Simon Coveney (Cork South Central, Fine Gael)

I appreciate the Leas-Cheann Comhairle's indulgence. Sometimes, it is only in tragedy that we see how fantastic Irish people can be.

There was a gross underspend of €226 million in the Department's budget allocation of €1.647 billion in 2011. The expenditure on the EU-funded single payment amounted to a further €1.316 million above this. The underspend of Exchequer funding arose as a result of the fact that the original programme allocations were not drawn down or because there were savings due to improved efficiencies during the year. The underspend arose despite the fact that every effort was made to make prudent provision for liabilities at the beginning of the year. Subject to administrative checking procedures having been completed, claims being verified and necessary inspections carried out in line with departmental and EU audit requirements, all liabilities were met and the underspend did not arise as a result of a decision by the Department to withhold payments.

I will outline the main areas of underspend. Some €10 million was underspent on the administration budget. Some €18.7 million was underspent in respect of the eradication programme, ERAD, which relates to bovine TB and brucellosis schemes, and other miscellaneous animal health schemes. Primary among these is BSE, which reflects the ongoing welcome reduction in the incidence of that disease. Some €30.6 million was underspent on the suckler cow welfare scheme. The original plan was to pay the premia due in respect of 2010 and 2011 in 2011. Due to the pattern of claims, however, doing so was not possible. The underspend will fall to be paid in 2012 and there is no reduction in the overall payments to farmers.

Some €23.2 million was underspent in respect of the clearance of EU accounts. This funding is provided to meet the cost of potential disallowances following European Commission audits of EU-funded or co-funded schemes and was not required in 2011. Some €40 million was underspent on the rural environment protection scheme, REPS, and €19.9 million on the agri-environment options scheme, AEOS. This is attributable to the fact that, under EU regulations, full and comprehensive administrative checks, including cross checks with the land parcel identification system, must be completed before any payment is made.

Notwithstanding these requirements, 22,000 REPS 4 farmers were paid in 2011, compared with 14,000 in 2010, and payments under the agri-environment options scheme are well advanced. There was an underspend of €24.2 million under marketing and processing schemes, reflecting the slower than expected capital investment in projects by food companies. An underspend of €20.4 million arose in the targeted agricultural modernisation scheme, TAMS, which was closed temporarily in 2011 and is now reopened. The underspend in this instance arose from the fact that approved projects did not mature in the form of claims for payment.

Additional information not given on the floor of the House.

The balance of savings is attributable to a large number of other headings under the Department's Vote. On the other hand, there was an additional spend of €13 million on the less favoured areas scheme over and above the Vote allocation in 2011. In addition, under public financial procedures, my Department has carried forward the maximum permitted carryover savings, totalling €29.834 million, which have been added to the 2012 budget. These carryover savings are reflected in the 2012 budget allocations announced last December. The figures do not take account of the payments by the Department under the single payment scheme, which amounted to €1,316 million in 2011.

Overall, much of the Department's Vote comprises schemes and measures that are subject to external factors such as demand from beneficiaries, market and economic factors, animal disease incidence and the pace of completion of capital investment and research projects, as well as the need to adhere to important issues of governance and, where relevant, compliance with EU operational rules and requirements. While every effort is made to forecast expenditure as accurately as possible each year, there is, inevitably, some degree of uncertainty in determining the appropriate level of budget to be assigned to various schemes and programmes. The Department is obliged to ensure, in so far as possible, that adequate resources are in place to deal with all manner of eventualities and possible unforeseen occurrences. Full details of the 2011 outturn will be available in the Revised Estimates to be published later this month by the Department of Public Expenditure and Reform and greater detail will subsequently be made available on my Department's website.

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