Fidelma Healy Eames (Fine Gael)
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Cuirim fáilte roimh an Aire. I am delighted the Minister for Finance, Deputy Noonan, is present as the matter is directed to him. It is in all our interests to proceed in a sure-footed manner when managing the public purse. In view of our expected exit from the bailout, I wish to ask the Minister whether he would consider amending the Fiscal Responsibility Act 2012 to require a statement each year or a report to be laid before the Oireachtas regarding first, the contingent liabilities of the State based on current policies, including pensions and guarantees, and second, the policy measures needed to live within the expenditure caps the Government has set for future years.

I ask the Minister for Finance to provide a transparent roadmap for the Oireachtas and the general public that will show the impact of Cabinet and Government decisions on our finances and that such a roadmap would be laid before the Oireachtas each year. Such a report would give us a better idea of the impact of policy changes and proposed reduced budgets. We are well aware there is always a price to be paid and trade-offs to be made for changes in policy. The reform process in which the Government is engaged is not adequately designed at present because it is not transparent.

I have the IMF document from July 2013 here and in regard to Ireland's fiscal transparency assessment it clarifies specifically that Ireland needs a statement of fiscal risks that will cover contingent liabilities as well as pensions and guarantees. As the Minister knows, a contingent liability may be something such as a liability for a toll road, where if enough cars do not use it, the State will have to pay a certain amount to make up the difference. Another example might be the deposit guarantee scheme, although it is not considered a contingent liability currently because of its legal form. However, like the insurance fund, if the State had to pay, it would have to levy other depositors. Therefore, the deposit guarantee is essentially a contingent liability, because if it was required, the State would have to raise the revenue to pay out. The IMF states this clearly in Table 3.3. Ireland: Selected Contingent Liabilities of General Government, 2011/12.

My motion requests an annual statement of these contingent liabilities to be laid before the House. Some contingency liabilities are listed in the stability programme update, but other similar liabilities, such as the examples I have given, are not listed. Thus, we have an incomplete picture. The IMF recommends a comprehensive statement of fiscal risks, including more information on these liabilities. While I welcome the exit of the IMF, we should learn from its advice so that our nation never repeats its mistakes. We should be committed to reforming practices so as to improve practice at Civil Service, ministerial, public transparency and accountancy level.

My second request is that an annual statement outlining the policy measures required for us to live within the expenditure caps will be set out by the Government for future years. The Government announces expenditure limits in the budget each year. However, it does not give the figures on estimated expenditure. The amendment I would request from the Minister would produce two sets of figures. For example, it would produce the expenditure levels for 2015 and 2016 with no policy change and also the expenditure caps as proposed by the Government for those years which would assume some specified or unspecified policy changes. The Oireachtas could then see the gap between option one and two and could debate the policy options for bridging those gaps in a meaningful and timely way. The Members, who have been elected by the public, could then have some say and could come up with ideas that could influence the final shape of the choices made. This would give Oireachtas Members more ownership of the process. This would be much better than the current situation, where policy choices are frequently concealed from the Oireachtas until after the Government has irrevocably made up its mind and the Oireachtas is then obliged to adopt those decisions on a take it or leave it basis.

EU Directive 2011/85/EU recommends that the Government spell out this no policy change scenario, but as things stand, the Government is not doing this adequately transparently. As the Minister can see, the Government is obliged to do some of what I am requesting by the end of 2013, but it has not done so yet. Will the Government amend the Fiscal Responsibility Act 2012 in this regard to meet these commitments on an annual basis? The current budgetary process and forecasting would then, therefore, be more transparent and more useful to the Oireachtas and the general public.

Michael Noonan (Limerick City, Fine Gael)
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I thank Senator Healy Eames for her very interesting contribution, which was a little different from the matter notified to my Department. I will deal with my prepared response first and then address what she has said.

I have no plans to amend the Fiscal Responsibility Act as suggested by the Senator as there is no need to do so for the following reasons. With regard to the first statement she seeks, regarding contingent liabilities, I am sure she is aware that statement 1.11 in the 2012 finance accounts sets out amounts that have been guaranteed by the Minister for Finance under various statutes, and where a pay-out under such a guarantee would be a direct charge on the Central Fund. The Senator should also be aware that in recent years, the finance accounts have also included a footnote to statement 1.10 on the State's pension liability in respect of the occupational pension schemes of public servants. The €116 billion figure set out in the 2012 finance accounts for this pension liability was compiled in 2009. The Department of Public Expenditure and Reform has commenced work on an exercise to update the accrued liability figure in line with a recommendation from the Comptroller and Auditor General. It is intended to have an estimate of the new figure by early 2014.

On the issue of State pensions, the Social Welfare Consolidation Act 2005 makes provision for the carrying out of actuarial reviews of the social insurance fund every five years. The most recent one was published in June 2012 and is available on the Department of Social Protection's website.

The Senator probably knows that the six-pack reforms adopted in 2011 by the EU included the legal requirement for member states to report annually on: the outstanding amount of government guarantees; the liabilities of public corporations; off balance sheet PPPs; non-performing loans; and the participation of government in the capital of corporations. Some of these requirements are already met in the finance accounts and Central Statistics Office publications and the Department of Finance and the Central Statistics Office will ensure that all these requirements are met in full.

Finally on this point, separate to the EU-IMF programme, the IMF carried out a fiscal transparency assessment, which was published in July 2013. The Government established a steering group, under the supervision of the Departments of Finance and Public Expenditure and Reform, to implement, as appropriate, the actions detailed in the IMF assessment. The steering group has commenced work and this should lead to better presentation of contingent liabilities in the future.

I will now address the second statement that the Senator suggests should be a legislative requirement. The Comprehensive Expenditure Report 2012-2014, published in December 2011, introduced the medium-term expenditure framework. This new framework allows for structural, medium-term planning and prioritisation within each area of spending, with full public input and parliamentary oversight. A key feature of the new framework was the introduction of multi-annual Ministerial expenditure ceilings that are set on a nominal gross expenditure basis and operate as upper limits on expenditure for each year within a three-year period. The ceilings operated on an administrative basis until July 2013 when the Ministers and Secretaries (Amendment) Act 2013 put the multi-annual ceilings on a statutory footing, ensuring that this reform is now a permanent structural feature of Ireland's budgetary framework. The ceilings are set out on a rolling three-year basis and each year, the three-year frame of reference for the expenditure framework will be extended to include a new, outer year. The Act is fully consistent with the EU budgetary frameworks directive and ensures that the multi-annual ceilings are binding over the three-year period.

An administrative circular was published in September 2013 setting out the rules and operational arrangements for the workings of the Government and departmental ceilings. The circular sets out specified limited circumstances under which the ceilings may be varied and the rules have been set to specifically ensure that any variations to the ceilings are compliant with the overall European and national fiscal rules. Furthermore, the circular sets out a number of mechanisms designed to incentivise Departments to adhere to the expenditure ceilings, including: current expenditure carryover which will in future years allow the carryover of unspent current funds from one year to increase the current expenditure ceilings for the next year - this will be subject to a number of safeguards and technical conditions; and sanction mechanisms which will deal with cases where ceilings have not been observed.

The first comprehensive review of expenditure, CRE, took place in 2011 and set out recommendations for making savings that informed subsequent budgets. The next CRE process will begin in the coming months and will be led by the Department of Public Expenditure and Reform. All Departments will be required to co-operate and prioritise key areas of spending for the coming years. The CRE involves a line-by-line examination of current expenditure across all departmental expenditure programmes. It will set out Government priorities and policies and it will be drafted in full compliance with the Government and ministerial expenditure ceilings.

I hope the Senator understands why I do not agree it is necessary to amend the legislation in question as the matters to which she referred are covered by law. I understand why she has raised the matter. It is important full information on the issue be provided for the Dáil, the Seanad and the public. If we were debating this issue last June, the Senator’s suggestions would be correct. However, significant progress was made in July and September and we have caught up with the issues which she has raised. The book of Estimates is published every year and shows the annual allocations to each sector. With the Budget Statement in October, the Estimates debate will take place between the months of October and December rather than June the following year when half of the moneys will already have been spent. The Senator is in the same space as we are, but we have made the legislative changes. The next issue is that the material published be not only comprehensive but also user-friendly in order that people will not get bogged down in statistics that are hard to follow.

Fidelma Healy Eames (Fine Gael)
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I thank the Minister for his reply. It seems we are singing from the same hymn sheet. It is useful that the Budget Statement will be made earlier in the year. It is no longer rammed through before Christmas without time geing given to review it. Why will the Minister not amend the Fiscal Responsibility Act 2012 in order that a report of this nature would be laid before the Houses by future Ministers for Finance?

Michael Noonan (Limerick City, Fine Gael)
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We are in the same space. While some work in this areas remains to be done, quite a lot has been done already. It is a task jointly shared by the Department of Public Expenditure and Reform and my Department. Under the Oireachtas (Ministers and Parliamentary Offices) (Amendment) Bill 2013, the Minister for Public Expenditure and Reform has put the multi-annual ceilings on a statutory footing. The legislation which carries what the Senator is proposing was put in place before the summer recess in July.

Fidelma Healy Eames (Fine Gael)
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That is not how I read it. If I were to bring forward an amendment to the legislation in question, would the Minister examine it?

Michael Noonan (Limerick City, Fine Gael)
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Yes; we will look at anything. However, the advice I have received is that what the Senator is asking to be done under law is already or about to be covered by it. I agree that the manner in which national statistics are presented makes them difficult to follow.