Dáil debates

Tuesday, 16 December 2014

Ceisteanna - Questions - Priority Questions

Government Expenditure

2:00 pm

Photo of Seán FlemingSeán Fleming (Laois-Offaly, Fianna Fail)
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85. To ask the Minister for Public Expenditure and Reform the role of his Department in respect of the overall book of Estimates for 2014, in view of the largest ever set of expenditure overruns across nine Government Departments; and if he will make a statement on the matter. [48015/14]

Photo of Seán FlemingSeán Fleming (Laois-Offaly, Fianna Fail)
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I wish to ask the Minister for Public Expenditure and Reform about his role and that of his Department in respect of the overall book of Estimates for 2014, in view of the largest ever set of expenditure overruns across nine Government Departments.

Photo of Brendan HowlinBrendan Howlin (Wexford, Labour)
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Twelve months ago, Ireland successfully exited the EU-IMF programme of financial support. This was achieved after five years of significant expenditure reductions and restraint across all areas of Government.

The expenditure allocations published in the 2014 Revised Estimates Volume required the delivery of an expenditure reduction of €1.6 billion in order to achieve the budget 2014 deficit target of 4.8% of GDP. This target was well within the 5.1% of GDP deficit ceiling under the excessive deficit procedure.

Over the course of 2014, there has been a significant improvement in the economic and fiscal outlook. Economic growth and revenues from tax and PRSI are well ahead of the budget 2014 forecasts, with the deficit for the year now forecast to be well below the 4.8% target. It is in this context, with tax receipts €1.1 billion ahead of forecast, that decisions regarding Supplementary Estimates have been taken.

As signalled earlier in the year, some Supplementary Estimates were required to fund a further round of stimulus investment from the proceeds of the disposal of State assets and also to make additional funding available for infrastructure repair and restoration works associated with winter storms. It has now also been possible to make further funding available for essential public transport capital investment. In total, the Supplementary Estimates have delivered €200 million in additional funds to support essential capital expenditure.

The Supplementary Estimate now being provided to health will ensure effective provision of this key service and allow the health sector to deal with some one-off costs without any impact on services to the public. Some Supplementary Estimates are timing-related, with a shortfall of almost €0.2 billion in appropriations-in-aid now forecast to be received in 2015 rather than 2014.

Given that the improved economic and fiscal background achieved by the Government provided fiscal space to meet additional expenditure, it was important when considering Supplementary Estimates that essential services be protected to the greatest extent possible in the light of the difficult but necessary expenditure reductions we have implemented for a number of years.

2:05 pm

Photo of Seán FlemingSeán Fleming (Laois-Offaly, Fianna Fail)
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In his Budget Statement of 15 October 2013 the Minister stated:

The two Government parties agreed a strategy for this budget and the Estimates. It involves reducing the tax and spending consolidation from the published €3.1 billion to €2.5 billion, targeting a general Government deficit of 4.8% for 2014 and in the process, achieving a primary balance.
The Minister did this on the basis of a flawed book of Estimates from which he read on that same date. He knew that they were false when he referred to them. The country also knew that they were false. Within 24 hours, the then Minister for Health and the chief executive of the HSE, Mr. Tony O'Brien, had disowned the budget because they felt it could not be achieved. The Minister, Deputy Brendan Howlin, forecast that medical cards probity cuts would offer savings of €113 million, but everyone knew the Estimates were wrong. The proof lies in the fact that we are now providing for the largest Supplementary Estimate in the history of the State to correct a budget that was flawed from the outset. The figure is now €1.2 billion, of which €680 million pertains to the Department of Health.

Photo of Michael KittMichael Kitt (Galway East, Fianna Fail)
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A question, please.

Photo of Seán FlemingSeán Fleming (Laois-Offaly, Fianna Fail)
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Had the Minister factored that figure of €1.2 billion into his budgetary estimates last year, he would have exceeded the deficit ceiling of 5.1%. He knowingly came to the House to present a figure that was under the target of 4.8% in the hope the Department of Finance would bail him out with extra tax revenue. Did he do this deliberately?

Photo of Brendan HowlinBrendan Howlin (Wexford, Labour)
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As the Leas-Cheann Comhairle knows, that is not a question. The Deputy made a series of false charges which were argumentative and which are not normally allowed at Question Time. When the Government took office, the deficit in 2010 left by the shambles of the previous Administration, of which the Deputy was a prominent member, was a Zimbabwe-like 30% of GDP, whcih was unprecedented in our entire economic history. The deficit after four years of the Government and prudent management of expenditure by my Department will be 2.7% next year. We have already exited the EU support base that we required during those difficult years. The simple yardstick is whether we have achieved the 4.8% deficit target set for this year through the expenditure ceilings and controls that I implemented. The answer is that not only have we achieved the 4.8% target, but we have greatly exceeded it, to such an extent that I was in a position to give additional support in areas that the Deputy's party every Wednesday demand be given extra funding. There is, of course, a disconnect between Fianna Fáil during Private Members' time and the new Fianna Fáil presented by the Deputy.

Photo of Seán FlemingSeán Fleming (Laois-Offaly, Fianna Fail)
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The Minister has skirted around the fact that the 2014 Supplementary Estimate of €1.2 billion is the single biggest Supplementary Estimate in the history of the State. It was nearly matched by the Supplementary Estimate of €1.1 billion in 2012. The two biggest Supplementary Estimates since the foundation of the State have been presented since the Department of Public and Expenditure and Reform was established. The Minister and his Department have done damage to the Estimates process. In the past four years they have failed to perform their basic function of presenting a proper book of Estimates and to live within them. The Minister has rightly acknowledged that the Department of Finance bailed him out. In hindsight, given his record and that of his Department, it might have been a mistake to split the Department of Finance in two. When that Department was responsible for expenditure, as well of taxation, we never had such a gross level of wrong Estimates presented on budget day.

Photo of Brendan HowlinBrendan Howlin (Wexford, Labour)
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The last time an integrated Department presided over the Deputy's party, there was a deficit of 30% of GDP. It was so crippling that we could not borrow a bob anywhere and had to call in the IMF. That is the record the Deputy is now applauding.

It is a joke. In truth, the Deputy knows well that the €1.2 billion is due to timing factors in many cases. I will offer some details. A sum of €177 million arises from delayed EU receipts from the Department of Agriculture, Food and the Marine, which will be received next year. In the Department of Education and Skills, €77 million relates to an accounting alteration required by the Comptroller and Auditor General of money that was accounted for in 2013 but will now be accounted for this year, so it will reduce the expenditure in 2013. I can go through each of the Departments, but the Deputy knows all of this. The only substantial additional moneys was a decision to allocate €510 million in cash to the Department of Health due to the additional work it has undertaken this year. The Deputy would have something to say if we were to close hospitals rather than provide the money for essential health services.