Paschal Donohoe (Dublin Central, Fine Gael) | Oireachtas source

I wish to comment on the brief exchange between my colleague, Deputy Lawlor, and Deputy Catherine Murphy on a potential budget surplus. Deputy Murphy encouraged Deputy Lawlor to get his Zimmer frame ready. It is probably worth pointing out that we will have a primary budget surplus within the next two years. A primary budget surplus is what one gets when one strips out interest payments on the national debt. We expect to run a small surplus in the budget once we exclude the interest on our payments. While the cost of servicing the national debt will be onerous and we will seek to reduce it, and while we still have a considerable deficit that we are currently seeking to reduce, Deputy Lawlor is correct to make the point that we should engage in some kind of planning for what we should do when we get to the point where the level of tax is roughly enough to pay for the level of expenditure. It is the lack of such discussions in the past that created the environment within which our budgetary situation and ability to regulate our banks fell completely apart. We are getting to the point where we need to have a discussion on the kind of country we want, the level of spending we want for public services and the level of taxation without having the troika in town.

One of the most provocative comments I heard recently on the troika came from Dr. Don Thornhill, chairperson of the National Competitiveness Council. He said the following recently: “Yet when the Troika came to town, Government committed to, and began implementing reforms which many long ago recognised as necessary”. He went on to list the reforms. He also said: “If Ireland regains access to the international financial markets, at acceptable cost and if we say goodbye to the Troika what will happen?” He later went on to say in the context of the troika leaving this country:

Sadly our history suggests that the risks of reform, fatigue and failure are very real. If we fail, the costs will be reflected in high levels of embedded unemployment and emigration, higher levels of taxation which impair economic growth, as well as diminishing levels of provision and quality in our public services. This would be an ironic and tragic consequence of our efforts to restore economic sovereignty.

As the man who runs the National Competitiveness Council, it is Dr. Thornhill's job to look at what this country should be doing and what progress we need to make to retain levels of competitiveness sufficient for the country to prosper. Rather disturbingly, he is questioning whether the country and its institutions will have the ability to do that if the troika departs. I am certain that the troika will go. I am also certain that in the absence of the troika, the Government, Parliament and all the institutions have the ability to come up with plans and deliver strategies that ensure the country can get to better days, and that we do not need the troika for our country to make the right decisions. The Bill and the introduction of multi-annual budgeting is a small but important part of the process. That is the type of measure sought by many commentators in this country before the boom. It is a system that is already in place in many other countries.

The elements of good budgeting I would welcome in legislation exist on four different levels. The first is that we must get to a point, towards which we are making steady progress, whereby we ensure the taxes we raise roughly pay for the level of public services we want. The moment a country is unable to deliver that, it sets itself on a path that makes it vulnerable to outside forces, be they the financial markets, other institutions or, in extreme cases, entry into a programme such as prevails currently. The second element that is vital is that we must be aware of the impact of levels of private credit within the economy.

We have to know if they are fuelling an asset boom or levels of lending or personal debt that are becoming unsustainable. Again, Ireland under the last Government lost the ability to do that.

The two final points that are essential are as follows. First, we must have a tax base that is broad and capable of weathering any sudden collapses in economic activity. Second, we must also ensure, with such a tax base in place, that the level of spending allowed by that tax base is roughly in line with the kind of growth happening in the economy. That is why legislation like this, which puts in place the requirement for multi-annual budget forecasting, is something I welcome. Those four ideas are very simple and most people would agree with them but they are ideas that our country, and the last Government in particular, was incapable of delivering. This legislation requires that this and any future Government look at these metrics and be aware of their impact on our budgetary situation.

All of that being said, when this legislation is passed and up and running, there are other areas that will be important in order to ensure that it works successfully. Those areas relate to what happens with current and capital spending. It is very important to recognise that capital spending is different from current spending. We must ensure that as each year goes by, if a given Department - for example, the Department of Transport, Tourism and Sport - decides not to spend all of its capital budget in a particular year, for whatever reason, the money is not lost to that Department in year two. Departments must be able to ensure they spend their capital allocations at what they believe is the best time in terms of getting the best value for the taxpayer.

On the issue of current spending, in order for a system such as this to work, Departments and Ministers must stick to the allocations made available to them. The moment that stops, legislation such as the Bill before us today stops working. Finally, the Government must have the ability to allocate money among Departments as it deems appropriate. If a particular Department is not spending its full current spending allocation, for whatever reason, the Government should be able to intervene centrally and decide where else that money should be spent. That is particularly important at the end of the fiscal year.

Of course, what this legislation is silent on is the Dáil. The Bill seeks to ensure that the Dáil will play a greater role vis-à-vismulti-annual budgeting in the future but does not envisage a greater role for the Dáil beyond that. It is clear to me, as a member of the Committee of Public Accounts, that the Dáil could play a greater role in two particular areas. The first area concerns the annual output statements that each Department publishes. My strong sense, having looked at how they are dealt with in the Dáil and in Oireachtas Committees, is that we are still not making enough use of them to confirm that the money allocated to particular Departments is actually spent in the way in which the output statements say it should be spent at the start of the year. The second area relates to the recommendations made by Oireachtas committees. As the committees move through the sectoral Estimates of a Department, scope should be provided for those committees to make recommendations on the reallocation of money within that spending area and to outline how the money could be spent. Obviously, it is exclusively the decision of the Government to accept or reject such recommendations, but there are many good ideas emanating from Deputies in the two main parties in government, not to mention our colleagues on the Opposition benches, that we should be capable of hearing within the budgetary process. If those ideas are good ones, the Government should be capable of making a small number of them happen. Of course, the other consequence is that it would force people who are against everything and in favour of nothing to engage more constructively with the budgetary process. This is an approach to devising budgets which, had it been in place in the past, might have prevented some of the difficulties we are now in and averted some of the misery that the people we represent are dealing with. For that reason alone, I look forward to the implementation of this legislation.

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