Estimates for Public Services 2017 (Revised): Discussion

We are now in public session. I welcome the Minister for Public Expenditure and Reform and his officials. Today's meeting will deal with the expenditure outturn for 2016, the Revised Book of Estimates for 2017 and public expenditure policy issues in general. Before we begin, I remind members and witnesses to turn off their mobile phones. The interference from mobile phones affects the sound quality and transmission of the meeting.

I am also obliged to run through the privilege notice. I bring to witnesses' attention that they are protected by absolute privilege in respect of the evidence they are to give to the committee. However, if they are directed by the committee to cease giving evidence on a particular matter and continue to do so, they are entitled thereafter only to qualified privilege in respect of their evidence. They are directed that only evidence connected with the subject matter of these proceedings is to be given and asked to respect the parliamentary practice to that effect. Where possible, they should not criticise or make charges against any person or an entity by name or in such a way as to make him, her or it identifiable.

Members are reminded of the long-standing parliamentary practice to the effect that they should not comment on, criticise or make charges against a person outside the Houses or an official, either by name or in such a way as to make him or her identifiable.

I now invite the Minister to make his opening statement.

I thank the committee for inviting me to discuss the Revised Estimates for 2017 and the outturn for expenditure in 2016. As the committee is well aware, this discussion is not simply about numbers. More importantly, it is about the provision of funding to deliver vital public services for our citizens and to invest in infrastructure. These services are delivered by over 300,000 public servants working in a number of Government Departments and agencies, a total of 41 separate Votes which are subject to approval by the Dáil. My last engagement with the committee was prior to the publication of the 2017 Estimates and I thank it for its valued contribution to that process. Since budget time, there have been a number of developments which I will outline to give a brief sense of the scale and changes made to the funding of services.

The expenditure report of 2017, which was published at budget time, revised the projected total gross voted expenditure for 2016 to €56.149 billion, which was an increase of €310 million or 0.6%. This reflected additional capital expenditure which was outlined in the mid-year expenditure report and provision for a social welfare Christmas bonus less anticipated offsetting savings across Government Departments. These additional expenditure amounts were reflected in the Supplementary Estimates that were considered and agreed by the Dáil in December. We operate a cash-based accounting system and, as the committee will appreciate, given the scale of resources involved, which was some €56 billion in 2016, there are timing and other budget management issues that mean it is difficult to be precise about the final spending position. So for 2016, the actual gross voted expenditure outturn is reflected in the end of December Exchequer returns, which is €55.981 billion. This is 0.6% lower than the gross expenditure allocation including Supplementary Estimates and is a very minor variation and very similar to previous years.

I will turn now to 2017. The 2017 Revised Estimates proposes total gross voted expenditure of €58.07 billion, which is an increase of €43 million, or 0.07%, over the amount set out in the expenditure report of 2017. This increase reflects a number of post-budget technical and policy adjustments. The increase in the 2017 Estimate over the 2016 Estimate, including Supplementary Estimates, is €1.7 billion, or 3.1%. When the 2017 Estimate is compared with the 2016 outturn the increase is €2.1 billion, or 3.7%.

Last October, I announced a spending review, which will take place in advance of budget 2018. While moderate, sustainable expenditure growth is now planned over the medium term, there are increasing and competing public service demands emerging. The intention is that the spending review process will help to broaden the Government's options within the budgetary process by creating fiscal space for funding new policies from within existing ceilings through a systematic review of the existing cost base. In parallel with this process, my Department is continuing its work on planning the capital review, the outcome of which is expected to be published alongside the 2017 mid-year expenditure report. The objective of the capital review will be to provide a focused analysis of capital spending and what can realistically be delivered over the remainder of the plan utilising the additional resources now available.

I want to mention the measure announced by Government today to stabilise the Lansdowne Road agreement following the Labour Court recommendations on Garda pay. After discussions with union leaders, I recommended an increase in annualised salaries of €1,000 for the period 1 April 2017 to the end of August 2017, inclusive, for those on annualised salaries up to €65,000, those who are parties to the Lansdowne Road agreement, and those who do not stand to benefit from the Labour Court recommendations issued in respect of the Garda associations.

The Government believes in the value of collective agreements and is taking steps to support the continued implementation of the Lansdowne Road agreement until a successor agreement can be negotiated following the report of the Public Service Pay Commission. A collective approach to public service pay is vital to our national interest as it provides for the stable industrial relations environment, which has been a pillar of our domestic recovery and restored international reputation. These agreements deliver public service reform, secure productivity improvements and allow for strong fiscal planning where pay increases are negotiated fairly and budgeted for on a multi-annual basis. This allows us to balance pay increases in the public service with other social priorities, including improvements in housing and health care. Collective agreements, however, are not dead documents or static bargains, they have to be flexible and responsive to events.

The Labour Court recommendation with respect to Garda pay provided for pay increases for a particular group of public servants. The Government had to act to ensure that the benefits of a collective approach were not undermined and that the Lansdowne Road agreement remains in place.

In my opening statement I have outlined the expenditure outturn position for 2016, the Estimates position for 2017 and the Government's announcement to stabilise the Lansdowne Road agreement, which has a continuing key role to play in underpinning the continued sustainability of our public finances. I have also summarised my Department's plans for the spending review and made reference to the capital review planning for 2017. I look forward to working with all the members of the committee this year and would welcome their input into and questions on any of the issues I have raised.

I thank the Minister. A number of Deputies have indicated they wish to contribute and the first to do so was Deputy Calleary.

I welcome the Minister and his officials. I apologise in advance for having to leave early as I have another commitment at 5 p.m. I will start where the Minister finished on the issue of public service pay. He made an announcement this morning of €120 million of extra expenditure and immediately prior to Christmas, there was €50 million expenditure for the Garda deal. There are a few questions around that. That €50 million was split between €25 million from the budget of the Department of Justice and Equality and €25 million from the general budget. Will the same formula apply across all Departments for the €120 million extra expenditure that was announced this morning? Can the Minister give a guarantee that services will not be affected in any way by the Garda expenditure allocation or the extra expenditure allocation announced this morning? Is the €120 million announced this morning included in the Revised Estimates for 2017?

The Minister said that "pay increases are negotiated fairly and budgeted for on a multi-annual basis" in relation to Lansdowne Road and we all agree with that, but what we have had in the past few months have been pay agreements on the hoof, to a certain extent, and since the introduction of the budget he has managed to find €170 million effectively out of nowhere. He said in his press conference that it will be found from general savings and efficiencies. That is one very big sofa if it has €170 million down the back of it.

The role of this committee is budget scrutiny and if €170 million can be found on the hoof, that makes our job as a committee very difficult. An independent budget office, the putting in place of which is our aim and which will be established this year, will surely not approve of that kind of action. The Minister will not be able to do that under the new fiscal rules. How will this or any Government envisage that kind of expenditure in light of the new fiscal rules environment and in light of us being empowered and able to do the job the Oireachtas has given us as a scrutiny committee?

Will the Minister outline the process and timelines for the capital review and the spending review? Before the Minister arrived, Deputy Cullinane proposed that we would do some work on the fiscal rules around capital expenditure. Given the commitments the Minister has entered into and the spending commitments in the budget and subsequent to it, what will be the revised fiscal space, to use those dreaded words, for 2017, 2018 and 2019? In the context of the Minister going down the road of having a capital review, where is the space within the existing fiscal rules for us to have an active and aggressive capital investment programme, which we all agree we need? Given that those rules are so restrictive, has the Minister engaged with the European Commission around those rules? Has he responded to their entreaties? President Juncker and others have said that there needs to be flexibility. Has Ireland engaged in that process of flexibility around capital expenditure? We saw the director general of the HSE at the weekend look for an extra €9 billion in capital expenditure for the health service. I am sure if every other director general and Secretary General had the opportunity, they would be doing something similar.

What is the Minister's expectation for the comprehensive spending review? His predecessor would have completed that probably on two or three different occasions during his time in the Department or one would have hoped he would have. In the context of the expenditure cuts that were engaged in during that time, one would assume that every cent was accounted for. The Minister made the suggestion in his opening statement that he hopes out of the spending review to find additional resources for spending and for programmes, and to add to the fiscal space. That is what I understood him to say. Can he outline the timeline for the spending review and what kind of figure he has in mind that may be achieved from it?

I thank the Deputy for his questions. I will begin by responding to his questions on the spending review and I will conclude by answering his question on public service pay.

Regarding the comprehensive spending review and the capital review, the process for each of them will be different. In terms of the comprehensive spending review, we will identify a portion of Government expenditure by Government Department. We anticipate it will be approximately one third of Government expenditure but we will pick that percentage of Government expenditure so that it is consistent with subheadings within that Department's Vote. We will then review that expenditure against a different approach from what my predecessor would have done. When Deputy Howlin was performing this role, he looked for cuts in the context of our being in the troika programme. We have not commenced a process like this since the run-up to, or during, the crisis. The objective of this approach is to examine efficiencies. It will be to examine what objectives are set for an expenditure stream and to see how that expenditure stream delivers against those objectives. It will be a rolling process that we anticipate will cover all of Government expenditure over a three-year period. Any conclusions we have with respect to that third of Government expenditure that we cover in 2018 will be concluded in advance of budget 2018. There will be a different process for the capital review. I want to bring all that to a conclusion this year. In line with the publication of the mid-term expenditure report, we will provide an overview of all current plans - capital expenditure programmes.

We will make an assessment of how much of the existing fiscal space remains unallocated and how much could be allocated for capital expenditure. Even within the current framework we anticipate it will be approximately €2.2 billion up to 2020 or 2021. We will then make a choice in the second half of this year in respect of where that will go.

In parallel, it is my anticipation and hope that the Minister for Housing, Planning, Community and Local Government, Deputy Coveney, will complete his work on the national planning framework. I hope that in the second half of the year his work will inform capital choices that we will make, especially in the area of transport and housing.

Reference was made to the fiscal space and the flexibility or lack thereof in respect of capital expenditure. Under the current framework, assuming no change in our economic circumstances, following the allocation of over €2 billion for housing there still will be between €2 billion and €2.3 billion. This is based on the assumption of no change in our growth forecasts with regard to allocation against new capital choices. That is why I want to bring the capital review to a full conclusion in the second half of this year, unlike the comprehensive spending review, which will be an ongoing process. Then there is the question of flexibility on top of that. Part of our capital review will include a review of the use of public private partnerships and off-balance-sheet activity to see what role they could play in future capital projects. As I have said to the committee previously, I am cautious in that area because I have no wish to make an assessment about a particular project being off-balance-sheet only for it to change in two years' time and for the Minister or Government of the day to have to face tough choices regarding projects to which they have already committed. I expect that in the second half of the year work in that area will be brought to a conclusion. We are using the funding of housing projects as a pathfinder approach to bring to an end some of the debate on the matter in the European Union.

Reference was made to pay policy. I do not accept that this is pay policy on the hoof. If I was sitting before the committee in the second half of this year with the Lansdowne Road agreement disintegrating and sectoral disputes in full flow, the committee would justifiably be asking me why I did not take action at the start of this year to try to give the Government and the State the ability to ensure those things did not happen. That is what I have done. I have concluded negotiations with the public services committee of the Irish Congress of Trade Unions. The conclusion was issued today. It makes the strongest possible commitment to the maintenance of industrial order for the remaining tenure of the Lansdowne Road agreement. That is why I believe this is the right decision. I believe that if we did otherwise not only would we face even more precarious prospects in the second half of this year, but we would either not be able to deliver a replacement to the Lansdowne Road agreement or, if we did negotiate an agreement, it would be dramatically more expensive and potentially unaffordable to the State. That is why I have put this framework in place.

There was a question about identifying the funding to pay for it and reference was made to the work the committee will need to do this year. That is work I will need to do during this year. I am confident in this regard. Last year, I identified savings and efficiencies of €168 million on top of maintaining service commitments for 2016. That is what I intend to do for 2017 as well.

I welcome the Minister. I wish to pick up on the Minister's response to Deputy Calleary on public sector pay. This is not about the rights and wrongs of any policy choice made by a Minister; it is about respect for this committee, in the first instance, and a recognition on the part of the Minister, Deputy Donohoe, and, hopefully, the Minister for Finance, that we have work to do. This is a new committee. Our job is to scrutinise spending and decisions made by the Department of Public Expenditure and Reform and the Government. Notwithstanding the rights and wrongs of the decision, €120 million is a great deal of money; it is not small change. The Minister says this can be achieved through efficiencies. The Minister has a responsibility to come before the committee and explain to us what exactly is meant by that. I imagine the Minister has been presented with papers by his officials on background information around how exactly that money can be saved and exactly what efficiencies he is talking about and in which Departments. Is it across all Departments? We have a right to that information and those papers. If we are to be in a position to hold the Minister to account properly on the one hand and to help and assist on the other, then we must have the information promised to be able to scrutinise properly.

The Minister referred to €120 million and said the saving can be achieved through efficiencies. That is a cause of concern for me and possibly for others on this committee. I am respectfully asking that any background information provided to the Minister with regard to how this money can be achieved is also given to us.

The Minister might also explain why the issue of equal work for equal pay was not dealt with. Earlier, the Minister mentioned the need for industrial relations harmony and holding the line on the Lansdowne Road agreement and so on. He will understand that at the heart of many industrial relations disputes in recent times has been the core issue of equal work for equal pay. This relates to those who came into the system post 2011. We have consistently asked the Minister and the Department to indicate how much it would cost to return to a single-tier pay structure to deal with this issue. The Minister has been unable to provide us with the figures. He has been unable to sign up to the principle of it or even give an indication that he will do it over a reasonable timeframe. Again, I am wondering why this issue was put on the long finger. It has caused tensions in classrooms, Garda stations and all manner of public sector workplaces because there is a two-tier parallel pay structure in place. Why was that not considered when the Minister was examining the Lansdowne Road agreement?

The Minister referred to capital spend. At the weekend an opinion piece by the director general of the HSE referred to the need for €9 billion of increased capital spend in health care in hospitals. The Cassells report refers to the need for billions more in capital spend. We have a housing emergency. Obviously, we need to build more houses and we need a great deal more capital spend on housing. I do not see anything in what the Minister has said today to suggest there is any urgency from the Government when it comes to investing in these areas. The Minister commented on how this was not about numbers but about people and services. However, the Minister said as much against the backdrop of people in hospital trolleys in record numbers, a dire need to invest in our schools and third and fourth level infrastructure and the need for the State to build housing. How does the Minister expect to be able to meet the capital demands that exist without more flexibility? How can we do that and continue with the tax-cutting agenda that he started in the last budget on top of previous budgets? I cannot see how the Minister can square the two. When representatives of the Irish Fiscal Advisory Council were before the committee, they said the only way we could do it in reality was to increase taxes on those who perhaps can afford to pay more, where possible. Obviously, the Minister is not in favour of that. His party has set its face against it and is in favour of cutting taxes. How is that possible in the face of what we are now seeing with regard to housing, health care and other areas? I have a supplementary question that I will put when the Minister responds, but I will take the Minister's responses first.

There was a question on health expenditure. By this year we will be spending €3,200 per head on health expenditure. This is a 5.4% increase above our highest ever point before that in 2009. Not only is health expenditure at its highest ever level; in per capita terms it is higher than where we have been before. At €14.1 billion, the allocation is the highest that has ever been made to the health sector. Where is that figure going? It is delivering a 10% increase in the number of people employed in the health service compared with where we were during the crisis period.

Those are the figures in regard to what is happening with health expenditure. It is the highest in terms of gross expenditure and the highest in terms of per capita expenditure, which I believe is a more appropriate way to measure these matters here in Ireland.

In regard to how we are looking to deal with capital expenditure, the Deputy is correct about the array of competing demands. There is a whole array of agencies, stakeholders and interests across the country that are looking for additional capital expenditure. The Deputy mentioned two of them and I mentioned the HSE. In regard to housing, we have allocated an additional €2 billion in health expenditure. He did not touch on transport, on arts and heritage, on sport or on all the other areas that are competing for this funding. The reason we are putting in place a capital review is to look at what choices we can make to expand capital expenditure and, within all that, see who would be the beneficiaries of it.

What I would say is different from what the Deputy has said is that, first, we need to pay for everything we commit to and, second, I believe we should move away from the approach of comparing the cash amount we are putting against capital expenditure with where we were at the peak, and instead look at what we want to get in return for it. The capital plan we have outlined up to 2021-22 looks to increase capital expenditure as a percentage of national income up to 3.8% to 4% of national income, which is in line with the 50-year average for the country and in line with where many of our peer economies are at the moment.

In regard to public sector pay, the Deputy said it is not about the rights and wrongs of policies. What it is about is making what are difficult choices that are not without risk, and trying to make a choice that gives the best possible prospect for us for 2017. That is what I have done and why I am here today to be accountable to the committee, as I will be. In all my considerations, at no point was I looking to be disrespectful to the Oireachtas or the committee. I believe it was appropriate that we made a decision at the start of this year. Across this year, through the various tools that are available to me, I will do everything possible to ensure the funding is put in place to do this while delivering against the other commitments we have.

I agree that €120 million is a very significant amount. Alongside that, however, it is 0.2% of what we have allocated for all expenditure within the State. What I have judged would pose an even greater challenge to public service delivery in the second half of this year is the disintegration of a collective approach to public pay. That is why I made the recommendation that was accepted by Cabinet. While the Deputy is pointing to the difficulties, in the interests of balance we should make reference to the statement that was issued by ICTU today and the commitment it has made to the maintenance of the Lansdowne Road agreement.

In regard to equal work for equal pay, we will be looking to address such matters in the context of the Lansdowne Road agreement and what will replace it. We will begin work on that, I hope, in the second half of this year. I have two concluding points in this regard. First, workplaces all over the country have employees who have different terms and conditions and different levels of salary, depending on the point at which they joined that workplace and the health and financial viability of their employer. To make a big change in that regard is something that will have consequences for everybody else who joined the public service, not just teachers. The only way the Government can deal with such a matter is in the collective approach to public pay that I am trying to maintain. I would hope the Deputy also recognises the agreement we did make with the INTO and the TUI that made progress in dealing with the issue of new entrant pay for teachers, and was recognised as such by the INTO and the TUI.

I have a small number of supplementary questions.

I ask the Deputy to be brief. We can come back to him.

With respect, I think the Minister has missed the point entirely. When I made my point that this was not about the rights and wrongs of his decision, I meant that sincerely. My point was that, in terms of process, he has made an announcement that he can achieve €120 million in efficiencies. The first question is why that was not identified at budget time. What people will reasonably ask is, if these efficiencies can be made, why were they not found earlier. The Minister has a responsibility to not just say in broad, bland, general terms that we have found €120 million. I cannot explain to anybody outside this room exactly where 1 cent of that will be saved because the Minister has given us no information whatsoever. We are the budgetary scrutiny committee yet I have not one scrap of paper in front of me which tells me where that €120 million will be found. That is the reality and it is the point I am making.

With regard to the capital spend, again, I do not think the Minister has addressed the point. He said earlier that he and the Government are looking at the review of public-private partnerships and the possibility of more off-balance sheet options. That is a tacit acceptance the fiscal rules are not working. If we have to look at these types of mechanisms, and we have seen how they have backfired on the Government with Irish Water, I do not think it is the way to go. To me, it is a recognition that these mechanisms have not worked.

The Minister made the point that this was not about comparing cash amounts and I have heard the Minister for Finance make the point a number of times that we should not focus just on how much we are putting into public services and that it is not about comparing cash amounts. The Minister, Deputy Donohoe, makes that point here again today yet, nonetheless, that is exactly what he did in his response to me. He talked about comparing the amounts of money that were put into the health service in the past when he said there is a record level of investment and so on - he is the one that made that comparison. I am pointing out to the Minister the reality that whatever he might say about the health service and about how much is being spent, we have problems in regard to capacity. More patients are being outsourced to private hospitals, there is more agency spend, there are missed targets in regard to people waiting to see consultants within 18 months and there are record levels of patients on hospital trolleys. That is the reality. When we have the director general of the HSE saying that €9 billion is necessary over the next ten years, it should be a wake-up call. I have heard nothing from the Minister to tell me that will be addressed in the short, medium or long term.

I do not need any encouragement to wake up. I am well aware of the capital needs of our country. I am also well aware of the difficulties that families are facing in regard to accessing our health services and the stress and anxiety families have faced across December and January. However, in any analysis of what we do to make progress, it is relevant to make the point that expenditure and investment and the number of people working in some sectors of our health service have never been higher. That is the point I am making.

There are 3,000 fewer nurses.

I said, "in some sectors of our health service".

I know. It is an important qualification.

It is in recognition of the fact it is an important qualification that I made the point. I understand what is going on in different sectors of our health service but, cumulatively, as I said, what we have seen is an increase of just over 10% compared with where we were a number of years ago. It is due to an understanding of the sectoral challenges that are faced, particularly within our health service, that we made an agreement with representatives of the nursing union in regard to the role of the student credit to try to address some of the issues we are facing in regard to the recruitment and retention of nurses. We have done that.

In regard to the specific points the Deputy put to me about capital spending, I have acknowledged the competing demands that exist. That is why I am reviewing the capital programme, despite the fact the programme is in existence less than two years. I know that the context within which the plan was first founded has now changed, and that is why I am doing this piece of work. Do I believe the fiscal rules are broken? No, I do not. Do I believe we should find ways of giving flexibility to capital expenditure?

The qualification for fiscal space, as the Deputy knows, already does that because it accrues capital expenditure in a different way to current expenditure when it occupies fiscal space. The Minister, Deputy Noonan, has said he wants to see whether further flexibility can be found on capital expenditure and we are doing work in that regard on housing to see if that can be done.

I thank the Minister for his presentation. I expect he probably had anticipated the backlash he is receiving from Deputies here today. There is no criticism as such in giving a pay increase to a public sector worker and nobody is disagreeing with that aspect of it. We, however, have a job to do. If we go back as far as the budgetary process when we scrutinised Government proposals and put forward our own proposals, certainly all the Opposition parties, Fianna Fáil, Sinn Féin and the others, put forward budget proposals on the basis of figures provided to us on the assumption that they were correct figures and that they were all the figures that were available. Moments before the budget was announced the Minister, Deputy Donohoe, managed to find €100 million. At the time it was highlighted to him that Deputies were very unhappy with how that was done and we felt it undermined the budgetary process at that point. Today the Minister, Deputy Donohoe, has found another €120 million and not so long ago he managed to find €150 million for An Garda Síochána. Nobody is begrudging money going to public servants but the job we have to do as Opposition Deputies on the Committee on Budgetary Oversight is to put forward realistic alternative budget proposals to the public and to the Minister. Because we are not operating on the same figures with which the Minister appears to be operating, it makes our job impossible and makes a mockery of the process. We must take the Minister at face value when he says that he has found this €120 million from savings and efficiencies - which is the term I believe the Minister has used. As Deputy Cullinane has pointed out, we have nothing before us to show where those efficiencies were made and we have nothing before us to tell the committee or the Dáil when the Minister found out about these efficiencies. When did the Minister become aware that he was going to have an extra €120 million to play with? On average it is working out at around €4,000 annually to members of the Garda - and again nobody is begrudging that - I understand why it was done. I appreciate the Minister cannot comment much on this aspect but clearly the difficulties facing An Garda Síochána, the onslaught and threat of an unprecedented all-out strike, the pressure it brought to public sector pay, the whole discourse around that process and all the upset around that HR difficulty have led to increased pressure on the Minister to find money elsewhere for other sectors of the public service. The Minister is telling us that he found this funding through efficiencies but it appears as though he found the money because he had no other choice. He tells us that it will not affect other services but there is nothing before the Deputies to assure the committee that this is not going to happen. The Minister speaks about the money going into the health services, for example, and that there has never been more money spent per capita in our health service. However, the numbers of people on trolleys at Mayo University Hospital this year reached an all-time high - the highest in ten years. If there is more money per capita going into the health service, where is it going? Clearly it is not being spent on the patient and is not improving the level of service provided to our citizens. I ask the Minister to take on board the issue of the undermining of the committee's work in the handling of this additional money being found and the lack of information coming forward to this committee to allow it to do its work. I take the Minister at face value when he says he wants to be accountable to this committee and that he is not looking to be disrespectful in any way but he can appreciate, from our perspective, why there might be anger on this side as to the way things have been handled.

Perhaps the Minister could comment on a criticism the Irish Fiscal Advisory Council, IFAC, has laid at the Minister's door on the trend for using temporary or volatile corporate tax receipts to pay for permanent services. What are the Minister's views on this and what steps is he taking to reduce the risks associated with that?

My final point is on the pre-budget work done by this committee. We heard presentations from various stakeholders such as the ESRI, IFAC and many others. At that point in time - going on the original figures the Minister told us were available in the fiscal space - we were being told by every stakeholder that it was on the upper limits of prudent spending for this State for 2017 and that we were hitting the upper reaches. Considering that we now have €120 million, another €50 million and then €100 million at budget time, is the Minister concerned that he may have exceeded prudent spending for this year, thereby putting us at risk in our economic performance?

I thank Deputy Chambers for her points. I make a broad point that this illustrates the contradiction and challenge I face as the Minister for Public Expenditure and Reform. Everywhere I go I face demands for more public expenditure and frequently, in the same analysis, people then go on to accuse me of breaching fiscal rules and expanding fiscal space. I must try to reconcile both together. On the response given to me by the Deputy, which she is entitled to do, it strikes me that if the Lansdowne Road agreement had disintegrated or if a number of my Government colleagues were facing pay claims that all had unpredictable consequences for this year, then I would be facing a very different issue if I was before the committee in the second half of this year. I will offer some perspective for those who have pointed to and criticised my response to the Labour Court recommendation on the An Garda Síochána issues. Those who criticise my response to it were also the people who were calling for An Garda Síochána to have access to the Labour Court. If I, as the Minister, had said the next day that I was not accepting that recommendation, then I would have fatally undermined the work of the Labour Court. For an employer to not accept the Labour Court's recommendation is one thing but it is another for the employer as Government - which set up the Labour Court - to not accept the recommendation. In so doing and definitively precipitating an environment in which the gardaí would have withdrawn their services, the next day would have posed a different set of consequences for which I am certain I would have been in front of this committee. Reference was made to how we are dealing with this issue. Critics are accusing me of responding to this but they would then criticise me if in the second half of the year I was facing pay claims that were unknowable. While there are risks with the approach I have taken, and I have acknowledged this, I believe in working with the Irish Congress of Trade Unions and bringing clarity to a figure for this year. It offers me and the Government the best prospect of dealing with the maintenance of industrial relations in the State for this year. I ask Deputies to consider where we would be across the summer if we were facing a situation where momentum was building in the aftermath of Article 50 being triggered - we have a very difficult situation in Northern Ireland and a responsibility to play our role in helping to respond to that - and a situation in which public expenditure policy was unravelling because we were uncertain about what public pay would look like in the second half of 2017. I have had to make a set of choices to deal with that. This is the argument I make to Deputy Chambers about the proposal that was supported in Cabinet today.

As I do not want it to be uncertain to the committee, I will clarify one matter. I do not state that I have identified savings or efficiencies and am not giving the figures to the Deputies. That is not the case. I am simply saying that the cost of this proposal is a very large amount of money, as I have acknowledged on a number of occasions, but it is in the context of the public pay bill of €13.5 billion. Were I to have the unknown that I had in respect to An Garda Síochána across every aspect of that €13.5 billion, I would face a massive challenge for expenditure policy for the second half of this year. I have a process for how we are dealing with the issue and in how we can reconcile funding this expenditure while meeting other commitments. I am more than happy to come back to the committee during the year to account for this process.

I will end on that note. What would have posed a bigger risk in the context of delivering all the commitments the Deputy wants me to deliver are, in the context of a €13.5 billion pay bill for the State, sectoral wage claims that will escalate in the second half of this year. I do not wish that to happen, which is the reason I have been engaged in negotiations with the Irish Congress of Trade Unions since early December. We brought those negotiations to a conclusion very recently.

I have a follow-up question, and I will be brief.

Did I miss a question from the Deputy on capital expenditure?

I do not believe so. I thank the Minister for his response. To be clear, I have never accused the Minister or anybody else of breaking the fiscal rules in any way. I was merely conveying to the Minister that the information the committee received prior to the budgetary process was that the original figure was on the upper limit of prudent spending, and the Minister has gone over €200 million beyond that. It is something of which to be aware. It was the information provided to the committee.

In terms of being accountable for the Lansdowne Road agreement and to avoid being back here in the second half of the year with that agreement disintegrating in front of us, nobody disagrees with the Minister. My point is that in order for us to have confidence in working with the Minister and his Department and to do our job, information must be forthcoming as soon as it is available and there must be a transparent process in place. I identified three separate situations where money has become available, even though we were originally informed that it was not available. My point is that this makes it difficult for us to put forward alternative proposals and to scrutinise the work the Minister does, which is the task we have been set.

I accept the Deputy's point. However, there is a broader issue. The Oireachtas is not a benevolent bystander in all of this. I had to manage a political process that had many participants, including the Deputy's party. We have an agreement with her party which it wants me to honour, and I had to deliver that. It was an exceptionally difficult process. While I take the Deputy's point about the consequences of that for the sustainability of public expenditure, I wish to make two points. First, part of what put me in the situation I was in was honouring the agreement in the programme for Government and in the supply-and-confidence agreement with the Deputy's party, as I was committed to do. Second, I am doing all of this in the context of the party I represent, which worked with Deputy Burton's party when she was Tánaiste in the previous Government, continuing its work into this Administration. We have seen the State's deficit come down from 11% of our national income, which is all we make and sell in our country, to the possibility of eliminating the national deficit within the next 18 months. As people make claims, as they are entitled to, regarding how we manage public expenditure and what that could mean for deficits and fiscal space, let us do that against the background of what our track record has been in that area during the past six years.

I welcome the Minister and thank him for his initial contribution. I have a few questions. To return to the issue of Garda pay, I am glad that an agreement was reached. It would have been incredibly unfortunate for the country if there had been a Garda strike, so it is welcome that an agreement was reached. However, in the material I saw about the agreement and how the €50 million is to be funded, I recall that €25 million is to come from within the resources of the Department of Justice and Equality. That struck me as being a fairy tale. I would be grateful if the Minister would analyse this. His Department is providing a certain level of support, understandably, out of buoyancy. In these statements, there is a great deal of revenue buoyancy, which has covered many of the difficulties that the Minister undoubtedly faced. However, in the context of any type of ordinary counting, will he please explain where €5 million, €10 million, €15 million, €20 million or €25 million will be found for Garda pay from the resources of the Department of Justice and Equality? To be honest, I do not believe what has been stated. It is a fairy tale. To return to the comments made about this committee, the Minister has a difficult job to do. We have a difficult job as well but we will help each other if we can be on the level about some of the figures. The Minister is not a magician, but he would need to be one to conjure up an extra €25 million from the Department of Justice and Equality. I would love to know the justice resources that would give up €25 million.

That brings me to the general principle of the expenditure reviews. The history of expenditure reviews worldwide is fraught with difficulty. There are the big beasts of public spending, which are social welfare, health, education and public service pay. They account for a vast amount of the total public spend, and a huge proportion of that is money well spent. I am anxious to know what the Minister means by efficiency and efficiency savings. Obviously, there are certain areas where progress can be made. One could try to cut down on fraud and clamp down on the black economy, which I believe is rampant again. These are areas in respect of which savings definitely can be made. The Minister's Department rides shotgun on the spending of all other Departments. It has six years experience of doing this, so the Minister should by now be able to share with the committee, via his officials, where the likely efficiencies will be found. There is one potential efficiency which I believe should be considered very carefully in the context of the type of economy we have. I refer to outsourcing. There are people in the Minister's Department who are very fond of the idea of outsourcing. We have a Government that is dedicated to rural Ireland, as opposed to Dublin. It is really quite hostile to Dublin.

My God, that is news to me.

It is not the Minister or me and certainly not some other people in this room but, based on reading the newspapers-----

I was not expecting that charge today.

One could base it on reading the newspapers. If the Department is going to outsource, I must bring it to the Minister's attention that what is happening with outsourcing is a drift down to minimum wage employment and relatively poor conditions of employment. The Department of Social Protection, in which I worked, has a huge amount of employment distributed throughout the country. There are large amounts of such employment in places such as Donegal, Sligo and the north west, as well as in the rest of the country. I seek reassurance from the Minister that this country-wide employment structure will remain largely intact. We have seen what happened with the British social welfare system, which is very different from ours, and in the social welfare system in the North. They have outsourced heavily, and disastrously so. In case this is one of the bright ideas floating around for those savings, I ask that there not be an agenda around additional outsourcing.

I have a question on another area. The Minister referred to demographics, which are terribly important. Can he supply the committee with a broad indication of the demographic costs involved? We know what they are in the context of younger children and a rapidly ageing population. I do not intend to go into that now but it would be useful for this committee because it is not often understood.

We have this marvellous thing that the Germans do not have, a rising population, a huge population of children but with big costs in health and education as a consequence. We also have an older population which is living longer, another great thing for the country but there is a pensions crisis. How is the Department going to approach the pricing of those demographic changes which are both a bonus and a huge pressure on spending?

In respect of the budget arithmetic, including the change that Deputy Chambers referred to, when a senior official told us an hour before the budget announcement that everything was "nailed down" – I think that was the term - there was a laugh around the committee because as we suspected, all the figures were subject to change. What plans is the Minister putting into his expenditure proposals and reviews for the cost of Brexit? The sterling rate in the budget arithmetic was assumed to be around 85 cent. It has fluctuated quite dramatically since and is falling rapidly. Many of us recall the mushroom growing firms in Monaghan and the midlands that closed overnight. It will be necessary for the Government to put a plan in place for Brexit. Is there a contingency plan? In a certain sense Brexit will happen very slowly. Will something be put into the plan?

We need more figures on the child care initiative due to start in September because the provision for it seems very low for our child population. It will be only three months of this year but in the context of buoyancy it is changeable. I would like to know more about that and in fairness to this committee the Minister should give us more information.

In respect of the health service, while I appreciate that €14.1 billion is the highest figure ever, does the Minister really think the Department and its officials have a grip on spending in the health services in Ireland? We are yo-yoing around very large changes in the figures in the budget season almost week by week. In his statement the Minister says correctly – and I was a member of the Government involved in this – that the health expenditure went up by €780 million in additional allocations. That was followed, which has become the practice in the Health Service Executive, HSE, by the most recent statement, that it wants €9 billion over ten years. Eaten bread is soon forgotten. I know this included capital but does the Department have a serious take on the finances of the health service?

Many extra managers have been employed recently in the health service. While I know managers are necessary most people want to see that expressed in extra nurses, doctors, medical services and people with qualifications in that field. In respect of the queues in accident and emergency departments in many parts of Dublin, and Deputy O'Connell could probably elaborate on this, there are very good services available at pharmacy level which are well positioned to take some of the pressure off people going to accident and emergency departments. That does not, however, seem to be prioritised in any way. Some of the quality services available in pharmacies in my constituency, the Minister's and that of Deputy O'Connell are absolutely excellent at providing people with information and reassurance for example, when children have cuts or grazes or adults have relatively minor complaints, such as the start of a cold. This, together with community-based services, seems to be the way to go yet we do not seem to be over the threshold. What does the Department do to monitor the health service budget? I presume the €9 billion has been accepted because nobody from the Department said it did not accept that figure. Is it right? Is this the private negotiation? That is roughly an extra €1 billion per annum. It is a lot of money unless we have a lot of extra buoyancy.

The Minister for Finance told us he was involved in negotiations on the terms of the fiscal rules. Is the Department of Public Expenditure and Reform involved in them because unless we put serious capital investment into the capital region, as well as the rest of the country, we will not do as well as we could from Brexit by companies locating in Dublin? I think we have a good chance of getting extra jobs out of Brexit.

I will begin with health expenditure and then deal with the Deputy's points on pay policy. I will fully answer the question on staffing because it is important to put this on the record. In December 2013 there were 8,353 people working in the medical and dental sectors of our health service. That figure was 9,692 in November 2016, an increase of 16%. There were 34,169 nurses, there are now 35,795, an increase of 4.8%. The figure for health and social care professionals, such as social workers and people who work in the community, was 12,400; it is now 15,300. In management and administration there were 15,500 staff and there are now 16,700, an increase of 7.8%. For general support staff, who support the running of primary care centres and hospitals, there were 9,786 in December 2013, there are now 9,415, a decrease of 3.8%. In respect of patient and client care, there were 16,796 in December 2013 and at the end of November 2016 there were 19,874, an increase of 18%. There were 9,808 more people working in our health and social services in November 2016 than in December 2013, an increase of 10.1%. To paint a picture of numbers of people working in those services contracting is completely inconsistent with the figures for what has happened over the past three to four years. Those are the figures.

In response to the question do we have a grip on health expenditure, the management of the health Vote probably occupies a fifth of my time. I engage daily and constructively with the Minister for Health, Deputy Harris, on this. In respect of whether we have an assessment of this, after many years of difficulty in managing it and the Deputy will be well aware of those difficulties because she was party to some of them, I made an intervention last summer in advance of the health Estimate coming to the House and we absolutely expect that revised figure not to be overspent. I have the same expectation for this year, in contrast with the terrible difficulties my predecessors have had to face in the management of that Vote.

It is one that justifiably attracts a huge amount of my focus and time, given the anxiety and fear people experience when difficulties arise with regard to delivery of the services. However, to paint a picture of not being able to recruit or numbers decreasing is not the reality in terms of what is happening in those services.

Before I deal with the Deputy's specific points about where we are with public pay, and I will do my best to answer each of them, I want to again read into the record a section of the text we negotiated with the Irish Congress of Trade Unions. I will paraphrase it to get to this point. It states that this agreement is being offered by Government on the understanding that there will be continued adherence to the terms of the Lansdowne Road agreement and, in particular, its mechanisms to resolve disagreements before they escalate into industrial disputes over the remaining period of the agreement. It further states that the requirement to adhere to industrial peace will be fully observed in all sectors. That is a joint statement by the Government and the Irish Congress of Trade Unions. I need hardly tell the Deputy we were a long way away from that place in December. I am facing challenges on which she is justifiably questioning me now in terms of how we got to this point but as I have said on a number of occasions, it is my assessment that the challenges I face now are different from the position I would be in if our pay bill became completely unpredictable and uncertain in the second half of this year.

The Tánaiste and Minister for Justice and Equality has provided details to her counterpart in the Dáil on the detail of the question Deputy Burton put to me. I do not have the information with me. However, I will ensure that the Deputy receives an answer to her query.

In terms of how I will manage to deal with all of this across the entirety of 2017, I am not committing to tax buoyancy at this point. That is a decision for the Minister for Finance to make but I am making the point that the figure before us is less than the savings we accrued at the end of 2016 in respect of expenditure after I had met all the other commitments I had to meet. While the Deputy was not party to all of this, I want to make the point that the process was a very difficult one of ensuring we could pass a budget for this year and trying to reconcile all the demands we faced. What I will not wear, however, is being obliged to negotiate the passage of that budget through the Oireachtas in a way that is consistent with our fiscal rules and deficit targets for this year while - once I have secured the agreement to lead to it being passed - facing charges that the budget is in some way inconsistent with the fiscal requirements I must meet. I am responsible for this budget and I was responsible for negotiating its passage through the Oireachtas.

On the points the Deputy put to me in respect of outsourcing, she can rest assured that the level of enthusiasm I have for outsourcing is roughly the same as was the case when Deputy Howlin was running this Department. Whatever role I can see regarding outsourcing will not precipitate any rush to the bottom in terms of wage levels or service levels. I want efficiencies and value for the taxpayer but I am aware of my other obligations and I will do my best to meet those also. That is one of the reasons collective agreements matter. I have been at pains to say, both privately and publicly today, that collective agreements have benefits that flow both ways. That has been a factor in the agreement we have reached today.

In the context of our assessment of the demographics, a detailed paper on that, which I will share with the committee, was produced by my Department. We know that to fully meet the demographic pressures, particularly in education, our public service numbers would need to grow by approximately 3% per year until 2021, and education is a big part of that. As this Dáil develops and as we get into the passage of future budgets, which I am determined to see passed but everybody has a role to play in making sure that happens, that will become a far bigger factor. It will be a factor when the Government publishes its Estimates on the fiscal space for 2018, which we will do in the mid-term expenditure update in the middle of this year.

Brexit is absolutely a factor. In my capital review, in particular, and in the terms of reference I have agreed with my Department, Brexit is part of it. I make specific reference to it and to the regional consequences of Brexit because I am aware that the north-west of our country is facing particular pressure in terms of infrastructure, and that will be exacerbated if we see very negative consequences from Brexit materialise.

That leads on to the accusation that we are in some way anti-urban. I assure the Deputy, as somebody who lives a few minutes away from O'Connell Street and represents a constituency in the middle of Dublin adjacent to hers, that I see no evidence that this is a constituency that is in any way anti-urban. Many of the decisions we are making in the area of public transport, for example, are with a view to trying to serve larger urban centres. It is our larger cities, most notably Dublin, Cork, Limerick and Waterford, with their high concentrations of population, that will benefit from some of many decisions we have made in respect of housing.

With regard to the breakdown of expenditure for child care, we have made available an additional €86 million for the roll-out of the extended child care scheme that the Minister, Deputy Zappone, has announced. That forms part of an increase of €174 million for her Department, which, in percentage terms, was by some way the largest beneficiary of budget 2017. I do not believe they are underfunded in any way but the Deputy is correct that this is only for three months of that scheme. My understanding is that the target live date for that scheme was October 2016 and the full-year cost of that would then be taken into account in discussions I will have with the Department of Children and Youth Affairs for 2017. That will also feed into the expenditure report we will publish in the middle of this year.

Finally, I have already given my view on fiscal rules and how we take account of capital expenditure with regard to that but under the division of responsibilities that was carried forward into this Government, the Minister for Finance, Deputy Noonan, has overall responsibility for that area as the person who sets the overall expenditure ceilings for Government. He is leading the Government view on that matter but he is well aware of my views on it.

I have a brief supplementary question. To refer again to the urban-rural situation, there are a couple of reports in the Irish Independent today that a house restoration grant is to be made available for young couples in rural towns and villages. In the areas the Minister and I represent, the cheapest option for many young couples in terms of getting their first house will be a second-hand house. It is grossly unfair, and a poor policy, that if funding is given - which I do not have a problem with if the money is available - for properties in villages and towns in rural Ireland, it is wrong not to make something equivalent available when many young couples literally have a gap they cannot cross in terms of being in a position to both buy houses and then, particularly if they are buying second-hand properties, whether in urban or rural Ireland, to give these people some support in upgrading them.

The report was attributed to a scheme the Department of Arts, Heritage, Regional, Rural and Gaeltacht Affairs is to launch shortly. It is very short-sighted to say this would be confined to younger people buying homes in rural towns and villages and not made available to their urban counterparts who work just as hard and are striving just as hard to get homes in urban areas, cities and bigger towns around Ireland.

Before we assess a policy, we should allow it to be announced. I understand that will happen very soon. I know the Minister, Deputy Humphreys, will make an announcement regarding an action plan for rural Ireland. My understanding is that the challenges rural Ireland faces, which I know well and have experienced, regarding depopulation and the availability of public services are a concern of the Oireachtas. That is what the report seeks to address. Alongside that, areas with high population densities, which are concentrated in larger urban areas and cities, will be the main beneficiaries at the same time of improved public transport plans such as: Luas Cross City; the availability of more buses - for example, to Dublin Bus; and the potential for a high-capacity metro link. Because of the lower population densities of other parts of the country, these facilities' equivalents might be available but the scale of investment is unlikely to be. This provides the background to the rural action plan which I think the Minister, Deputy Humphreys, will launch soon and which, when launched, will be able to deal with the kind of issue the Deputy has articulated.

Very briefly on that, the Minister is being rather short-sighted, and I am a little surprised. In urban areas, in big cities and towns, investors are beating local young people to purchasing second-hand houses. If the Minister is now going to provide a set of cash incentives, which he has more or less confirmed, to people buying second-hand homes, "doer-uppers", in rural areas, with which I do not have a problem - it sounds very good-----

Deputy, I do not want to-----

What I do not understand is why the Minister would consciously discriminate against young people in cities and big towns.

I cannot for the life of me extrapolate from the statement I made to the Deputy how I confirmed her view on the policy.

The Minister said there will be an announcement.

I said we should await the announcement of a policy before we make our minds up about it. How the Deputy can deduce from that statement the content of the policy is a matter for her. There is nothing at all short-sighted in what I have said. I can only assume that her opposition to this scheme is shared by Deputies Kelly and Penrose and I look forward to hearing them confirm that.

I call Deputy Doherty because I know he is under time constraints.

I thank the Minister and his officials. I am due to ask the first question of the Minister for Finance, Deputy Noonan, in a few minutes. I wish to put a number of factual issues to the Minister for clarification - quick questions and quick answers, if possible. Can he clarify that the €120 million will be identified from public sector savings? Is €120 million the correct figure? Is my interpretation correct?

I will not give a quick answer to any of the Deputy's questions because if I do so, he will be back here holding me to account on it. I have said that I will work across 2017 to identify how we might fund the sum out of public expenditure and savings within public expenditure overall in the same way the same approach last year yielded €168 million-----

It is therefore not just the wage bill, it is across every-----

The answer, therefore, is "No".

If the Deputy is going to let me put a point to him, he should let me finish it off.

Yes, that is fair.

I have answered the Deputy's question-----

I know and I appreciate that.

-----but I will not get into a binary approach because the Deputy will have me back before the committee holding me accountable for the answers I give him.

I just want clarification as to whether the savings inefficiencies were solely directed at the pay bill. That is all. This is not confrontational at this point in time. It may get there. Hold on.

It is normally when people assure me that matters will not be confrontational that they end up being confrontational. This is like AOB in a party meeting.

Regarding the budget which the Minister presented to the House and which his Ministers presented to the different committees, were efficiencies and savings identified in budget 2017? If so, what was the quantum of efficiencies and savings targeted?

I did not in budget 2017 identify an efficiency figure and I did not at that point identify the savings we had delivered across the entirety of 2016.

Why did the Minister not identify an efficiency figure? Did he think there were no inefficiencies or did he decide not to look for efficiencies?

I did not identify an efficiency figure because at that point there were three months remaining in the calendar year.

Could the Minister explain that to me again? I am talking about budget 2017. In budget 2017, which he presented to the House, he did not target any efficiencies.

Excuse me, I thought the Deputy was referring to 2016. Regarding why I did not identify such an efficiency savings figure for 2017, I will not go into a spending review and lay out the precise figure I am looking to save. The reason for this is I want this to be an ongoing approach that will happen every year, and if I lay down the exact figure we are looking to save, I will perhaps create an environment in which I can only save lower than that figure, and I do not want that to happen.

Could the Minister speak to me about the spending review? It will be executed this year.

The spending review will be implemented this year over one third of Government expenditure but it would then be an ongoing process over a three to three and a half year period. My objective is that it will have covered off the entirety of Government expenditure.

The Minister has now identified a target of efficiencies and savings that must be required as a result of the decision announced earlier today. I want to repeat this because other members have said it. I am not interested at this point in time in the merits of the decision, good, bad or indifferent. I am not interested in whether things would be worse three months later or whether the fiscal position would be worse if he did not take the decision.

The key issue occupying my mind and I think a number of other members' minds is that this is a budgetary scrutiny committee, which we are all attending in good faith. Hopefully, this is a new venture. However, this type of carry-on from Government is not acceptable, coming before the committee a couple of months after announcing a budget and a couple of weeks after other committees have dealt with and scrutinised Estimates and saying it will find €120 million of efficiencies which were not identified a couple of weeks beforehand but not provide a scrap of paper - not one piece of paper - to the budgetary scrutiny committee to convince us that what he has announced is in any way achievable. I say this with respect. The Minister has a responsibility to do this. He came before the predecessor of this committee, the budgetary arrangements committee, and talked in glowing terms about how the Executive and the committee need to work together. This is it now. He must provide this committee with the papers he was presented with by his Department to somehow suggest to us that €120 million of savings is somehow identifiable.

It is an extraordinary statement to say one is not interested in the merits or demerits of a policy position.

I did not say that. With respect, I said "at this point". The Minister may try to deflect from what we are supposed to do, but let me explain what it says on the tin: "budgetary scrutiny committee". We must scrutinise not only the policy decisions of Government but also, crucially, the expenditure and the tax areas. The Minister accepts that. Therefore, we would be in dereliction of our duty if we did not challenge the Minister if he came before the committee and said a couple of weeks after the budget had been passed, "I am spending another €120 million." A couple of weeks earlier it was €50 million. In a couple of weeks' time we anticipate €58 million for the continuation of suspension of water charges.

Add it all up and it is nearly €250 million. It is 25% more than the net fiscal space that was there at the time of the budget. If we did not ask the questions as to how this money is supposed to be found, then we would not be doing our duty. Let us reverse roles for a minute. If I stood up in the Dáil, asked the Minister for Public Expenditure and Reform to spend €120 million on a project that I felt to be worthy and said it should be found from efficiencies somewhere, the Minister would laugh me out of it, and rightly so. I have a question to put to the Minister and ask him not to deflect from it because the issue here is really important and we could deal with that if we had time. The question I have relates to the committee and its integrity because I have no intention of being a member of a committee which is just pushing paper and is not being fed the information from Departments. We made that clear at a very early stage. The question is, will the Minister provide this information? I am sure the Department has provided some type of paper to the Minister that suggests where €120 million of savings can be achieved over the next number of months.

To respond to the Deputy, I have a responsibility across this year, to this committee and to the Oireachtas, to explain how we will pay for the €120 million, alongside delivering the other commitments that we have for 2017. I will discharge that responsibility across this year. The reason I have brought forward that proposal for €120 million, and I am confident I will be able to identify that figure, is that because in previous years, leaving aside the issue of buoyancy and what happens in tax take, processes and work that my Department has done have yielded figures that are higher than that. When I complete the work I am going to do across this year on how we will pay for this bill and the detail of how we will pay for it, I will be accountable to members and I will discharge that responsibility. I am confident that we can deliver that figure and have outlined the process as to why. During and at the end of the process, I will answer and will be in a position to answer Deputy Doherty's questions.

Alongside that, the Deputy talks about his responsibilities. I also have another responsibility. All of the events to which I am referring and to which I am now responding, in particular the magnitude of the Labour Court recommendation and the scale of difference that meant to the public pay bill, happened after I put in place the budget for 2017. It is my assessment that if I do not respond to this now, the figures I might need to find in the second half of the year will be many scales larger than the €120 million on which the Deputy is challenging me now. That is why I have made the decision to which the Government has agreed today. While there is a challenge regarding this figure - the Deputy is justifiably raising it with me - the amount of risk I would face in the second half of the year if I did not do what I am doing now would be many quanta bigger and many multiples of what I am facing now.

The Deputy is correct that I have a duty to explain how I am going to find this figure. Will this be in higher expenditure? Will it be in the reallocation of expenditure? Will it be in other choices that we make? I will account for that across this year. To conclude on this point, unless I deal with this now, my assessment is I will face larger risks and larger figures in the second half of this year. While I will not read it out again, as the Deputy already has heard it, I read into the record of the committee the recommitment that has been made by the Irish Congress of Trade Unions, ICTU, on industrial stability and the Lansdowne Road agreement. That is essential to the decisions and issues we will face in 2017 and beyond.

Many of us warned before the budget that there were issues in respect of public sector pay. My colleague, Deputy Cullinane, has raised that with the Minister on many occasions and it was ignored. The Minister presented a budget here and asked the Oireachtas to approve a budget. He now suggests that the Government was going to find savings anyway and was not going to spend that amount of money. Consequently, the Estimates were a wee bit bogus since those were not the real figures anyway.

Regardless of the rights or wrongs, we have to deal with the fiscal part of this year. The Minister has come before the committee and has said he has no idea as to how he will get this €120 million but is determined to find it and that it will be found somewhere. The danger in all of that is to service delivery. We have constituents and we know what is happening. Unfortunately, in my constituency efficiencies in the health service meant that when people who had home help support passed away, that home help support was taken into the Health Service Executive and 50% of it was reallocated. This meant people could not get out of hospitals or nursing homes and back into the community. That is what are called "efficiencies". Moreover, the non-recruitment of people into positions was deemed to be savings by the Department. I just do not think it is credible. It is what it is, but it is bizarre that the Minister for Public Expenditure and Reform has come before the Committee on Budgetary Oversight and has told members he does not know at this point in time from where the €120 million will go. As a final point to the Minister, it is expected or at least there is a likelihood that the suspension of water charges will continue during the period of 2017 at a cost of €58 million. Is that €58 million likely to be found down the same couch where the Minister is going to find the €120 million?

I do not have the luxury to look at a decision and say that regardless of its rights and wrongs, we are going to analyse it and suspend the rights and wrongs of that policy. I do not have that luxury. It may be one that the Deputy has-----

----- but it is not one that I have.

I would have a proposal to raise revenue. That is the difference.

Let the Minister say his piece.

What I have weighed up, in respect of this decision, is the choice I can make that will give me the greatest certainty regarding what the pay bill will look like in 2017. If the entire public pay bill was to go down the route it faced the risk of going down towards the end of 2016, the figures the Government would be asked but would be unable to find would be many multiples of this. They would be costs that would transfer into 2018, 2019 and 2020. That is unlike the agreement that I have today. One of the main reasons I am doing it, the Deputy has referred to the risks to service delivery, is that I am always doing this with a mind to those who depend on our public services. It is my judgment that a very significant risk exists to service delivery in our country if collective agreements, the principle of which I believe Sinn Féin supports, are undermined. I face that risk in the absence of this agreement. That is why I have made the choices I have in this regard.

Across this year, I will respond to the Oireachtas as to how this matter will be dealt with. I have outlined the options available as to how we will deal with it. I am repeating myself but then again, so has Deputy Doherty in terms of the points he has put to me. I believe the savings from the options available to me to generate this figure are equivalent to - and the figures that were delivered in the past, in 2016 in particular, are lower than - the cost of this agreement. In the absence of this agreement, I would have faced a horizon of potentially hundreds upon hundreds of millions of euros of risk for our public service pay bill.

A key thing that this committee has to do is scrutinise policy positions prior to them being enacted. That is why, for example, the Department of Finance is releasing the tax strategy papers to us before the tax strategy is announced on budget day, and so on. The Minister is familiar with this. Let me put the question to him again. There is no doubt in my mind, or maybe he can tell me I am wrong, but that the Department has provided the Minister with a paper or a page to suggest from where efficiencies or savings can be gained within the public sector or within the public pay bill. I am asking the Minister, on behalf of the Committee on Budgetary Oversight, and I am not sure if members will endorse this request, to provide that to us in order that we can do our job and scrutinise what is now a budgetary measure. Will the Minister do that? There is no point in coming to us six months or three months down the road. Our job is to scrutinise in the here and now.

I differ with the Deputy. There are clearly assigned roles for the Executive and the Government in our Constitution which allows the Government to take decisions in areas and implement them. The Government is then examined and scrutinised by the Oireachtas after it has done that. Deputy Doherty knows there are different roles laid down for the Oireachtas and the Government when it comes to Government expenditure. That is what has happened in this case. The decision I made today is clearly inside the autonomy and power that the Government has under our Constitution, as the Deputy well knows.

Without a doubt, but let us scrutinise it now.

On the latter part of the Deputy's question, any paperwork available to me on the spending review and this decision will be shared with the Deputy. However, if I was in a position where we had already identified the outcome of a spending review, then the Deputy would be asking me why I was going ahead with it.

It is not the spending review. I want to know if there is any paper which suggests how the Minister can save €120 million. That is what the committee wants to know and that is what the questions were leading to earlier on. The Department must have provided the Minister with a paper suggesting this is possible and these are the areas where it is possible.

I think the Minister has answered the Deputy's question. I call Deputy Richard Boyd Barrett.

I welcome any acceleration of pay restoration for workers, either in the public or private sector. It is positive and is a fantastic vindication of the decision of gardaí and teachers to resist. They deserve the credit for this change in policy by the Government. Now people inside the Lansdowne Road agreement have been the beneficiaries of the justified militancy of gardaí and teachers. While I welcome it, I would much prefer if it were financed by increased taxes on those who could afford to pay, rather than from €120 million which the Minister cannot fully explain from where he is getting it. Is it not the case that it will inevitably come from cuts or, at least, by removing flexibility in other areas of public services which could do with it? Given how underfunded many areas are, such as health, they could do with a bit of upward flexibility and discretion but now they will not have it. Extra revenues should have been raised through larger contributions in corporate tax, financial transaction tax, taxes on those with higher incomes and a landlord tax, as we proposed in our alternative budget submissions, to ensure some pay restoration. While I welcome the pay restoration, is it not the case that the Minister is potentially robbing Peter to pay Paul?

This is not about recognising those outside the Lansdowne Road agreement but those inside it. The only protagonists I have had in the outcome reached earlier today are those representing those inside the Lansdowne Road agreement. I do not believe one could justify this as rewarding militancy - the Deputy's phrase, not mine - when this agreement only benefits those inside the Lansdowne Road agreement.

On the inevitability of cuts, I have described the way in which I have looked to handle the matter. I have dealt with questions from all the Deputy's colleagues on this. I have spoken about the role of efficiencies. I have outlined that, if it looks at any point that it would pose challenges in the delivery of key services, this is a matter the Government will review across the year. As I have said on several occasions, while Deputies are asking me many questions about the decision I made today, I am certain that if I had not made this decision, I would have far bigger challenges and questions later on this year. That is why I made the intervention that I have.

Just for clarification, my point was that those inside the Lansdowne Road agreement have now benefited from the militancy, people power, determination to campaign or whatever one wants to call it, of the teachers and the gardaí. To my mind, it is a vindication of the decision of those workers to fight for proper pay restoration. There is a belated acknowledgment on the Minister's part, forced on him by the teachers and the gardaí, that accelerated pay restoration was necessary. Frankly, more is necessary and sooner because even with this accelerated pay restoration, all these public service workers affected will still be earning less than they were before the austerity started. Eight years after austerity started, public sector workers are still earning less than they were before all this.

I believe in the right to pursue immediate pay restoration. My point is that it has taken action by the teachers and the gardaí to do that because the Minister resisted it all the way along the line. It should not be financed by shaving corners off other stretched budgets.

I completely disagree with the Deputy on that point. We went through a period where 500 secondary schools were closed. The Deputy welcomed the action that led to their closure. The reason the schools were closed was because the Government did not want to make agreements on public pay outside the Lansdowne Road agreement. The Deputy wants immediate restoration of public pay with the improvement of public services. The journey and the challenges we have ahead of us on public pay are considerable. If we had not made the adjustments we made today, those challenges would be even greater.

We will agree to disagree.

I will allow Deputy David Cullinane back in with one quick question.

It is a question that was not answered. An Teachta Pearse Doherty and I had put a direct question to the Minister earlier. Was the Minister presented with any background, options or efficiencies papers by his officials, in advance of taking the decision to spend the extra €120 million, on where the money could be found? Was he presented with any paper which even had broad headings? He mentioned reallocation and higher expenditure.

I have a substantial number of background papers on these issues. Have my officials and I agreed how we are going to find-----

Had they provided the Minister with options?

We have many options.

There are documents which have not been presented to us.

Any documents we have on decisions we have made can be made available. However, this must be within some parameters. Any Government needs to have the space in which papers can be presented to it to help in the decision-making process without risk of them being interpreted in such a way that creates unnecessary worry or challenges. The freedom of information legislation recognises the deliberative process in policy-making.

At the moment, the Deputy is asking me whether the Government has defined exactly what savings are going to be made.

That is not what I asked. What I asked was-----

Let the Minister answer, please.

He is mischaracterising the point that I made.

Let me finish off my point-----

What I asked was whether he was given options, even in broad terms.

What the Deputy asked was whether we have options on how to generate the capital. As of this point, these options have not been identified beyond what I have said to the Deputy.

I will draw that to a conclusion. The question has been asked by Deputy Cullinane as well as by Deputy Doherty.

Before I conclude the meeting, I would like to comment myself. To be honest, I am somewhat mystified by the contributions of some of my colleagues. I warmly welcome what the Minister has announced. As the Committee on Budgetary Oversight, one of the things we cannot detach ourselves from is the potential impact of unknown quantities being spent throughout the year on the budget. I warmly welcome the proposal the Minister has brought forward. I believe it is a proposal of common sense. It brings forward basic clarity and gives a defined figure for a cost for the year. It takes out that uncertain risk. I have no doubt that there are hundreds of thousands of public sector workers throughout the country who are very pleased with this announcement today. From a budgetary perspective, being able to put a figure on this at this point in the year and effectively to put a cap on it is something that we should welcome. I commend the Minister on his work. If we look back to last December, and this is a reference the Minister himself made, I do not think anybody here would have believed that we would have reached this type of agreement and understanding. I am tremendously pleased that we are now facing into 2017 with the type of certainty that allows all the planning for the other aspects of the budgetary outturn during the year to be looked at in the knowledge of what that figure is. That is my contribution on the matter.

I thank the Minister and his officials for attending the committee today. We appreciate his time and the answers he has given to all our questions.

The select committee adjourned at 6.12 p.m. until 2 p.m. on Wednesday, 8 February 2017.