Sean Barrett (Independent) | Oireachtas source

I welcome the Minister of State and endorse the Bill, which does very valuable work. I also endorse pretty much everything the two previous speakers, Senator Darragh O'Brien and Senator Tom Sheahan, said. The case study today is the Narrow Water Bridge. I gather the Minister for the Environment, Community and Local Government, Deputy Phil Hogan, is having a meeting about it at 1.30 p.m. How did the cost double in such a short amount of time? Is it a try-on by the construction industry? How did it reach a situation where it looks like the estimate is double the original one? It will be stalled until we find out what went wrong. The only solution, of which I can think in response, is if we make it a toll bridge and the builder has an equity stake in building it at low cost and in generating a use for it. There is a toll on the Dublin to Belfast road, which is not that far away. It shows us a construction industry which tells us it has spare capacity and that it is a great time for stimulus but when we get involved in a project, an extra €20 million is required for a bridge. It illustrates what the Minister of State is trying to do here.

I pretty much endorse all the sections of the Bill and will support it. The Minister of State said it is to limit the growth in general Government expenditure to a sustainable level. Expenditure ceilings were mentioned, which are a good idea. I support the Ministers for Finance and Public Expenditure and Reform and the Minister of State in the proper and effective operation of ministerial expenditure ceilings. The Minister of State referred also to the fiscal advisory council.

As the Minister of State will know, this is a widespread problem in most countries. Debt to GDP ratios are far too high and lead to the kind of programmes we are now having to endorse. For spending Departments, their goal is maximising the budget. The Minister of State, along with the Ministers for Finance and Public Expenditure, must say that for them it is about the outputs, that maximising the budget is about inputs and that they want to know what they will get. The cost-benefit analysis, to which Senator Tom Sheahan referred, is whether the benefits exceed the costs.

There has been a disequilibrium between the power of the spending Departments and the ones which have to raise the revenue, such as the Minister of State's Department, and measures such as this Bill redress that. Why has it taken so long? That is not a rebuke in that the old health boards had to be abolished because it was impossible to control their budgets as the banks, which we subsequently had to rescue, were always giving overdrafts, even though the Department of Finance could issue edicts about their limits. Maybe we should have been more draconian. If the budget was gone on 15 November, we should have said there is nothing left, although the Minister for Finance would probably have faced media pressure from the spending Departments and so on.

We have to get it across that, in terms of debt to GDP and taxes, we are maxed out and that the bulk of the adjustment the Minister has been making has been on the tax side in that public expenditure is still rising. All the spending Departments will give one a million good reasons that should be but we need to set things up completely differently and this is a start.

In terms of the capital programme, all projects should be analysed and the cost-benefit analyses published about a year in advance to see what is going wrong. One could see how the €20 million for the Narrow Water Bridge became €40 million.

There are problems with lobbying. I refer to the IMF list and Vito Tanzi, the retiring director, who was mentioned previously. In his very interesting book on this issue he asked why this is happening everywhere. Bureaucracies cannot stop growing. That is a huge pressure on expenditure. The Government is going to deal with lobbying but lobbyists have huge power.

I refer to the kind of misguided Keynesian model which the fiscal council has warned against. The multiplier effect in an open economy like ours is pretty small. I mention the tax termites who undermine the tax base but who are always looking for extra public expenditure and the kind of entitlement culture that the Government owes everybody everything no matter how well off people are.

Why is there medical inflation? Why can that sector not generate efficiencies like lots of other sectors? To whom are income distribution programmes redistributing the incomes? Can we have efficiencies measures for that? Brookings in the United States has done a lot of work on that and I hope the Government's new economic service might link up with it to make sure that when we have income distribution programmes, they actually accomplish the goals we want and that we do not have programmes which are monopolised by the producers rather than the consumers and think cash is better than goods. Who produces the goods and are they available at prices which represent value for money for the Government on behalf of the taxpayer?

I would go for a central office of project evaluation called COPE and probably a new culture as well. Professor Ronan Fanning gave a lecture at the Kenmare conference some years ago and referred to the austere era in the Department of Finance, where former Secretaries General Joseph Brennan and James McElligott wore overcoats and turned off the heat in case the budget ran over.

Professor Colm McCarthy, in his inimitable way, has said bring back Brennan and McElligott so that we can live within budgets.

The Minister of State mentioned the forecasting role for the fiscal council. Is that the best role for a fiscal council? Senator Tom Sheahan referred to a household. A household cannot say this is the budget for next year but that it assumes it will have a certain amount of growth and, therefore, it will balance. Why not get the money in first and then spend the surplus, if there is one? It is said economic forecasting was invented to make weather forecasters feel a bit better. It is not the most reliable part of our subject but resource allocation is, so I would have the fiscal council give more advice on resource allocation and efficiency. If forecasting works out, it is a bonus. As Professor John FitzGerald said yesterday, forecasting is difficult, especially when one is trying to forecast the future. There have been some years when we have had to revise GDP estimates several years back, so trying to forecast the past has created problems as well. However, those are small points. If this Bill illustrates a new approach to old-fashioned household management in the public finances and not doing things which do not represent value for money, it will, as my colleagues said, be strongly supported.

The banks caused us dreadful problems but there was an underlying public finance problem. I recall the OECD report on Irish public finances in 2006 saying that our rate of public expenditure growth was far faster than Germany's, which is our benchmark country in the new arrangements we are in. People said that social partnership may have been a little easy on public expenditure. That era is gone and we live in a new one. We must reverse the situation where there is high unemployment among people. Some 300,000 people have emigrated. A new cost effective public sector, as promoted by the Minister of State in this Bill, deserves and I think will get widespread support.