Dáil debates

Thursday, 17 June 2021

Ceisteanna Eile - Other Questions

Capital Expenditure Programme

11:15 am

Photo of Brendan SmithBrendan Smith (Cavan-Monaghan, Fianna Fail)
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106. To ask the Minister for Public Expenditure and Reform if capital expenditure was on or within profile at the end of May 2021; if he expects expenditure to come in on profile in 2021; if not, if he has received requests for a reallocation of funding; if such requests will be supported; and if he will make a statement on the matter. [32351/21]

Photo of Éamon Ó CuívÉamon Ó Cuív (Galway West, Fianna Fail)
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There was a big underspend last year. Was there an underspend in the capital allocation up to the end of May? Is it projected that will carry on again this year to the end of the year? Has the Minister received requests from Departments to transfer funding within the Department to funding streams that might be spent more quickly this year to make up for the shortfall in expenditure so far?

Photo of Michael McGrathMichael McGrath (Cork South Central, Fianna Fail)
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I thank Deputy Ó Cuív and I acknowledge Deputy Brendan Smith, who spoke to me about this issue yesterday evening. As reported in the Fiscal Monitor, net capital issues to the end of May 2021 amounted to €1.885 billion. This is €408 million, or 17.8%, behind the end-of-May profile of €2.293 billion. Expenditure for the same period in 2020 totalled €2.121 billion. In year-on-year terms, expenditure is €236 million, or just over 11%, below the end of May 2020 position.

The main underspends are the Department of Transport, which was just over €158 million, or 30%, behind profile at the end of May, and the Department of Housing, Local Government and Heritage, which is just under €93 million, or almost 17%, behind profile.

In the transport sector, there is a backlog of work because of the Covid-19 restrictions and a later than anticipated allocation to Transport Infrastructure Ireland. The Department of Transport is satisfied that capital expenditure will realign with its profile as the year progresses.

As a result of building site closures during level 5 Covid restrictions, local authority housing is €20 million behind profile. Irish Water is €74 million, or 33%, behind the published profile. The capital contribution was not drawn down as profiled because capital expenditure is progressing slower than anticipated due to a restricted operating environment under Covid health and safety protocols.

It is too early in the year to definitively state whether expenditure will be on profile at year-end. However, my Department will continue to engage with all other Departments throughout the year with regard to expenditure management. Expenditure will continue to be monitored in order to assess the implications of the Covid crisis on capital expenditure profiles.

Last year, an underspend of more than €700 million was carried forward into 2021.

Photo of Catherine ConnollyCatherine Connolly (Galway West, Independent)
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I thank the Minister. We are over time.

Photo of Michael McGrathMichael McGrath (Cork South Central, Fianna Fail)
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It is undoubtedly the case that the restrictions on construction in particular in the early part of the year have had an impact. I have not had requests to date for the transfer of funding but I would be favourably disposed to same, depending on the specific ask.

Photo of Catherine ConnollyCatherine Connolly (Galway West, Independent)
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I ask for the co-operation of the Minister because we have limited time.

Photo of Éamon Ó CuívÉamon Ó Cuív (Galway West, Fianna Fail)
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The Minister referred to the Department of Transport. It has profiled 25% expenditure in the first five months of the year, even though that period accounts for 40% of the year, but it is significantly behind on that expenditure, that is, by €150 million. At a time when county roads are screaming out for money and the Department of Transport has spent nothing on non-county roads, that is, local improvement scheme, LIS, roads, in the past ten years, if a request came to the Minister from the Department of Transport to spend more on county roads that urgently need work and on LIS roads, would he be willing to look favourably on such a request in view of the fact that these are projects that can give quick spend as the year goes on?

Photo of Michael McGrathMichael McGrath (Cork South Central, Fianna Fail)
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I thank the Deputy. That is the specific issue Deputy Brendan Smith raised with me and intended to address this morning through this oral question. It is very much a matter for the Minister for Transport to manage his capital budget. Deputy Ó Cuív has correctly pointed out that there is a very significant underspend in the year to date. The feedback we are getting in my Department is that the Department of Transport expects to bring spending in line with profile. To answer the Deputy's question directly, if it is the view of that Department that a reallocation of funding to road improvements or resurfacing of non-national roads, county roads and local improvement scheme roads in the course of the year is what it wishes to do in order to fully avail of its capital envelope, I would be favourably disposed to facilitating that. However, the request for such an initiative has to come from the relevant Minister and the Department of Transport. My door is open and I will engage positively with any such request that might come.

Photo of Éamon Ó CuívÉamon Ó Cuív (Galway West, Fianna Fail)
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Only that I do not want to gum up the Minister's Department with unnecessary work, I would love to submit a freedom of information request in respect of the assurances the Minister got in June, July, August, September and October last year that all the money would be spent by all the Departments.

He has ended up with an underspend of €700 million. I know what happens within Departments, with each principal officer being asked whether he or she will be able to spend the money. For fear it might be taken from them and allocated to somewhere more productive, they will all assure the Minister they can spend the money. Then it is too late and there is a big heap of money in November that cannot be spent. In the meantime, ordinary people need things done urgently but this game goes on year after year. Even the profiling is skewed towards the back end to cover this particular hobby that goes on within Departments.

What steps will the Minister take to make sure that when officials tell him they can spend the money, they really will be able to spend it? How will he ensure that, this year, we do not have the scandal of €700 million not being spent for the good of the people within the calendar year?

11:25 am

Photo of Michael McGrathMichael McGrath (Cork South Central, Fianna Fail)
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The Deputy makes a number of valid points. For the record of the House, the actual overall underspend last year was more than €900 million. There is a restriction on the amount that can be carried forward, which is 10% of the capital allocation within the relevant Vote. This meant the amount carried forward into 2021 was more than €700 million.

The Deputy is correct that Departments will guard their capital allocations very closely. In recent months, we have put in place new requirements for reporting directly to Cabinet by the main spending Departments, a number of them on the current expenditure side and, in the case of the Department of Housing, Local Government and Heritage and the Department of Transport, in respect of capital expenditure. I am a firm believer in getting small works done where that is possible, and many of them can be done in a relatively short period. We will keep a very close eye on this issue. If decisions have to be made on reallocating from one subhead to another within a Department, I am very much open to that. Any such request needs to come from the line Department.