Seán Fleming (Laois, Fianna Fail) | Oireachtas source

I am pleased to speak on these statements on the Draft Stability Programme Update, which includes the Department of Finance's spring forecasts, for April 2016. I had a look through the document which includes many interesting figures which I want to highlight.

I always compare the document to the one produced the previous year to see how it stood up. If what was proposed this time last year was substantially the situation on budget day, it was a useful document. If it was wide of the mark, its use was very limited and it was probably unhelpful to political discourse. The document refers to the fiscal space. Last year's document referred to a fiscal space of €1.3 billion or €1.4 billion. I forget the figure because I have not checked my notes from 12 months ago. All summer, for six months, the debate raged on how we would divide the fiscal space between tax and expenditure. Fianna Fáil argued for fairness, as we did all along in our responses to the Budget Statements over the past three years, because the Fine Gael Government always wanted to give more money in tax cuts to higher earners and cut expenditure on front-line services. This is the hallmark of Fine Gael. It took much debate to get Fine Gael to accept a 50:50 split between expenditure and taxation. In the recent election, most parties were of the opinion that we needed more in expenditure for front-line services compared to tax cuts for the wealthy.

Last week, I spoke to junior certificate students at the CBS in Portlaoise. There were approximately 30 students in the classroom, aged approximately 15 years. We got into a discussion about the national finances and they asked what happens in the Dáil. I explained that one of the most significant decisions we make in the Dáil is how much of the fiscal space available goes on tax cuts and how much on public expenditure. I told them this issue was the essential difference between the parties in the Dáil and I asked for a show of hands on whether they favoured tax cuts so people had more money to spend and less for front-line services, such as health and education, or more for front-line services and a little less in tax cuts. The people in the group were very clever and intelligent and the vote was three or four to one in favour in favour of expenditure on front-line services. They see in their daily lives the troubles their parents have making ends meet, the difficulty of the cost of education, especially if somebody is going on to third level education, and dealing with the health service where 500,000 people await a routine appointment before they get on a list for treatment. They understood it.

A small minority in the class favoured tax cuts and thought people who had worked hard and earned money should keep more of it. This minority point of view prevails among a certain group of people and while I do not agree with it, it is a valid point of view. It is interesting that the next generation can see the issue of social justice. They agreed on how the split in the fiscal space should be spent.

The document we received this time last year referred to a fiscal space of €1.4 billion or €1.5 billion. Although it may have been right at the time, it was wrong when it came to budget day. The weekend before the budget last year, the Government marched into the House and announced Supplementary Estimates of €1.6 billion. The week before the 2016 budget, there was a fiscal space of over €3 billion, comprising the Supplementary Estimates of €1.6 billion and the €1.4 billion the Government found on budget day. In last year's spring statement, the Government had underestimated the fiscal space on budget day by 50%. While the Government had estimated a fiscal space of €1.4 billion, we had a fiscal space of €3 billion a week before the budget. More than half of it went on a Supplementary Estimate, given that we could not upset the ratios we were dealing with as part of the fiscal treaty, which I understand.

My only question is how wrong these figures are in terms of the fiscal space that will be available next September. It will be all the more important, given that last year, the information could be kept internally among a few officials and a Minister in the Department of Finance. I do not know if it was shared with the full Government. While the EMC and maybe four people in the House knew about it, nobody else knew.

Will we have a new budgetary process in September and October in advance of the budget dealing with these issues? This is not the basis of a document that can be part of the process next September. Last year's document was woefully off the mark last September and this will need to be revised next September when we begin our budget debate a month before the budget, or whenever, that we are basing it on the actual situation, not on something that is six months old. There will be policy changes in the meantime and the document will have to be updated in terms of new policy initiatives that are not included and a more up to date estimate of the financial position. Last year, we had an unexplained bonanza due to corporation tax and there was much talk about it internationally. Some companies are probably trying to put their best foot forward and make an increased contribution to corporation tax to ensure they do not look like they are not paying a certain amount. This is the most important single issue.

While this document is useful for today, it will be no use when we discuss the budget here next September. We will need a substantial document. Those who are producing it will have to go through it with the Oireachtas committee. The rules have changed regarding Supplementary Estimates and if there is a shortfall in the Department, it can raise funds elsewhere or obtain them from another Department. This will have a significant influence next September in the run up to next year's budget. We will need all those figures available in public at an Oireachtas committee, not to be announced as a surprise on budget day. It will be useful. While the document we have is a useful set of statistics, it will not be the basis of a discussion on the budget next autumn.

The document mentions threats from external influences extensively and we will have a better read on it in autumn. I refer to table 11 on page 17 - Budgetary outturn 2015 and projections 2016-2021. It shows that the current budget balance - current revenue minus current expenditure not including national debt and interest payments - will be in surplus this year, which is good. In 2018, we will have a positive Government balance as a percentage of GDP as long as the economy holds up, which is welcome. The national debt is expected to continue at the same level. According to Table 12 on page 19, the gross debt was €201 billion at the end of last year and is expected to be €201 billion at the end of 2021. Although the national debt will not be reduced by a single penny, the figures will look good because the percentage of national debt will have decreased solely on the basis of increasing GNP. Table A2.2 on page 41 is General Government budgetary forecasts 2015-2021. Item D.41 on this table is interest expenditure, primarily on the national debt. We will pay €6.3 billion this year, €6.3 billion next year, €6.1 billion in 2018, €6 billion in 2019, €5.8 billion in 2020 and €5.4 billion in 2021.

While we talk much in the Chamber about a €12 million budget moving from one area to another, we have never had a debate about interest on the national debt in my years here. We do not discuss the non-voted expenditure account. It is wrong. Approximately €10 billion goes through the account, including EU transfers. While some of the matters are contractually entered into and cannot be changed, it is wrong that there is not a debate in the Chamber every year on the interest on the national debt. We will come in and talk for two days on €12 million in the mental health budget but there is no talk about the interest and expenditure on the national debt. Although it cannot go away, the nation would benefit from an open debate on the issue to see if there is any way it can be reduced. It is important that we examine it.

The total expenditure for this year noted in the chart is €73.8 billion, minus the €6 billion national debt. It will allow expenditure of €67 billion on other items and this increases at a maximum rate of less than €1 billion per annum over the lifetime.

I look forward to seeing an updated and revised document based on new policy positions next September as well as up to date estimates and projections of Government receipts and expenditure, so that we will have a useful document to discuss at that time in advance of the budget.

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