Dáil debates

Thursday, 29 March 2012

Finance Act 2004 (Section 91) (Deferred Surrender to the Central Fund) Order 2012: Motion (Resumed)

 

The following motion was moved by the Minister of State at the Department of Public Expenditure and Reform on Thursday, 29 March 2012:

That Dáil Éireann approves the following Order in draft:

Finance Act 2004 (Section 91) (Deferred Surrender to the Central Fund) Order 2012,

copies of which have been laid in draft form before Dáil Éireann on 7th March, 2012.

12:00 pm

Photo of Richard Boyd BarrettRichard Boyd Barrett (Dún Laoghaire, People Before Profit Alliance)
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As mentioned by the Minister of State, this motion addresses what is primarily a technical issue to do with the carryover of unspent moneys. I will discuss that point but, given the fact that he referred to the capital programme, I will make an equally brief comment.

According to the Minister of State, the capital investment programme remains substantial at €17 billion, but it is important to state that the significant cuts in capital investment are particularly disastrous in the current economic climate. Investment is desperately required, but these cuts come at a time when private sector sources of investment have collapsed. As such, any cut in the capital programme is disproportionately damaging to the possibility of economic growth.

A significant amount of money was poured into Europe's private banking system, supposedly in an effort to get banks lending to and investing in the economy. According to announcements made this week, however, there has been no investment and the banks are hoarding money in the vaults of the European Central Bank, ECB. This situation makes the cut in Ireland's public expenditure on capital investment all the more depressing and damaging. We need a significant increase in that expenditure if we are to have any chance of restarting economic growth and returning people to work.

As Deputies have stated, it is quite sensible that last year's unspent moneys be carried over as opposed to having them surrendered to the Central Fund. I agree with the Minister of State that multi-annual budgeting makes sense. Many projects roll over several years and restricting planning to an annual budget framework would be foolish. That said, €114 million is a significant sum in the current economic climate. As Deputies and public representatives, we must scrutinise how every cent and euro of public money is being spent or unspent if we are to know it is being spent well, efficiently and to maximum effect and advantage for the public and the economic and common good.

In this context, it is a matter of concern that the only information we are given is a list of Departments and headings and a bald figure.

There is no explanation for why the underspend occurred and, more specifically, the areas or projects affected. There is no information in either the original note on the deferred surrender or in the Minister of State's speech on whether the money carried over will be spent under different headings and, if so, the original headings. The Government owes it to the House and, more importantly, the public to explain fully the underspends, the headings under which the money will be spent and the reason for any changes that might have been made.

As the biggest single issue facing the country is the employment crisis, it is critical that we spend money to maximum effect in creating jobs. In that context I note that part of the €15.8 million carried over by the Department of Communications, Energy and Natural Resources is to be spent on retrofitting. Does this mean the retrofitting programme had an underspend last year or is the money being moved from elsewhere? Targeted expenditure in this area could create tens of thousands of jobs and the measures could be self-financing in that the State would make significant savings in energy efficiency. Is there a problem with investing in an expansion of the retrofitting programme?

I cannot tell from the figures whether there was an underspend in micro-finance last year or if we are shifting money from other areas. If there was an underspend in this area can the Minister of State explain the reason for it?

Photo of Brian HayesBrian Hayes (Dublin South West, Fine Gael)
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Yes, I can.

Photo of Richard Boyd BarrettRichard Boyd Barrett (Dún Laoghaire, People Before Profit Alliance)
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I look forward to his explanation because the Government has spoken at length about the importance of this initiative and its potential for job creation. It is odd that we have not spent the money allocated to this area. The biggest figure is €26.9 million for agri-food and the rural economy. This is an area in which we have the natural resources, ability and tradition to produce food to high standards. We have the capacity to generate badly needed employment and revenue for the State. I ask the Minister of State to explain why there is an underspend in this area and how the money will be spent this year to maximise the effect of investment.

It appears from the lack of information on underspending and changes to the carry over for next year that the parties opposite changed their attitude after coming into government. The points being now raised by Opposition Deputies are the same as those made by Fine Gael prior to the election. In 2010, the current Minister for Jobs, Enterprise and Innovation, Deputy Bruton, stated in a debate on a previous deferred surrender to the Central Fund:

With the greatest respect, if this is supposed to be an exercise in transparency I give it a poor D rating. That we have been presented with a list of capital sums without any information as to the project concerned, the reason the projects were not delivered in the year in question, whether it was a question of cost overruns that are being carried forward, what projects have been lost, may fulfil some letter of some obscure law, but it does not shed any light on the efficiency, effectiveness or value of our capital programme. It is pointless bringing us in here to approve a 10% carryover when we do not know any of the background as to the reason the projects were delayed or whether the projects delayed continue to be worth pursuing.

Given that Fine Gael was critical of the previous Government's failure to provide adequate information on the use of public funds, one would have expected more transparency and information from it in Government so that we can properly scrutinise the figures and any changes that may have taken place. Instead, however, we get the same limited list with insufficient information to allow a proper debate on the significance of the figures and the headings under which the money is to be spent.

I ask the Minister of State to provide us with further information. When carry overs and deferred surrenders are discussed in future I hope we are given adequate information on them. While I welcome that the Minister of State will have five minutes to respond to our concerns there should be an opportunity for an exchange that would allow us to inquire about the various headings so we can fully scrutinise and understand the figures.

Photo of Brian HayesBrian Hayes (Dublin South West, Fine Gael)
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I agree with the Deputy this is not the right way to do our business and I put my hand up to acknowledge it should not have happened this way. During the previous Dáil I spent considerable time in committees asking the questions raised by the Deputies opposite. However, the reason why it was not possible to discuss the matter in committee was because a meeting agreed with the relevant committee was postponed at the last minute. The suggestion of conspiracy or bad faith on the part of the Government does not agree with the facts. We sought a meeting with the committee but it was postponed at the last minute.

In regard to the 31 March deadline, this appears to be a fetish for the Government in terms of a number of things that are happening.

Photo of Mary Lou McDonaldMary Lou McDonald (Dublin Central, Sinn Fein)
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Among others.

Photo of Brian HayesBrian Hayes (Dublin South West, Fine Gael)
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I assure Deputy McDonald and other Members of the House that this relates to a Bill passed in 2004 providing that when a capital allocation was being transferred from one year to the next, the order needed to be placed before the House by 31 March. While we are responsible for many things, we are not responsible for that.

I agree with colleagues that this should in future be debated at the select committee. I will ensure that every Member of the House receives a full Vote-by-Vote assessment of the savings made by Departments and what they are intending to do line by line. That will be in their pigeonholes by late this afternoon - I give an absolute commitment on that. I apologise that it did not happen before the debate.

We are dealing here with money allocated for 2011. To answer Deputy McDonald's question it is approximately 2.5% of the 2011 allocation. So while €114 million is a significant amount of money, it is very small in global terms. As Deputies will appreciate there is general support for the idea that if a Department cannot spend the money by the end of the year, the worst thing it could do, as Departments did for many years, was to spend a glut of money at the end of the year very often unwisely. It was spent badly and there was no value for money and everyone knew that. The 2004 legislation provided for an opportunity to spend that money in the following year and also to change it between subheads if there was not the expenditure profile there.

Colleagues have legitimately asked why we have these underspends. Much of it is down to timing. In the OPW, for which I have responsibility, almost half the capital allocation is spent on flood defences. We set out a profile for a year and the contracts that are to be awarded and the progression of those contracts. However, much of that depends on whether the other bidder takes an action as to whether he won the contract or whether the contractors actually get on-site into the river. It depends on whether the agreement on the purchase of the private landholding as part of the scheme is agreed and proceeds. It is not as if the money will be spent on anything different in the following year for the OPW. It is just the way the scheme is progressing and the drawdown of funds accordingly.

Photo of Richard Boyd BarrettRichard Boyd Barrett (Dún Laoghaire, People Before Profit Alliance)
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If there were no outsourcing, we would not have that problem.

Photo of Brian HayesBrian Hayes (Dublin South West, Fine Gael)
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This is very much in-sourcing. This is the Department itself organising it. Although outsourcing is not a bad idea as I said this morning at a conference.

Photo of Richard Boyd BarrettRichard Boyd Barrett (Dún Laoghaire, People Before Profit Alliance)
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The Minister of State is talking about bidders.

Photo of Brian HayesBrian Hayes (Dublin South West, Fine Gael)
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Much of it is about timing and the profile of that timing. The other reason we are not spending as much is that we are getting better value for money. At the start of the year a Department might propose spending, for example, €50 million on an item, but it ends up being cheaper because of the collapse in the construction industry. I understand reductions of approximately one third have been achieved in some schemes.

Deputy Boyd-Barrett asked about retrofitting. One of the reasons we did not spend enough on such demand-led schemes was that the level of applications from householders was not as significant as we expected. On the minor flood schemes, we may give local authorities €3 million and find at the end of the year they have only spend €1.5 million because they have not drawn down the funds. On demand-led schemes we are dependent on a third party or an individual drawing down the funds and in many cases they do not. That is one of the reasons that occurs.

Even though it is 2012 expenditure, we are talking about an amount of 2011 expenditure which is to be spent on various subheads. I give an absolute assurance to Deputies that we will get a detailed Vote-by-Vote breakdown into their pigeonholes by this afternoon. It is only right and proper that would happen. We do not want to do it this way. I ask Members who are members of the relevant committee to facilitate having this detailed engagement where an opportunity arises. I fully concede that it should not be in plenary session and should be at the committee where we can go back and forth on the many issues that arise. Ultimately it is an important procedure. Without allowing this to happen the State cannot spend €114 on various worthwhile projects. However, I accept we need greater scrutiny of those projects, and of the relevant capital envelope and that should happen at the committees. Some seven or eight Departments are involved and I am sure each of their Ministers would be more than happy to appear before the relevant committees to set out how that additional expenditure will be spent in this year.

Question put and agreed to.