Tom Parlon (Laois-Offaly, Progressive Democrats)

I am glad of this opportunity to appear again before this House to resume our discussions on public expenditure and the background to the enactment last December of the Appropriation Act 2006, which gives statutory effect to voted expenditure for 2006.

Before we examine the detail of public expenditure it would be useful to put it in context by reviewing briefly our economic performance and the performance of the public finances in 2006. The economy continued to prosper and grew by more than 5% last year. For the first time in our history there are more than 2 million people employed in the State. Unemployment has fallen from 10% in 1997 to just more than 4% today with only 1.2% on long-term unemployment benefit. Our unemployment rate is one of the lowest in the EU, where the average unemployment rate is double that in Ireland.

The Exchequer Statement published last month showed the Exchequer recorded a surplus of nearly €2.3 billion in 2006. This compares to an Exchequer deficit of half a billion euro the previous year. The nation's debt now represents less than 25% of our income. It is no wonder the European Commission consistently ranks Ireland as one of the top performers at EU level when it comes to managing our public finances. In its recent assessment of Ireland's Stability Programme Update, the Commission noted once again that Ireland's budgetary strategy provides a good example of fiscal policies conducted in compliance with the Stability and Growth Pact. With so many more jobs and people employed, more goods and services are being produced and the consequent increase in tax receipts has allowed for a significant increase in the level of public services.

The end-year Exchequer statement showed that, on an issues basis, net voted current spending increased in 2006 by 11.2% or some €3.3 billion. Some 79% of these increases were targeted at the priority areas of social welfare, which received additional resources of €736 million last year; health, which received €1.2 billion extra; and education where additional current funding of €663 million was made available.

Net voted capital expenditure grew by 11.5% or by some €666 million in 2006. For the fifth year in a row expenditure in 2006 is expected to be within profile, reflecting the sound management of the public finances. The 2007 Revised Estimates Volume, to be published on 22 February next, will set out detailed provisional expenditure outturns by Vote. The Government is also determined to ensure these significantly increased levels of public expenditure result in real improvements in public services. It is relevant in this context to point to some concrete examples of the progress that has been made.

Social welfare impacts directly on the quality of life of many sections of society, including our most vulnerable citizens. Last December the Minister for Finance announced the largest ever welfare budget package with an increase of more than €1.4 billion. The historically high package delivers on the Government commitment to bring State pensions to €200 per week, with the contributory pension increasing to more than €209, and with substantial across the board increases providing very tangible benefits to more than 1.5 million men, women and children, including pensioners, low income and welfare families, carers, those with disabilities and dependent relatives.

In addition to the significant rates increases, the Minister for Social and Family Affairs has introduced a number of fundamental reforms targeted directly at tackling remaining child poverty numbers, supporting carers through increased incomes and supports, increasing the status and incomes of women pensioners as well as enhancing the incomes of older people generally.

The resources allocated to the health sector have increased almost four-fold since 1997 to around €13 billion in 2006. All services have benefited from this greatly increased funding. To get the most out of the increased resources, a major programme of health reform is under way, building upon the establishment of the Health Service Executive as the single agency charged with the management and delivery of health services at a national level. More than 1,200 additional hospital in-patient beds and day places have been put in place since 2001. Waiting times for most common procedures have been reduced to between two and five months, helped by the work of the National Treatment Purchase Fund which has arranged treatment for more than 50,000 patients. Primary care services have been improved and the roll-out of primary care teams is now well under way, with 100 teams being put in place in 2006 and a commitment to create 500 teams by 2011.

A national child care strategy was launched by the Government in the 2006 budget. The early child care supplement has been introduced, which is worth €1,000 for each child up to his or her sixth birthday. An extra 50,000 child care places will be created by 2010 under the five-year national child care investment programme. To complement the roll-out of these new places, a total of 17,000 child care workers will be trained over the next five years.

Education is key to promoting our future competitiveness and building a modern knowledge economy. There are now almost 11,000 more teachers in our schools than there were ten years ago, including teachers at post-primary level. There are now almost 8,000 teachers working solely with children with special needs and learning difficulties in our schools. There are about 8,300 special needs assistants meeting the care needs of these children compared with fewer than 300 in 1997. The pupil-teacher ratio at primary level has fallen from 22:1 a decade ago to 17:1 students in 2005, and at post-primary level from 16:1 to almost 13:1 over the same period. More children are now completing second-level education. There are higher participation rates at third level, with more than 30,000 more third level places than in 1997.

I happen to take a particular interest in agriculture. Direct payments to farmers amounted to almost €2 billion in 2006. The percentage of payments made is significant and compares very favourably with the situation in all other member states. Moreover, the single payment scheme has simplified processes for farmers, reduced the level of paperwork and halved inspection levels.

This Government has also nurtured the agrifood sector, which has seen its gross value added, GVA, increase by more than 60% between 1997 and 2005. The value of agrifood and drink exports to the EU market has grown by more than 40% over the same period. Exports of Irish food and drinks in 2006 are estimated at a record €8 billion.

In 2006, the Government agreed the agriculture provisions of Towards 2016 with the farm pillar. The overall package was €6.8 billion, of which the Exchequer provided funding of €4.7 billion for rural development measures. This is an increase of 135% in Exchequer spending compared with the €2 billion provided in the previous round. The measures contained in Towards 2016 will underpin the €8.7 billion commitment to agriculture under the National Development Plan 2007-2013.

Our sustained period of economic growth has also presented us with an opportunity to tackle the infrastructure deficit and to lay the foundation for continued economic and social progress in the future. Over the past ten years, great advances have been made in expanding the roads and public transport networks. As a direct result of our investment in national roads, major traffic bottlenecks have been eliminated and journey time savings have been achieved throughout the country. The worst traffic bottlenecks including those at Drogheda, Dundalk, Balbriggan, Kildare, Monasterevin, Cashel, Limerick, Ballincollig, Youghal and Kinnegad, have been targeted first. Further work to eliminate other bottlenecks on the major inter-urban routes continues, while relief roads for Castleblayney and Waterford city are well under way. It is now possible to travel from north of Gorey to north of Dundalk on almost 180 km of continuous motorway and dual carriageway, or from south of Portlaoise to Dundalk on 170 km of continuous motorway and dual carriageway.

Iarnród Éireann is now the fastest growing railway service in Europe. Almost 70 new locomotive-hauled carriages were added to the larnród Éireann intercity fleet in 2006, at a cost of €120 million. In 2007, 150 new intercity self-propelled railcars costing €325 million will start to arrive for service on the intercity routes servicing Dublin, Westport, Ballina, Sligo, Galway, Tralee, Waterford and Rosslare. The bottom line, in terms of additional seating capacity on our railways, is a huge increase of around 6 million passenger journeys per annum.

During 2006, more than 1,300 building and modernisation projects were supported in schools. This investment in our education infrastructure comes on top of a sustained investment drive between 2000 and 2005, during which the Government has delivered 76 new schools, with construction under way at a further 23 new schools; 380 large-scale refurbishments or extensions, with construction under way at a further 54 schools; as well as 6,055 small-scale projects, involving upgrade works and small-scale extensions.

The Appropriation Act 2006 provides for a capital carryover into 2007 of €159 million, or about 2.4% of the 2006 provision for voted capital. To allow for spending of the capital carryover amounts in the following year, the Minister for Finance is also required under section 91 of the Finance Act 2004 to make an order no later than 31 March determining the capital carryover amounts by subhead which will be available for expenditure on those subheads consistent with the amounts by Vote included in the Appropriation Act. The draft ministerial order for 2007 has been tabled for Dáil approval. Under the capital carryover arrangements, €31 million is available for investment by the Office of Public Works, largely on new works, €29 million is available for the Department of Transport to invest mainly in road improvements, and €20 million will be invested by the Department of the Environment, Housing and Local Government on vital water and sewerage works. These investment funds, which are carried over from 2006, are available in addition to the moneys that will be allocated in the 2007 Estimates.

Looking to the future, the period to 2013 represents a major window of opportunity to accelerate the tackling of our infrastructure deficits before population related expenditure pressures in health and pensions loom larger on the horizon. We must use our favourable demographic situation to build up the productive capacity of the economy and lay the groundwork for stronger economic growth in the future. The National Development Plan 2007- 2013 will involve expenditure of €184 billion over the next seven years. As it is based on the achievement of annual average economic growth of between 4% and 4.5% over the 2007-13 period, it is affordable.

The investment will be rolled out within a framework of economic and budgetary stability and in full compliance with the requirements of the Stability and Growth Pact. Among its key objectives are the improvement of everyone's quality of life, the promotion of balanced regional development in the context of the national spatial strategy, greater long-term environmental sustainability and the strengthening of all-Ireland co-operation. Under the plan, resources will be allocated with a "whole-of-Government" approach and a cross-departmental perspective. The plan involves a carefully crafted and integrated strategy, under five priority areas.

The investment of almost €55 billion in economic infrastructure under the new national development plan will finance the completion by 2010 of the major inter-urban road routes; a significant enhancement of the Atlantic road corridor; a quadrupling of investment in public transport, compared to the previous plan; and a significant switch to the generation of much more electricity from renewable sources. Some €20 billion will be invested in the promotion of enterprise, science and innovation. There will be a particular focus on research and development, as well as investment in potential start-up and high-growth companies. Almost €26 billion will be invested in training and education under the human capital priority. This will support the continuing upskilling of the workforce and further increases in the number of people attending third level education, including students from disadvantaged areas. A major programme of reform and modernisation of the third level sector will also take place under this heading.

Some €33.6 billion will be invested in social infrastructure. Approximately 60,000 new social housing units, 40,000 new affordable housing units and 500 primary care health teams will be provided by 2011. The investment of approximately €50 billion under the social inclusion priority, over the seven years of the plan, will allow for the creation of an additional 50,000 new child care places by 2010; a reduction in the number of children with serious literacy problems, particularly in primary schools serving disadvantaged communities; and new supports for older people living independently in their own homes. If older people cannot live at home in independence and with dignity, the plan will fund the provision of high-quality residential care for them.

Under the value for money framework, which has been put in place by the Government in recent years, most capital projects are being completed on time and on or within budget. Value for money will be central to the implementation of the new national development plan. The value for money framework and the capital appraisal guidelines, in particular, will apply to the programmes and projects being financed under the plan. All capital projects above €30 million will be subject to full cost benefit analysis. A project manager will be appointed to monitor the progress of each such project. Robust implementation and monitoring procedures, including the measurement of performance by reference to inputs and target outputs, will be put in place. Progress will be overseen by a monitoring committee that will include representatives of social partners and regional and other interests. An annual report on the progress of the plan will be submitted to the Oireachtas to increase the level of accountability in respect of the delivery of the plan.

I stand proudly over the Government's record in managing public expenditure. The Government has delivered strong and sustained economic growth for over a decade, within a budgetary position that is the envy of the rest of Europe. It has made available unprecedented levels of resources — almost €51 billion in 2006 — to fund improvements in public services. The Government has improved the quality of life and living standards of the people. More people are at work, taking home more of their own income and enjoying more and better quality public services than ever before. I commend the Government's stewardship of the economy and the public finances to the Seanad.