Terence Flanagan (Dublin North East, Fine Gael) | Oireachtas source

The introduction of this short, technical Bill is a requirement under the troika programme of financial support for Ireland. It will provide for medium-term expenditure management and will amend the Ministers and Secretaries (Amendment) Act 2011. The aim is to set a limit on the annual budget of each Department, resulting in each Department prioritising its resources and working more efficiently. Having defined limits in place will focus the minds of Ministers and senior departmental staff. This is not before time, given the events of the past ten years.

The Government recognises the importance of introducing a more transparent expenditure system with a longer-term outlook. The Bill's provisions number among a range of regulations to promote this change. It has been made clear in recent years that Ireland must implement reform measures in its budgetary management process to increase the transparency and effectiveness of the process. Fine Gael sought such changes in opposition and is continuing in its policy with the Labour Party in government. It is vital that the system be accountable to the Oireachtas and, most importantly, the public.

The current budgetary process has a short-term outlook that focuses on the year ahead instead of a number of years in advance. Financial pressures that fall outside the annual frame of reference do not receive the same attention and projections are regularly outdated and incorrect by the time the year in question is reached. Ireland operates a traditional annual cash-based system of Government accounting. While this has strengths, a number of areas of public financial management are not addressed.

In recent years, several significant policy developments have taken place at national, EU and EU-IMF levels. Methods of economic and budgetary governance are now under review at EU level and specific proposals have been tabled to help to ensure that all EU member states manage their national budgets in a sustainable way. Ireland has already moved to implement a number of these proposals. In this regard, some commitments were set out in the National Recovery Plan 2011-2014 and budget 2011.

Multi-annual expenditure planning is in place in a number of other countries. It is only right and proper that the Oireachtas would introduce such a system. It sets fixed expenditure ceilings for each year in a multi-year cycle and for each main area of expenditure rather than for just one year. Under the terms of this Bill, for each financial year the Government will approve an upper limit of expenditure for the following three financial years. The Minister for Finance will submit a proposal about the limit and can later propose to the Government that this amount be revised upwards or downwards. The new section 17(6) inserted by section 1 of the Bill outlines that the Government will decide the amount of expenditure to be apportioned to each Minister's area of responsibility for the financial years concerned.

This short, technical Bill will change the accounting exercise involved in the annual budget. Any move to improve transparency in Government expenditure should be welcomed by all Deputies. This system will enable the public to hold Departments to account and to ensure there is effective management of scarce public resources. The introduction of a more complete medium-term framework for fiscal planning will inevitably lead to the greater planning and control of expenditure.

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