other. The IMF and our EU partners are making up the difference but they will not do so forever and we will have to get by with reduced support in 2012. We have to wean ourselves off borrowing, not because the troika say we have to but because it is in our best interests to do so before our debts overwhelm us, and that is what this Government intends to do.

The budget deficit fell to 10.1% of GDP in 2011, ahead of target, and as a result of the measures in this budget will fall to 8.6% of GDP in 2012. Despite the fact that there were almost €6 billion in adjustments in the 2011 budget, the harshest budget ever, the economy returned to growth. If any in this House still believes that we cannot have austerity and growth at the same time, this is their answer. The only recovery that really matters is one in which employment increases and living standards rise, and that is some way off.

A major newspaper today led with the headline that "The Government had decisions to make but made the wrong ones". That is an opinion but the decisions we made in the 2012 budget flowed from the mandate given to us by the Irish people in the general election. We said that we would continue the work of reducing the deficit through a combination of growth, taxes and reductions in spending, and we are doing so. We said we would do this through a greater share of reductions in spending and a lesser share of tax increases, and that is what we are doing. This budget contains €1 billion in new taxes and €2.2 billion in current and capital spending reductions.

We said we would protect incomes by not increasing income tax, PRSI or the universal social charge. We have done better than that by removing the universal social charge from more than 300,000 low income, part-time and seasonal workers and by avoiding any reductions in basic rates of social welfare including jobseeker's, pensions, carer's and disability allowance for existing recipients. We said we would increase mortgage interest relief for those hard-pressed first-time buyers who bought a home between 2004 and 2008, when the property bubble peaked, and we have been true to that promise.

It is worth recalling that the alternative four-year plan put forward by Fianna Fáil and the Greens and agreed with IMF and EU would have resulted in more than €800 million in social welfare cuts rather than €475 million announced this week and would also have resulted in an increase in income tax for almost everyone. The alternatives put forward by other parties envisage a world that does not exist, as it would have no financial markets and wealth would not have to be created and distributed. In the Government we do not have that convenience, and we must deal with the world as we find it.

I will now turn to the detail of my Department's Estimates for 2012. My Department engaged with the Department of Public Expenditure and Reform in the comprehensive review of expenditure undertaken this year. In accordance with that process, a detailed review was undertaken of all of the spending programmes falling within the responsibility of my Department. The submissions made as part of that process, which provides the backdrop against which the 2012 Estimates were agreed have been published on that Department's website and that of my Department. Throughout this process I have recognised the need for my Department to deliver on its share of the required reduction in public expenditure. Ministers should not operate in silos and all Ministers must see the bigger picture. Our role is not to act as a lobbyist on the behalf of the sectors which our Department covers and our responsibility is to do the best we can for the public in general.

The current expenditure provision for my Department for 2012 is €786 million, which is a reduction of €69 million on the current year Estimate. Following adjustments of the order of €5 million for one-off items in the 2011 Estimate, the reduction of €64 million represents a package of net expenditure cuts of €45 million. This is because it is anticipated that some additional revenue will accrue from the local government fund in the form of motor tax receipts, which are shared between the Department of the Environment, Community and Local Government and my Department in a ratio of roughly 2:1. For this reason, I cannot say for certain how great the cut in funding for the maintenance of regional and local roads will be, but it will be modest.

Our local and regional roads have benefited from an additional €60 million which was reallocated from within my Department's Vote as part of the jobs initiative earlier this year. People driving around the country in recent weeks will have seen much of this work being done. It will not be possible to avoid making some expenditure cuts. It is therefore proposed to discontinue grants under the local improvements scheme, achieving a saving of €5 million. I am aware of the importance of this scheme to rural communities and in assisting local development projects on private roads but the maintenance and improvement of these roads is, in the first instance a matter for the relevant landowner. Given that there are barely sufficient funds to maintain public roads it is not appropriate to spend public money on works for private roads. The community involvement scheme will be retained.The Department's grants are not and never were intended to provide for the full funding of regional and local roads. Local authorities have other revenue sources, including the new household charge.

The €45 million in savings will be achieved in a number of ways. With roads and public transport, there will be an 8% reduction in subsidies for the CIE group saving €21 million in 2011. This will result in an increase in fares to be determined by the National Transport Authority, the transport regulator, in the coming weeks. I have indicated to CIE that a further reduction in subsidies of approximately €32 million will occur between now and 2015. I have asked the CIE companies to develop business plans to achieve these savings and to concentrate on reductions in cost and the achievement of enhanced efficiencies ahead of any further fare increases or reductions in services. This will be difficult as such savings will have to be on top of the significant savings and efficiencies delivered by the CIE companies in recent years.

A similar reduction of 8% will be applied to rural transport, saving €850,000. Maintenance of the national road and motorway network will be reduced by 1%, saving €633,000, some €6.5 million will be saved in reduced operational payments for public-private partnership roads and €3.5 million will be saved from efficiencies and greater use of information technology in vehicle and driver licensing. The allocation for the Road Safety Authority will be reduced by €4.5 million or 20%. This will not result in an overall reduction in the RSA's budget as the agency has benefited from an increase in revenues from the national car test and will take on the role of providing the new plastic card driving licence by 2013. It is anticipated that the RSA will become self-funding in the longer term. Another €3 million is saved from reductions to the administrative budgets of the National Roads Authority, Railway Procurement Agency, Railway Safety Commission and MBRS. These will be of the order of 7% to 10%.

Funding for the green schools programme will be maintained at €1.9 million. Notwithstanding recent concerns about the misuse of some funds, the programme is a success and it is intended to maintain funding at this level through to 2015. The Minister of State, Deputy Kelly, will expand on some of these points in his speech.

A total of €5.3 million will be saved on civil aviation through reductions to operating subsidies paid to regional airports. This reflects savings that follow from decisions I made earlier in the year to cease funding for Sligo and Galway airports from the end of the year. Funding for Ireland West Airport Knock, Waterford, Donegal and Kerry Airports will remain, but it must be constrained as funding will be reduced by at least another €1 million to €9 million per annum in 2014.

I intend to maintain funding for the Irish Coast Guard at €3.4 million per annum through to 2015 in view of the essential role played by it in search and rescue services at sea and on land. This is separate from the provision made for the search and rescue, SAR, helicopter contract which will rise from €27.9 million in 2011 to €33.4 million in 2012, €53.3 million in 2013 and €58.9 million in 2014 and 2015. Similarly, funding for the Royal National Lifeboat Institution, RNLI, Mountain Rescue, Weather Buoys and the Marine Casualty Investigation Board will be maintained at current levels through to 2015, all things going to plan. The Irish Coast Guard responds to 2,000 incidents annually, peaking in the late summer. Of the average 3,500 persons assisted, it is considered that 160 would perish but for Irish Coast Guard intervention. The Irish Coast Guard makes maximum use of voluntary services, with 900 Irish Coast Guard volunteers, 2,000 RNLI volunteers, 300 community rescue boats and 500 mountain and cave rescue volunteers providing an on-call service day and night to respond to emergencies at sea, on cliffs or coasts. That service would be unaffordable if carried out by full-time staff and is admired by other states. For that reason, I propose no reductions in spending for any of these bodies in any year between now and 2015.

Funding for the Irish Sports Council will be reduced by 5% from €46.8 million to €44.5 million in 2012, with a further reduction to €42.1 million in 2013 and €40 million approximately in 2014 and 2015. The Minister of State, Deputy Ring, will expand on this further. Funding for the national sports campus will be maintained at €1.5 million per annum.

In the tourism area the budget for Fáilte Ireland will be reduced by 5% to €59.4 million, saving just over €3.1 million, with a further reduction to €56.3 million planned for 2013 and €53.2 million in 2014. However, a special allocation for the Gathering will be made later in the year which will mean that overall funding for tourism will only be reduced slightly in 2012 and 2013. The tourism marketing fund will be reduced by 5%, or €2 million, to €39.3 million, while Tourism Ireland's administrative budget will be reduced by €500,000, or 3%.

Investment in capital infrastructure will be scaled back significantly in the next five years. The five year capital investment plan represented an overall cut of 18%, or just over €1 billion, on the national recovery plan allocations published in November 2010. Specifically, capital expenditure confirmed today for my Department in 2012 will fall by €267 million to €1.231 billion. Cuts of this magnitude necessitate that some very good and worthwhile projects had to be curtailed or postponed, not because these projects did not have merit but because we could not afford them.

My aim has been to get the maximum return for the taxpayer from the considerable investment in transport, tourism and sport that is still planned. In making these decisions my first priority has been to ensure the investment made to date is protected and that safety standards are maintained. This accounts for the bulk of the available funding provided in 2012 and beyond. Where possible, funds have also been provided for a limited number of projects which offer the best return in terms of their contribution to economic recovery and job creation.

Funding for road restoration and improvements will fall from €680 million in 2011 to €605 million in 2012, €278 million in 2013, €288 million in 2014 and €253 million in 2015. As I have stated many times in the House and the media, there will only be sufficient funds for roads already under construction or which are out to tender, as well as for the restoration of existing roads. While some very minor safety and online improvements might be affordable, there will be no money for major new multi-million euro projects during the term of the Government with the exception, I hope, of the N11 to Newlands and Gort to Tuam PPPs, depending on private capital market conditions.

The budget provided for capital funding for regional and local roads will fall from €330 million in 2011 to €280 million in 2012, saving €50 million on the capital side. Funding will fall to €255 million in 2013 and €240 million in 2012. Again, the bulk of this, approximately 85%, will be required for road restoration. A small number of already planned strategic regional road projects can still be progressed. In addition, the NRA will end the practice of paying €5,000 per acre in goodwill payments to landowners. This will result in significant savings when large-scale land acquisition commences again. For example, when the suspended Cork to Limerick M20 project proceeds to land acquisition stage, the decision to end goodwill payments will result in savings of approximately €4 million. The goodwill payments will remain in place for those projects for which the notice to treat has already been served.

Funding for smarter travel and carbon reduction measures shall be €65 million between now and 2015, with €17.4 million provided in 2012. With regard to public transport, funding provided for the National Transport Authority for capital projects in the greater Dublin area will fall from €216 million in 2011 to €116 million in 2012, reflecting the decision to suspend metro north and other rail projects. A total of €111 million will be provided for the railway safety and minor capital programme, a reduction of €27 million. Approximately €16 million will be provided annually for public transport projects in the regional cities through to 2016. In particular, funding will be provided for key existing public transport programmes such as railway safety, bus fleet replacement for PSO routes, traffic management programmes, including quality bus corridor, QBC, upgrades, as well as to facilitate the advancement of Luas BXD. Funding will also be provided for the completion and operation of the integrated ticketing project in the greater Dublin area and traffic management projects, including QBCs in the regional cities.

The envelope for capital funding for regional airports shall be limited to the funding of necessary safety works only. A total of €36 million is provided for capital infrastructure for the Irish Coast Guard between 2012 and 2016, with €10 million provided in 2012, thus allowing Killybegs Irish Coast Guard station to proceed in the first half on 2012 and the Doolin Irish Coast Guard station thereafter. A total of €2 million is being provided for the Commissioners of Irish Lights in 2012 and an envelope of €8.3 million through to 2016.

Expenditure on regional harbours has concentrated on essential remedial works, pending transfer. Nine out of a total of 13 harbours have transferred to local authorities, including the transfer of the Tralee and Fenit Harbour Authority in October. Agreement has also been reached to transfer three of the four remaining harbours - Kinsale, Baltimore, and Arklow - in 2012. Many of the regional harbours have no resources to carry out necessary works and requests for funding are normally far greater than the budget allocation. My Department will continue to provide much needed funding for essential works at these harbours for a two year transitional period totalling €6 million in 2012, €6 million in 2013, with a reduction to €1 million in 2014, and a cessation of funding by 2015.

A sum of €21 million is being provided for sport in 2012 and an envelope of €64 million through to 2016 for the funding of sports facilities. A total of €16 million is being provided for the national sports campus.

In tourism there is a €77 million envelope for funding through to 2016 the upgrading of existing attractions and the part funding of new ones. It should be noted that the vast majority of the money is committed already.

In recent weeks I have taken time to review the budgetary proposals of Sinn Féin and Fianna Fáil. The economic and budgetary fairytale of the United Left Alliance does not deserve the respect of detailed consideration. Neither Sinn Féin's nor Fianna Fáil's proposals delve to any great extent into current spending under the Department of Transport, Tourism and Sport, but they do give us much to ponder on capital expenditure. If we start, first, with Sinn Féin's contribution, I note that it implicitly accepts the Government's decision to defer funding for metro north, the DART underground, the Navan railway line, the N2, the A5 and the western rail corridor projects, as its proposals do not provide for any funding in 2012 or in its three year capital investment programme for transport. This latter decision is particularly stark when one considers that Sinn Féin's three year capital investment programme involves an additional €7 billion in capital spending. However, none of that money would go towards projects within the remit of the Department. Certainly, if the Government did have an additional €7 billion for capital projects in the next three years, there would be additional spending on key transport projects.

If we turn to Fianna Fáil's contribution, it must be acknowledged that it is, at least, consistent. Fianna Fáil in opposition is engaged in the same game of smoke and mirrors as it played in government. Within its proposals it makes great play of the allocation of an additional €250 million in 2012 for capital spending. However, there is no detail of how this additional capital expenditure would be spent, whether it would be on third level education facilities, hospitals, roads or railways. The failure to do so is a device to allow Fianna Fáil Deputies and Senators to travel around the country and suggest that if they were in power, project X, Y or Z would be going ahead. This is the old politics of raising expectations and stringing people along.

See this speech in context