Framework for Parliamentary Engagement Throughout the Budgetary Cycle: Discussion

I have not received any apologies. Today we are joined by the Minister for Finance, Deputy Donohoe, and the Minister for Public Expenditure and Reform, Deputy Michael McGrath. They are welcome. I thank them very much for joining us this afternoon. The Minister, Deputy McGrath, is accompanied by officials from the Department of Public Expenditure and Reform, including Ms Caroline O'Loughlin, assistant principal for performance budgeting, Mr. John Kinnane, principal officer, central expenditure policy and reporting division. The Minister, Deputy Donohoe, is accompanied by officials from the Department of Finance, including, Mr. Niall Cassidy, principal officer in the economics section and Ms Anne-Marie Walsh, principal officer in the tax section.

Today we will discuss the committee's interim report on the framework for parliamentary engagement throughout the budgetary cycle, the potential for enhanced parliamentary engagement, and the capacity of the Executive to support an enhanced framework. This is the committee's final engagement before it publishes its final report.

Before we begin I wish to explain to the witnesses some limitations to parliamentary privilege and the practice of the Houses as regards reference they may make to other persons in their evidence. Pursuant to both the Constitution and statute, the evidence of witnesses physically present or who give evidence from within the parliamentary precincts is protected by absolute privilege. However, if they are giving evidence remotely from a place outside of the parliamentary precincts, as such they may not benefit from the same level of immunity from legal proceedings as a witness who is physically present. Witnesses are reminded of the long-standing parliamentary practice to the effect that they should not comment on, criticise or make charges against a person or entity by name or in such a way as to make him, her or it identifiable, or otherwise engage in speech that might be regarded as damaging to the good name of the person or entity. Therefore, if statements are potentially defamatory in regard to an identifiable person or entity, witnesses will be directed to discontinue their remarks. It is imperative that they comply with any such direction.

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 of the Houses or an official either by name or in such a way as to make him or her identifiable. I remind members of the constitutional requirements that they must be physically present within the confines of the places in which Parliament has chosen to sit, namely, Leinster House and the Convention Centre Dublin, in order to participate in public meetings. I will not permit a member to participate where he or she is not adhering to this constitutional requirement. Therefore, any member who attempts to participate from outside the precincts will be asked to leave the meeting.

I invite the Minister for Public Expenditure and Reform, Deputy McGrath, to make his opening statement. Due to technical problems we cannot hear him. We will try to establish contact. If we cannot sort out the sound issue I will call on the Minister for Finance, Deputy Donohoe, to make his opening statement. I am sorry, but we cannot hear him either.

I thank the committee for the invitation to appear before it today and to make a contribution to its deliberations on parliamentary engagement throughout the budget cycle. The interim report of the committee sets out a number of key observations, including in respect of pre-budget and performance scrutiny. I will deal with the issues that are relevant to the expenditure side of these processes.

I am very appreciative of the efforts and the insights that have gone into the preparation of the interim report. It is encouraging that the progress that has been made in recent years in improving and strengthening the opportunities for parliamentary engagement in our budgetary process not least through the establishment of this committee, of which I am a former member, but also that it would be kept under review and that opportunities for further enhancement should be identified and implemented, where appropriate.

Equally, it is important to acknowledge and to remind ourselves of the progress that has been made and that is under way to support increased parliamentary engagement. As I have just mentioned, the establishment of this committee is one milestone in this reform agenda, as is the establishment of the Parliamentary Budget Office. At the same time, the reforms introduced by the Departments of Public Expenditure and Reform also support budgetary scrutiny and effective engagement with the budgetary process. The programme for Government also outlines a number of priorities in the area of reform to the budgetary process, including the development of well-being measures and better budgeting for demographic costs. These priorities, along with the significant reforms in place, can help to deliver more focused and more informed engagement. As the committee noted in the interim report, a more effective budgetary framework has the potential to lead to improved outcomes for citizens through better informed policy-making, resource allocation and accountability. Ultimately, that is an outcome we all want to see delivered.

Reforms in recent years with the publication of additional documents such as the summer economic statement and the mid-year expenditure report support better pre-budget scrutiny. I acknowledge that the pandemic impacted this process last year, with the mid-year expenditure report not being published in July as usual and being replaced by a pre-budget expenditure update published in advance of the budget in October.

The exceptional circumstances last year, with a requirement to respond to the evolving situation with the virus, meant that the focus was on implementing measures to support people and businesses experiencing extreme difficulties arising from Covid-19 and to ensure that the health service had the resources to respond to the crisis. The scale of support provided resulted in overall gross voted expenditure for 2020 coming in at €85.3 billion, an increase of almost €15 billion on the amount set out in the pre-Covid Revised Estimates for Public Services 2020, the REV. I acknowledge the role of the Oireachtas in considering and approving this significant level of additional expenditure required to implement these support measures.

Turning to pre-budget scrutiny, there are a number of processes in place that can support such engagement.

In setting out the departmental expenditure baseline for the medium term, reflecting pre-existing commitments arising from cost pressures such as demographics and outlining the mid-year expenditure position for Departments, the mid-year expenditure report is focused on supporting enhanced pre-budget scrutiny. I note that the interim report specifically references the cost of standing still for the budget year, including taking account of demographics. This is an issue that the mid-year report seeks to inform and, as I noted earlier, better budgeting for demographic costs is included in the programme for Government.

Alongside the mid-year expenditure report, my Department publishes the spending review papers. Among the objectives of the spending review process are the assessment of the effectiveness of public spending in delivering on policy objectives and the development of evidence-informed policy making. With more than 100 published papers from the spending review process since 2017, this represents a significant evidence base to support policy formulation and development and a year-round approach to the budget process.

I note that the interim report outlines that performance scrutiny should move towards a more structured year-round engagement. I am supportive of the principle that underlies this recommendation. Indeed, there are a number of processes and reports in place that can support such engagement. In this regard, performance budgeting has been a key focus of budgetary reform. With the change in the budgetary timetable in 2013 and the Revised Estimates Volume, REV, now being published in December each year, this provides an opportunity for earlier engagement by committees with the Estimates during the first quarter of the year. The REV itself has developed significantly in recent years and now routinely includes details on activities, outputs and context-specific outcome indicators.

Over the past three or four years in particular, the performance budgeting initiative has been expanded to include indicators relating to equality objectives. The equality budgeting initiative was first introduced as part of budget 2018 and aims to provide greater information on how budgetary measures are likely to impact upon the various dimensions of equality. Expanding from an initial pilot, REV 2021 includes equality indicators for a number of Votes across 12 ministerial Vote groups, with additional Departments providing indicators this year including the Departments of Housing, Local Government and Heritage, and Agriculture, Food and the Marine. Since its introduction, the performance budgeting initiative has been kept under review with a view to enhancing the quality of the information provided. As we look to develop performance budgeting further the OECD, under the EU’s structural reform support programme, is currently engaged in a project to improve the effectiveness of performance budgeting drawing on international best practice. In its work, the OECD has met with a wide range of stakeholders including members of the committee.

A significant volume of information is published in the REV each year, with information at programme level on financial resources, outputs and public service activities and impact indicators. Taking into account the ongoing work to enhance performance budgeting, this affords the opportunity to leverage the use of existing reports and processes to support the work of the Oireachtas in scrutinising Estimates. While the REV deals with planned performance for the year ahead, the public service performance report outlines the key outputs that have been delivered each year. This report was developed to facilitate meaningful and constructive dialogue on what is being delivered with public funds and is available for use by Oireachtas committees.

As noted earlier, the programme for Government contains a commitment on the development of a well-being framework for our country. The development of this framework is aligned with the aforementioned reforms. In developing this framework, I am mindful of the need for Government to consult with key stakeholders as such consultation should ensure buy-in to the framework and ensure its relevance to the work of those charged with designing, implementing and scrutinising public policy.

There are many reports and processes in existence that we can look to utilise as we work together to improve engagement between Government and the Oireachtas on the budgetary process and on scrutiny of performance. Such an approach can support effective engagement, timely provision of information and the identification of those metrics of performance, equality and well-being that are most useful to parliamentary accountability. It would also be important that there is a clear sense of the respective roles and responsibilities of the various committees as this clarity can support Departments in their engagement with the Oireachtas. I look forward to a good discussion and to working with the committee on ways to enhance this area of work in the future.

I thank the Minister and now invite the Minister for Finance to make his opening statement.

I thank the Chairperson and the committee for the opportunity to discuss the current framework for parliamentary engagement in the budgetary process. I welcome the opportunity to discuss the committee's report and look forward to the discussion we will have.

At the outset we can all agree that there has been much progress in our broader approach to the national fiscal framework over recent years and I want to assure the committee that I and my Department will continue to play a constructive role going forward, both formally and informally. To put this in context, it would be useful to briefly highlight the main reforms to our budgetary framework.

I have spoken on many occasions about the importance of our institutions. Independent, analytically-robust and respected institutions perform an invaluable role in any democracy. In this regard, perhaps the most important reform to the fiscal framework in recent years has been the establishment of the Irish Fiscal Advisory Council, IFAC. The council provides a crucial input to the budgetary process, providing an independent assessment of my Department’s economic and budgetary forecasts, the stance of fiscal policy and compliance with the fiscal rules. In terms of the economic projections that underpin Government policy, a transparent, rigorous process precedes both the budget and the stability programme update forecasting rounds. Additionally, the scrutiny of Government policy provided by the council is now firmly embedded within our budgetary architecture. I know that this committee’s deliberations with the council have provided a broader context for my engagement with this committee.

Another important reform initiated in recent years is the national economic dialogue. This is now firmly part of the annual budgetary cycle although, unfortunately, it was interrupted this year. The dialogue is normally preceded by the publication of the summer economic statement which sets out the main parameters of the budget. I will say more about this later. The dialogue provides an opportunity for all stakeholders to participate in an open and inclusive exchange on the competing economic and social priorities facing the Government.

Each summer my Department also oversees the circulation of the tax strategy group papers to the relevant sectoral Oireachtas committees. This group comprises representatives from various Government Departments, political advisers and politicians in government. The papers that are published on our website are a stock take of existing tax measures and include issues for discussion and costed options for change. Finally, the establishment of this committee itself is also an important reform to the budgetary infrastructure.

Turning now to the committee’s interim report, many of the issues raised have been covered by my colleague, the Minister for Public Expenditure and Reform, and I will not repeat what he has already said. As the committee will be aware, the programme for Government outlined the Government’s objective of developing better measures of quality of life and well-being. Connected to this is the Government’s commitment to expand equality budgeting. In this regard, I am engaging with my colleagues, the Minister for Public Expenditure and Reform and the Minister for Children, Equality, Disability, Integration and Youth, on next steps in this area.

In terms of the further development of well-being measures, this will be guided by an expert group convened through the Department of the Taoiseach. My officials have been engaging with their counterparts in the Departments of the Taoiseach and Public Expenditure and Reform in order to further develop the technical aspects of this work. My Department published a paper entitled Wellbeing and the Measurement of Broader Living Standards in Ireland alongside budget 2021. The paper examined the development of international approaches to well-being and looked at options for national well-being measurement in Ireland. The purpose of these measures will be to complement existing economic tools and measures and not to replace them. It is hoped and anticipated that these new measures can serve over time as a useful reference for a range of policy and budgetary reform initiatives which are currently under way, including performance budgeting, equality budgeting, spending reviews and proofing of policy proposals against environmental and other goals. On green budgeting, the Department of Public Expenditure and Reform has already incorporated green budgeting practices into its expenditure analysis in recent years.

I will conclude on the summer economic statement as it concerns one of the recommendations in the interim report.

In a nutshell, the summer economic statement is a vehicle in which the available level of resources for the year ahead is communicated to the Oireachtas and to the general public, taking into account the need to ensure sound budgetary practice.

I am aware of the views of the committee on the fact that it was not possible to produce this document last year. I wrote to the Chairman outlining the reasons for this. I believe the SES is an important staging post in advance of the annual budget and I have been in front of the committee on many occasions to discuss it. I will continue to accommodate the committee in terms of future attendance. It is my expectation that the SES will be published over the summer. We will have to engage in government on the format and role of the SES. I look forward to engaging with the committee at the appropriate time.

Having said that, it is important as we look at the SES to highlight the voluminous amount of economic and fiscal analysis published by my Department over the course of any year. For example, we recently launched the annual debt report some weeks ago to highlight the many issues, positive and negative, associated with the accumulation of public debt.

In conclusion, I believe it is fair to say that the budgetary processes have evolved significantly in recent years. Notwithstanding the challenging times we are in, the Government shares the committee's view of ensuring we have an open, transparent and engaged budgetary process. Sound, counter-cyclical budgetary policy is at the heart of a well-performing economy and a fit-for-purpose budgetary framework is a key part of this. I remain committed to assisting the committee in its work and look forward to engaging with it.

I will now open the floor to members. I remind members that we have two Ministers before the committee today and they should bear that in mind when timing questions to get answers. The first slot is for Sinn Féin with Deputy Pearse Doherty.

My question is for the Minister for Public Expenditure and Reform, Deputy McGrath. On 8 October, only five days before the budget, I said:

It appears from what the Minister is saying that he is still going to pull the bunny out of the hat next Tuesday, despite everything he said for the past ten years. It is not the way to do budgets. I acknowledge that there are moving parts but he has a sense of the quantum at this stage. That is usually published in the summer economic statement, which he and the Minister for Finance have decided not to publish this year.

At the time the Committee on Budgetary Oversight was trying to ascertain from the Minister the size of the budgetary package. What we were able to elicit five days before the budget was that it was €12 billion. Five days later, the Minister produced a budget of nearly €16 billion. Can the Minister explain to me why this committee should judge what the Minister did at the time as in any way a serious effort to build on oversight and scrutiny or does he believe, as I do, that the engagement was making a mockery of the committee?

My thanks to the Deputy for the question. That was certainly not the intention of me, as Minister, in appearing before the committee, which, of course, I am happy to do at any point. As both the Minister for Finance, Deputy Donohoe, and I acknowledged in our opening statements, this was a year like no other in the context of budget 2021. We have acknowledged that, due to the circumstances of the year, it was not possible to publish a mid-year expenditure report. That was and has been in recent years an important part of the overall process for the committee in preparing for the budget that will be unveiled the following October.

Also, we did not have the summer economic statement, as has been acknowledged. The truth is that in preparing budget 2021 we were dealing with an extraordinary amount of volatility. Final decisions on the budget were made following careful consideration over a period at a late stage. As we know, we constructed the budget against certain key assumptions in terms of Brexit, the pandemic and the issue of a vaccination programme. We decided on the need for a recovery fund of €3.4 billion and a Covid-19 contingency fund of €2 billion.

All of these issues were very much in play and remained under active consideration until the eve of the budget. That is the truth because it was a year like no other. We had many moving parts. The value of the decisions we made are now bearing fruit, even with the decisions we made today in respect of a new business aid scheme, additional funding for the sustaining enterprises fund and so on.

That is not the question, and my time is limited. I will move on. I am not talking about the summer economic statement. I acknowledge there were moving parts. Is this the way the Minister is going to continue in terms of increasing the budget, even with volatility? The scope of the package of the budget that the Minister relayed to the Committee on Budgetary Oversight five days before the budget was increased by one third. That is not on. It is not the relationship we should have with the Executive. The Minister knew or had a sense of where the parameters would be. The Minister might not have known the final figure but decided to keep it from us. It was okay because we learned about it in the Sunday newspapers, as I said to the Minister at the committee. I said the Committee on Budgetary Oversight will gain more from reading the Sunday newspapers than from questioning the Minister five days before the budget.

I have a question for the Minister for Finance. The Minister for Finance said the expectation - or words to that effect - was that the summer economic statement would be published. I hope the Minister will clarify that there will be a summer economic statement and there are no "buts". The Irish Fiscal Advisory Council criticised the Government and the Department for not doing that last year.

I will move on to the stability programme update and the spring statement. Is it the intention that the statement will be published at the end of April? Will there be medium-term projections? In the budget documentation last year the Minister said it would contain medium-term projections to set a pathway towards moving the national finances back to a balanced position once the public health situation allows. Can the Minister explain how far out we are going to look? Is it a five-year projection? Is that forthcoming in April?

Will the Minister respond to the issue of the fiscal rules and the Stability and Growth Pact? Does the Minister share my view - more and more people across Europe are saying it - that the pact is now outdated? I believe that, with the levels of indebtedness chasing the 60% targets, it is not appropriate at this point and we need to look at these rules all over again.

Does the Minister, especially in his role as president of the Eurogroup, support the extension of the general escape clause and the work of rewriting the fiscal architecture of the European Union? The purpose is to replace what I would argue is an obsession with debts and deficits with targets such as full employment and public investment.

There will be a summer economic statement, although I will have to consult within Government regarding the format of the SES. Many of the difficulties we had in respect of economic uncertainty will be better than they were a year ago. I still anticipate they will be present in a way that will be unlike many other years. Anyway, there will be an SES, but I will have to agree the format with Government.

Deputy Doherty asked about the timing of the stability programme update. We will publish a stability programme update at the end of April. It will contain a multi-annual projection with regard to budget performance and how we will look to move our national finances into a sustainable position. The programme for Government has a long-term commitment to return our national finances back to a position of health. Again, that will be outlined in the stability programme update. I wish to emphasise that there will be considerable uncertainty around this. It will be a different SPU format from what we have done before because there are still many variables and changes that could have a major impact on our economic performance.

Deputy Doherty asked a question with regard to the fiscal rules and architecture. I should make clear here that I am not speaking as president of the Eurogroup on this issue. I am speaking as Minister for Finance of Ireland, because different rules apply.

I believe there is an opportunity to make the fiscal rules more simple. When the fiscal rules are reapplied, that should be done when our economies are recovering and we are seeing employment and income growing again. I believe there is an opportunity to make the fiscal rules less complex. We need to look at how they can be the cause of and recognise investment within economies that it is capable of generating further growth.

I thank the Minister. On the recovery and resilience plan, the Minister, Deputy Michael McGrath, will obviously acknowledge that the allocation in that regard is, in some cases, bigger than the allocation to singular Departments. Does he agree that the proposals relating to accessing this €853 million should come before the Dáil for a resolution for support and should be scrutinised by the committee before they are submitted to the European Commission by 31 April?

The Minister, Deputy Donohoe, will note that part of this will have to include how we respond to the country-specific recommendations. One of those is the fact that we have a system that allows for intangible assets that were onshored to be offset 100% against future profits. How will he srespond to that? Is it his intention to allow for the decrease in the standard rate of VAT to 21% to lapse at the end of March or is it his intention to extend it, given the environment whereby many businesses will not be able to avail of that due to restrictions?

I thank the Deputy. First, I believe there should be engagement between the relevant Oireachtas committee and myself or the Minister, Deputy McGrath, or both, regarding the submission to the recovery and resilience fund, but I do not believe it should be the subject of a resolution from the Dáil. It is a matter for the Government to decide on what our application is going to be and we have to engage with the Commission on that. I believe it is appropriate that we consult with the Dáil and an Oireachtas committee on that matter, but I do not believe it appropriate that the process should be subject to a Dáil resolution.

On the role of country-specific recommendations, the European Commission has made reference to its views relating to tax planning and the Irish planning. When I am dealing with this matter in the context of the recovery and resilience facility or, indeed, any other engagement that I have with the European Commission, I will make reference to the roadmap on corporate tax reform that I published several weeks ago. I will use that as the basis for engagement that I have with the Commission.

On the issue of the standard rate of VAT, it is my intention that it will go back up to its original rate at the end of the planned period, but it is also the case that the rate of VAT for the hospitality and services sector is due to continue until the end of this year. When we made the original decision regarding the standard rate of VAT, there was a particular need to support retailers at a time of great difficulty. We have now launched the Covid restrictions support scheme, CRSS, which is providing additional support to that part of the economy.

I thank the Minister. I know there was another question for the Minister, Deputy McGrath, but we need to move to the next member.

Like other members, I thank the Ministers for giving up their time and coming before the committee on this particularly important subject. I have just a few short queries. In the aftermath of all the problems we have had, be they economic, health-related, Brexit or the pandemic, what is the most appropriate fiscal role and policy for us to follow in the years to come?

For instance, should we adopt something similar to the growth development policies and restrictions of the European Union or the eurozone or, alternatively, should we find a course in between, given that it is important that we do not run off on our own on a spending splurge or that we do not forget from where we came and all the difficulties we had extricating ourselves from that situation? At the same time, are we recognising fully the problem that faces the general public? After experiencing hard times for so long and being crushed for so long, do we need to give them some kind of encouragement or incentive in recognition of the efforts they have made and in view of the fact that we cannot recover all the expenditure in a year or two years but that, with the passage of time and growth, we will recover some of the ground? That is a question for both Ministers. They should divide responsibility and divide burdens.

If I may respond to a question from Deputy Doherty, I wish to alert the committee to the public consultation that is currently under way regarding the national recovery and resilience plan. It is open until 22 February and we would be delighted to hear from the committee as part of that process. All Departments have been consulted regarding the preparation of that plan which is currently under way.

On the question asked by Deputy Durkan, we are certainly pursuing counter-cyclical policies at this point. Over the course of 2021, our expenditure ceiling is almost €88 billion. That encompasses the money that has been allocated to the 45 Votes as well as the €5.4 billion across the recovery fund and, of course, the Covid contingency fund. We will require that money because the fact is that we are in level 5 restrictions. We are dealing with a very strong third wave of this virus. As such, the cost of the employment wage subsidy scheme, EWSS, the CRSS, the pandemic unemployment payment, PUP, the local authority rates waiver and so on is running at between €1.2 billion and €1.3 billion per month at this stage. A certain amount of the provision necessary for that was provided for within the Votes allocated but, as the months go by and depending on the length and depth of the restrictions that need to be imposed, the resources we provided for are going to be required.

The Minister, Deputy Donohoe, given his international experience and overall responsibility in terms of macroeconomic policy, is well placed to comment on the overall budgetary strategy for the coming years. One thing he and I share is the view that we should be unremarkable in European terms when considered next to our peers. By that, we mean that we cannot be an outlier on the negative front because the extraordinary support of the European Central Bank, coupled with the strong position from which we went into this crisis, means that the current level of historically low interest rates will not continue indefinitely. The markets will at some point take a view as to the overall sustainability of each country's public finances. We are in a good position. I believe we are managing this well. We can afford to do what we are doing, but over the next period, and particularly in the stability programme update, we will need to map out a roadmap for the country in terms of the restoration of the public finances onto a sustainable path.

I emphasise and agree with the remarks of the Minister, Deputy McGrath.

We are in a public health emergency and have emergency economic measures in place to help our society and, indeed, Europe deal with this pandemic. This week we are directly supporting the income of just over a million of our fellow citizens in terms of those who were on jobseeker’s payments before this crisis and those who are now on the pandemic unemployment payment and in receipt of the employment wage subsidy scheme. We have major levels of support in place in our economy. As our public health conditions improve, we will need to begin the journey towards how we can put in place more appropriate budgetary policies that support our country in its recovery but move away from very high levels of support that are needed when many people are not in a position or not able to work. That is the approach we are taking in Ireland and it is paralleled by the approach being taken across the eurozone and the European Union. For now the measures we have in place are needed. They will be needed for a while yet and over time as our economy begins to open up again, I hope we will be able to get hundreds of thousands of people back into a good job putting in good work which, in turn, will not require the level of support we currently have in our economy.

May I ask one further question?

The Deputy has another two minutes.

Two minutes still remaining - that could be a lifetime. Will either Minister confirm if we are talking in terms of a revised Stability and Growth Pact for Europe and compliance with it or are we thinking about something different? Given that we have not fully recovered yet from the economic crash and on top of that we have the effects and cost of Brexit and the effects and cost of the pandemic, we could find ourselves on a bad day feeling we had to recover all that ground in one short sharp phase. To my mind, that could be difficult. It could create further difficulties and a burden for the economy that would be counter to what the economy needs, which is growth. Is it not a fact that growth is the essential part of what we have to rely on in the future, which will result in greater employment, investment and confidence?

I will take that question. If by referring to a short sharp movement the Deputy means a very rapid withdrawal of the measures we have in place and trying to move from having a deficit to being in balance in a very short period, that is not what we are envisaging. It will take time for our economy and society to recover. A withdrawal too quickly of the measures we have in place could be counterproductive. What I and, I believe, the Minister, Deputy McGrath, are anticipating is that over time we would be able to rebuild our national finances as our public health allows us and as we are successful in getting more of our fellow citizens back to work.

In terms of the Stability and Growth Pact, there will be fiscal rules. A debate will begin during this year on the future of fiscal rules, but it is worth noting the fiscal rules have the general escape clause that was triggered which allowed for the measures that are in place in 2021. The fiscal rules are in some way showing their worth in that, when this pandemic hit Ireland and Europe generally, national finances for the vast majority of countries within Europe were in a position of having a very small deficit, being in balance or having a surplus. That, in turn, combined with the work of the European Central Bank, has been vital in allowing us to do what we are doing at the moment.

Therefore, fiscal rules play a really important role. They will be needed. A debate on this issue will be developing soon, but the rules allow the flexibility currently being used in 2021.

I welcome the Ministers. The Minister, Deputy Donohoe, has always been very generous with his time in coming before this committee and has made himself available more than most. I welcome my colleague, Deputy Michael McGrath, to his first budgetary oversight scrutiny and extend very best wishes to him, on my behalf and I am sure on behalf of the committee, in the onerous task that confronts him. I welcome some comments in both their scripts on developments and the evolution of processes that emerged from budgetary oversight in the previous term, including equality budgeting. I acknowledge the movement that has been made on that. I am also excited about the well-being initiative, which the Taoiseach announced today, with respect to budgeting, which I also acknowledge.

What views have both Ministers on the one positive aspect of Covid, namely, the pent-up savings that have occurred during the past 12 months and that will probably continue this year, in terms of budgetary processes and public expenditure and what would the European views be on that? What are the pluses and minuses for the economy in that respect? My party colleague, the Minister, Deputy McGrath, might reply first.

I thank the Deputy for his kind comments. I look forward to working with him and all his colleagues on this committee. I reiterate my officials and my Department generally are available on an ongoing basis to help this committee in the work it is doing. There have been some really good reforms in recent times and we can build on them. In respect of many of the recommendations in the committee's interim report, we can develop them on a partnership basis and I look forward to doing that.

The Deputy touched on a really important issue, namely, the extraordinary level of savings we have witnessed in recent times. However, we should be careful and put it in context. When we talk about these things in the aggregate, it is far removed from the reality very many families have faced since last March. A point the Minister, Deputy Humphreys, regularly makes, and it is one that strikes home with me, is that of the order of 115,000 people currently on the pandemic unemployment payment have been on it since March 2020. They will be rapidly approaching 12 months of being in receipt of the pandemic unemployment payment continuously. Many of those people are facing great hardship. We need to be very conscious of that when we touch on what is an important issue in the round.

For other people, their incomes are largely unaffected and they have far fewer opportunities to spend money in the hospitality sector, on holidays and on all the things that people might normally like to do. There is pent-up demand. The amount of savings across the financial system offers us great hope that, once we can get beyond the necessary restrictions we are having to impose, many people will want to return to the things they always liked to do. There will be much demand for goods and for services, but it comes down to sentiment and confidence. For me, in any economy that is the critical intangible, and that is why we have always said that moving out of the health pandemic is inextricably linked to our economic recovery. Until people have the confidence that we are not heading into deeper restrictions in the future, I do not think they will adjust their behaviours. For us the key issue is to manage the health pandemic as well as we can to make sure we do not have to deal with a fourth wave and reintroduce further restrictions over the course of 2021. That will then give people confidence, as they see a level of normality returning in line with the vaccination programme.

Much of that money can undoubtedly represent a stimulus for the Irish economy which is something we would welcome. It is the job of Government to give people confidence and time to spend that money in the appropriate way.

I will just make three points. The Deputy is correct to call out the fairly significant increase in household savings. I understand that the last set of figures that were produced by the Central Statistics Office indicated that the level of household savings in the economy for the quarter in which they measured it had increased by nearly one third. Such a level of increase is a significant economic development. I very much agree with what the Minister, Deputy McGrath, has said that many in our society are saving more. Many others in our society are using their savings to live on and to support their businesses at a time of significant strain. Those savings can mean very different things to different people.

As the Minister, Deputy McGrath, said, how that money is released into our economy is also tied into confidence regarding the sustainable opening of our economy in the future. A key factor that will influence how savings are used is whether those who are saving more believe their income and their employment will it be stable over a longer period of time than it was in 2020.

The consumption mix as those savings are used within our economy is of course critical in being able to understand what effect it will have on our economy. For example, if that money is spent on exports other countries will benefit from the use of those savings. That is not necessarily a bad thing because, of course, our exporters can benefit from the spending of savings in other economies and so the two things go hand in hand. If that money was to be spent over time within our hospitality and services sector, within domestic tourism for example, the release of that level of savings into a part of our economy which is really hurting could have a particularly positive effect.

I thank the Minister. I have a minute and a half left.

How the money is used his key.

I hear what the Minister is saying and the inflections he has made.

His UK counterpart, Rishi Sunak, is considering taxing companies such as Amazon because of the amount of retail business that has been displaced online. What is the Minister's thinking on that?

My final question will not get answered but the Minister, Deputy McGrath, might be able to come back to me. It relates to how Covid has redefined what essential workers mean to an economy and has opened our eyes to the importance of those working in retail right through to nursing and health, etc. What is Government thinking on that? I will accept a written response on that, but I would like a reply on the Amazon piece.

I have heard the principle floated in the UK and in other countries, but I would like to see the details of how it would actually work. Let me use Amazon as a good example. I know the Deputy is a big reader and maybe he might be a customer of Kenny's or so many wonderful independent bookshops at the moment. It is not clear to me how it would be possible to design a tax that would be fair and would apply only to a particular scale of an online retailer. Our taxes at the moment, particularly VAT, do not differentiate based on the scale of the retailer. Using the book example, I would like to see how anybody could come up with a tax that would apply to Amazon but would not apply to Kenny's, Tatalia Books or Books Upstairs. Irish companies, including Irish retailers, need to increase their online retailing as well as being able to reopen physical retail stores.

While I have heard many float the idea of being able to charge online retailers specifically, I have yet to see how that could be done without disadvantaging small and medium-sized retailers that are using an online presence to grow their business. I have questions on that approach, and I would not like to do anything that would damage the ability of small and medium-sized retailers to use an online presence to sell goods and services into Europe and throughout the world.

I thank both Ministers for giving the committee their time and for their openness. This is my first term as a member of this committee. I am struggling somewhat to understand how we do this oversight. The information is often produced in a language that suits the members of the Irish Fiscal Advisory Council but does not suit parliamentarians. We need to produce more common-language reports so what we can have better understanding of what is going on.

I ask both Ministers to consider having engagement with our committee prior to the publication of the summer economic statement so that the committee is better placed to consider that because it is usually over the summer. If we could have some engagement with the Ministers or their officials in May, it would help us in our work.

We talk about the well-being and the measurement of the broader living standards in Ireland. However, the north and western section of the country has been downgraded in its status to a region in transition, which means that our output and our economic derivative have fallen. How will that be tackled in budgets in coming years? This does not come from me but from the EU, which has written to Ireland about this. There is a significant difference and we should be positively discriminating towards the north and western region. I ask the Ministers for their comments on that.

I often say that the biggest problem we have with budgets is looking at what the outcomes are. We set the budget and we get reports, but we do not actually see how the budget works. For instance, I have tried to elicit information from different Departments about how their capital projects are performing and if they are overrunning. They are struggling to come up with the information. It beggars belief that we are spending billions of euro on capital projects and we do not have readily to hand how each project performs, and if we have overruns why we have them and whether we should take corrective action. There are many strategic issues we have not taken into account when we are spending billions of euro. Nobody, apart from officials from the OPW, has come back to me how they are performing on their capital spend and whether their final accounts are exceeding their tenders. It is a very simple process. I ask the Ministers to comment on those matters.

I will take this to begin with. I thank the Deputy for those observations and I agree with much of what he said.

What I will say, however, is that in recent months, in finding my feet in the Department, I have come to the realisation that there are a lot of very good reports written that do not get the attention they deserve. I would point to the spending review papers, for example. Since 2017 more than 100 spending reviews, including 25 last year, have been completed and published. They look to the very point the Deputy raises. We spend all this money in different areas and do we look back and see how it worked out? Can we learn lessons? Did we get the outcomes we were trying to achieve? I urge this committee and the respective line committees to undertake work with the spending review papers because there is a wealth of information there. Similarly, the public service performance report is published annually, normally in spring. Again, there is a huge amount of information there which measures performance. Ultimately, from my perspective as Minister with responsibility for public spending, it is important we measure outcomes because that should inform better decision-making going forward. I would really welcome any feedback from the Deputy or the committee on the language, the terminology and the presentation format in the various reports we publish because we need to make them as understandable, meaningful and accessible as possible.

As for the north and the west, we are currently undertaking a review of the national development plan, NDP, as the Deputy will be aware. That is out for public consultation until 19 February. One of the objectives is to make sure that the aim of balanced regional development is progressed. I encourage all stakeholders in the north and the west to engage in that process. Over the course of the coming months we will finalise essentially the new NDP for the next decade, and there is a fantastic opportunity there to have the voice of the north and the west heard. If Deputy Canney needs any information on any of the capital spending programmes and is not getting information he believes should be made available, I ask him to contact my Department and we will make sure that whatever information is at our disposal is made available to him.

Does anybody wish to comment on the summer economic statement and earlier engagement-----

I will come in on that. I agree with the point the Deputy made about the language of how we communicate where we are on economic policy. I was engaged in a one-man campaign in the previous Dáil to banish the terms "gross fiscal space" and "net fiscal space" from any conversation in which I was involved, and the Deputy's words will encourage me to keep at it. We need to challenge ourselves in the language we use to make it as clear as possible.

In truth, I think we can work with the committee to explain the principles behind the summer economic statement and its work before decisions are made and how it works, but I do not believe we can engage with the committee on the content of the summer economic statement before we in the Government agree it. It is a decision by the Government on future budgetary priorities and has to be agreed within the Government before we can take that strategy to the Parliament and to our country. Yes, there are definite opportunities for us to engage, to explain the process and to make it as clear as possible, but it is appropriate that we engage with the committee on the content of the statement only when it is agreed by the Government. We have to put enough time into doing that inside the Government. When that is done, that is the right point at which to engage with our Parliament on the content of the statement.

I thank the Minister for that. Finally, when we start to come out and come into recovery, how we will budget for remote working into the future and plan our development? I do not like the use of the word "remote"; it is just off-site working. I see that as an opportunity for the regions to grow their population and create a balance throughout the country.

Perhaps the Ministers would give their thoughts as to how, from a budgetary point of view, the Government might positively discriminate towards such a scenario in which we spread the population from the major centres of population out into the regions to support them. We have proven we can work remotely. The national broadband plan will deliver and reinforce that over the coming years. However, how do we put in place the backup to make sure that people move to the regions and create populations and a critical mass within the regions?

I will take that. I thank the Deputy for the question. There are undoubtedly opportunities for the regions in the post-Covid world that we are all really looking forward to. Many of the changes that have occurred in the past nine or ten months have been forced upon us, and we would not be having this engagement in this format were it not for Covid-19. The truth is that many people have now realised they do not necessarily need to be at their normal place of work five days a week. If that enables more people to spend time in their local communities, that offers a lot of opportunity and potential. I think the truth is that we will be looking at a hybrid. I think it will take us a while to figure out the appropriate balance. We also need to have strong cities. That is important for our country as well.

We are working under the umbrella of an overall national planning framework, as the Deputy will be aware, which is to be reviewed in the coming years. That is the overarching strategy for Project Ireland 2040, with the NDP sitting alongside the national planning framework. Certainly, from the point of view of the work ongoing in my Department, I anticipate that the issue of remote working and the opportunities it presents for towns and villages across regional Ireland will feature strongly as part of the review of the NDP. The Deputy will have already seen a number of different Departments invest public money in different initiatives to facilitate people working in their local communities: in remote working hubs, co-working spaces and so on. There are a whole range of programmes in that regard. I think we will see much more of that but it will be a hybrid. I do not think that into the future the current position that pertains during the crisis will be the permanent situation. It will move back to probably a more balanced combination, which I think would suit an awful lot of people and which presents opportunities for rural Ireland for sure.

It is the Green Party time slot now, so I will focus on the process and the issues we are dealing with in this report. We have been lucky enough over recent weeks, both before the interim report and afterwards, to talk to a number of parliamentarians and the counterparts of the Parliamentary Budget Office in various countries, and a number of issues have emerged which I would like to put to both Ministers.

The first is the issue of a hands-free budget. This came out particularly from discussions with some counterparts in Austria. One of the issues that has come to the fore for us is the timing of the mid-year expenditure report and whether it is too late to allow for a proper budgetary oversight review of that document before the budget process is in place. Linked to this is the treatment of the Finance Bill. I think we can all agree that the Finance Bill properly belongs in the finance committee, but there was a suggestion that we could support some of that work by looking over the course of a year at things such as tax expenditures in order that we might formulate some kind of position on a hands-free budget. I put that to both Ministers. It is the idea of producing a more detailed overview of what a hands-free budget would look like every year.

May I come in on that? Did the Chairman say "hands-free"?

Yes. That is what the Austrians call it. That is their phrase.

Yes, as in a no-change budget.

It sounds like a bicycle rather than a budget, does it not?

A no-change budget, if the Minister prefers that term.

I take the Chairman's point about the issue of timing. Clearly, the sooner we can have material shared with the committee the better, but we do face challenges in doing that from a departmental point of view.

A concrete example would be the stability programme update, SPU. We would struggle to do an SPU any earlier than we do at the moment because even when we do that update, we only have a single quarter of tax revenue available to analyse. Our ability to form a projection regarding our economic performance for a year any earlier than April is limited. If we were trying to produce forecasts for this committee in quarter 1 about the economic outlook for the year, we would only have a month of two worth of data available to us and we would run the risk of sharing forecasts with the committee that would be plain wrong and that could cause difficulty later in the year.

The option for a no policy change budget is, in effect, made available when the White Paper on expenditure and receipts is published but that does not happen, typically, until the Friday night before the budget. Perhaps in the coming year we could look at the possibility of providing the committee with some kind of a starting position for the budget before any new policy decisions are made. A considerable amount of information is made available about the budgetary process. The wealth of information contained in, for example, the tax strategy group papers gives a sizeable amount of advice and perspective to the committee. If the Minister for Public Expenditure and Reform manages to repeat the expenditure review process that has happened in other years, a huge volume of data regarding how we spend money within our country is available. There may be opportunities to bring it forward to a little bit earlier in the year but I am not sure that we can do that in the way the Deputy is suggesting without undermining the accuracy of what we are doing.

We now have the volume of Revised Estimates for the following year in December. We would like to see the select committees then considering the Estimates as early as possible in the year. I remember when I was first elected, we dealt with Estimates months into the year to which they related and I questioned the relevance of it. Committees only consider the Estimates and do not vote on them because that is a matter for the Dáil as a collective but I think it is important for committees to consider Estimates as early as possible in the calendar year. That is important.

We then have the SPU in April and the summer economic statement, which is normally around June. The mid-year expenditure report gives an update on the Department's estimate of where expenditure stands and is likely to go at the midpoint of the year, as well as taking into account the multi-annual ceilings. We will publish a mid-year expenditure report this year in the normal way because, as I acknowledged earlier, that did not happen during the pandemic in 2020. A considerable amount of information is available but if the committee has any specific suggestions as to how we could bring things forward, we will certainly consider them and my Department will help in any way it can to provide information to the members of the committee.

I thank the Minister. We have seen examples of effective communication of financial information with the public in other countries, which we hope will be in our report.

He touched on the issue of Estimates and I would like to go back to it. We in the committee have talked a lot around the treatment by sectoral committees of budgets in general, Estimates and Supplementary Estimates. One issue that arisen is the fact that we are somewhat an outlier compared to other EU countries. We do not approve or take a view on Estimates or Supplementary Estimates and get them quite late in the budgetary cycle. The Oireachtas does not approve the SPU, for example, and unlike almost every other European country, there is no facility for the Opposition to amend the budget. Is there any particular reason for that? We know from the parliament in Westminster that part of that is historic, in its view. We had a particularly interesting conversation with representatives of the Scottish Parliament which, because it was set up more recently, has more effective mechanisms for this kind of oversight.

I would like to hear the general approach of both Ministers to the lack of opportunity for the Oireachtas to approve things such as the stability programme update, sectoral committees' inability to take a position on Estimates, and the inability to amend the budget.

If I could come in there, I believe that the balance of decision-making between the Oireachtas and the Government is broadly correct. Putting together a budget, with all the decisions relating to it, is at the core of the ability of a Government to do its work, meet its commitments in the programme for Government and to have the ability to initiate and complete an annual budgetary process. There are always opportunities for us to engage with and better explain our work to the Oireachtas and hear the views of others. I have been present at many such debates over the years and have always listened to what the members of the committee have said and tried to respond to them. There are core issues that are fundamental to the Government regarding its being charged with producing a budget and then, because we have a history of majority governance in our country, although that changed during the previous Dáil, the Finance Bill and Estimates have been the preserve of the Government. It is not a balance I would be recommending we change at the moment. I am sure if there was a majority Green Party government, the Chairperson would be eager to ensure that its budget reflected the majority Green Party within that government. It is a balance that I think is appropriate, but there are always opportunities to look at how we can share information more effectively and hear the views of others. I will try to do that in this Dáil.

I will add something to that, briefly. The legal basis and authority for the expenditure of public money ultimately comes from a vote of Dáil Éireann. I know the committee in its interim report touched on the possibility of the committee playing an enhanced role when it comes to Supplementary Estimates. As committee members know, Supplementary Estimates go to the line committee in the same way as normal Estimates. They are scrutinised before they come back into the Dáil. Some thought needs to be given as to the exact demarcation of the responsibilities and roles of the Committee on Budgetary Oversight, which would perhaps focus on the overall framework. We should then ask whether we can enhance the work of the sectoral committees when it comes to considering the annual Estimates and Supplementary Estimates which are considered in committee and then come into the Dáil for an actual vote. That is the current legal framework. A vote of Dáil Éireann gives us the authority for spending public money.

I thank the Minister. Deputy Boyd Barrett is the next speaker. You are on mute, Deputy.

I am sure the Minister would have been happy if I had stayed on mute.

I just said that the Deputy will not be mute for long. I meant that in a humorous way.

I thank both Ministers, new and old, though I do not mean that to apply to their ages, obviously. The basic point of the Committee on Budgetary Oversight is to ensure the sustainability of the public finances, to oversee the moneys that are allocated, what we get for those moneys as they are allocated in different areas, and whether they are achieving their ends. I want to put to the Minister something obvious to which he has alluded, that is, all bets are off during the Covid-19 pandemic. Many of the normal signposts or markers for the budgetary cycle have been put off. The summer economic statement was not produced. An extra €6 billion had to appear days before the budget.

All of this is happening because of a pandemic, a virus that does not give a hoot about the budgetary cycle, fiscal rules, summer economic statements, projections or anything else. It seems to me that we are flying blind until we get this virus under control and that all of the chatter about sustainable public finances is borderline meaningless until we get it under control. I would like the Minister to respond to that point. In comparison with other countries that have the virus under control, where most of the time most people are living normal lives and they can plan, such as New Zealand, Australia, Vietnam, Taiwan and much of China, we are not doing as well. We have no idea what is coming down the line. This week, we had Ministers making statements about arbitrary dates for the reopening of sectors of the economy which seem to bear no relationship to the level of Covid infection. At the current level of 800, it is four times higher than it was when the Government made the decision to reopen sectors of the economy prior to Christmas, with disastrous effect not only in terms of infection but economically, the full ramifications of which we still do not know. I put it to both Ministers that if this happens again, maybe two or three times this year, our ability to manage the public finances and be sustainable in our approach to them will be somewhat difficult.

The budget deficit was €20 billion extra last year and is projected to be €20 billion extra this year. The debt increased by 10% last year. I ask the Minister to confirm if that €219 billion will rise by another 10% if his plans come to pass this year. Would the Minister agree that in the interest of sustainable management of the public finances, we need to get control of the virus. Will he acknowledge that trying to live alongside a virus that does not want to negotiate with us is not a very good idea and that we need to get control of it by adopting a different strategy? I am serious in saying that because this has a bearing on everything we and the Minister have to deal with for the next year. I ask the Minister to respond to that point as well. It seems to me the current plan is not working and it is costly us a great deal at every level.

I am not sure which Minister would like to take those questions.

I will begin by offering some thoughts on the debt issues raised by Deputy Boyd Barrett. Most of the figures he referenced in regard to the debt forecast are correct. By the end of last year, our debt stood at €219 billion, which is an increase of approximately €15 billion versus what we estimated it would be. Taking the two year period of last year and this year together, there will be an increase in our national debt of €33 billion. We are seeing a very considerable increase in our national debt, albeit an increase in the stock of our debt that is in line with what we are seeing happening in other countries. This is additional debt which we have been able to refinance at a next to zero interest rates due to the manner in which we have managed our public finances and the work of the European Central Bank.

Deputy Boyd Barrett asked if we need to take a different approach to Covid. We have to be open to all debates and points of view in regard to what we are doing and not dismiss each other's point of view out of hand, which Deputy Boyd Barrett rarely does on important issues and I do not propose to do so now. I will offer three points that matter to me in relation to the points the Deputy made.

First, the Deputy spoke about the need to reduce radically the presence of the disease within our country and its transmission. That is what we are trying to do. As a country, we have taken the most extraordinary measures over the past year to do that. Second, the Deputy seemed to suggest we should go beyond that and have a target of zero Covid. As I understand it, zero Covid is defined by some people as zero community transmission for 14 days consecutively. When community transmission was at its lowest level, we did not get to that point. Third, if we were to set that objective, it would require public health measures that would stretch beyond what we are proposing to do in regard to travel and borders within our country because the origin of much of this disease is community transmission as opposed to travel. It would require very significant and sustained measures in terms of the contact we have with each other, our society and how we organise movement within our country that would stretch beyond how we manage travel.

I would like to make a further point genuinely to the Deputy who I know is raising this point genuinely. I have heard him speak eloquently about the personal and social consequences of demanding public health measures. It is at least implicit, if not likely, in the approach he is suggesting that those public health measures would be of greater severity for longer periods. That is a factor in evaluating the case the Deputy puts forward. As demanding as the management of mobility in and out of the country is - the Deputy will know that travel accounts for less than 0.5% of recorded Covid cases over the past number of weeks - far more would be required to deliver zero Covid. If that is what the Deputy is looking for, even stronger measures will be required in regard to travel. It is important to outline what those measures are and what effects they would have on our society and the well-being of many people about whom I know the Deputy is concerned, which is why he raised this issue.

Deputy Boyd Barrett's time has expired. I call Deputy Mairéad Farrell.

Gabhaim buíochas leis an gCathaoirleach agus leis na hAirí as teacht os comhair an chruinnithe seo. We know that the Government is planning to ratify CETA. As the Ministers are aware, it provides for the investor court system, which is a legal mechanism that will allow large corporations to sue the State for massive sums of money. This has the potential to have a significant impact on the budgetary position both directly in terms of a reduction in available spend because of legal costs incurred and indirectly in terms of tax foregone because the presence of the investor court system may act as a deterrent to Governments using the tax system to modify corporate behaviour. My question is for both Ministers. What risk analyses have been done by the Department of Finance with regard to the corporate tax base and by the Department of Public Expenditure and Reform with regard to the impact legal payouts would have on public expenditure?

We have not considered CETA as a cause of risk in our forecasting for tax revenue. We have outlined many other issues that could impact on corporate tax revenue and on the performance of different tax heads but we do not assign a risk to the future of CETA in terms of the impact that it could have on our tax flows. It is not recorded as a risk in our tax revenue forecasting models.

There has not been any specific risk assessment of what CETA might mean in terms of its public expenditure implications. I would point to the overall context within which our economy operates and our experience over the last ten or 11 months of living with Covid-19. The reality is that the role of FDI in Ireland and our position as an open, trading economy has, in many ways, helped us to absorb some of the enormous shock of Covid-19. This is clear from the number of jobs that have been sustained, the corporation tax paid and the income tax receipts underpinned by employment in the FDI sector. Ireland's place in the world is as a small, open trading economy with a very strong enterprise sector. That is why the Cabinet today approved an additional €90 million for Enterprise Ireland for the sustaining enterprises fund. Many of the businesses that will avail of funding from a scheme like the sustaining enterprises fund will be seeking export opportunities to countries like Canada. In that regard, from the perspective of the Irish Government, the opportunities of CETA far outweigh the risks.

I am absolutely astonished, given our 20-year liability, that a risk assessment has not been done. Perhaps it is something that should be considered. The Minister mentioned performance budgeting in his opening statement and referred to the need to manage public sector pay. The Public Service Stability Agreement, PSSA, rules on lateral movements within the public service stipulate that lateral redeployments within the civil and public service should not attract additional salary increases. If, for example, a nurse moves from Beaumont Hospital to St. Vincent's Hospital while remaining at the same grade, there is no automatic salary increase. We are all aware of the anger and frustration surrounding the proposed increase of €81,000 for the Secretary General of the Department of Health. If it turns out that a Secretary General undertakes a lateral move to the Department of Health on a permanent basis, I ask the Minister to assure us that such a move will adhere to the PSSA rules on redeployment and will not attract an unnecessary and exorbitant salary increase.

The very principle that the Deputy outlined there has been fully adhered to on this issue and in this context. The move across of the Secretary General from my own Department to the Department of Health on an interim basis did not involve or attract any change in remuneration-----

What if the move is on a permanent basis?

As the Deputy knows we are currently in the middle of an open and competitive recruitment process and have advertised the terms and conditions that are associated with the post. I would prefer to let that take its course at this point in time.

If it turns out that it is a lateral movement on a permanent basis, will the Government adhere to the PSSA guidelines?

We have an open process. I do not know who has applied for the post or how many candidates have applied at this point. This process is governed by the Public Appointments Service, PAS and the Top-Level Appointments Committee, TLAC and-----

I am asking about the lateral movement rule because it may end up being a lateral move. If I was a Secretary General and I applied for and was appointed to the post, would the move stick with the PSSA rules and not attract a salary increase?

As this is an open process, any person is entitled to apply and be considered as part of the process that is under way-----

So it will go against that aspect of the PSSA.

The terms that are attached to the position have been advertised in an open and transparent manner. It is open to anyone to apply and it is best to let the process take its course and see how it ends.

Lastly, will the Minister confirm that there will be no salary increases for any other Secretary General if such a position were to become available in a different Department?

There are no plans for any other salary changes in the context of any Secretary General vacancies arising in the months ahead.

There will not be any increases.

No, there will not.

Deputy Patricia Ryan is next and then I will open the floor to any Deputies who have further questions.

My first question is for the Minister for Finance, Deputy Donohoe. I am concerned about the Covid restrictions support scheme, CRSS, which the Minister discussed with my colleague, Deputy Doherty, earlier. Will the Minister be including businesses such as taxi-drivers, manufacturers under licence and those without fixed premises in that scheme?

The Tánaiste announced today a further set of initiatives to try to deal with those who are experiencing great hardship due to this disease but do not have the ability to participate in the CRSS. He has launched a fund today that is designed to support businesses that have premises but those premises are not public facing. For example, it could be a premises of a business that does not have customers but has been very badly affected by Covid. That should help some of the businesses to which the Deputy has referred. Very broadly, the supports we now have in place are supporting 1 million people in our country today. They all need and deserve this help and we are doing all that we can to keep this help in place. I do accept, despite the variety of schemes that we have, that not every business can avail of them in the way they would want but I hope the initiatives announced today will offer further help.

The last time the Minister was before this committee I raised the issue of community employment supervisors. I asked that the Minister would prioritise reaching a solution for these very deserving people. These are people who keep initiatives like meals on wheels and Tidy Towns alive, and in the midst of a pandemic their work is even more valuable. Is there any solution on offer for these people?

I must ask the Minister for Public Expenditure and Reform to address that question because the issue is under his direct control and I do not want to mislead the Deputy.

Is Deputy Ryan referring to the pension issue and the Labour Court finding?

Work on that issue is ongoing. As the Deputy knows, responsibility for policy for community employment schemes sits with the Department of Social Protection but we are working on this issue on a joint basis. We are continuing the work that my predecessor as Minister for Public Expenditure and Reform and his colleagues did in the previous Government. We are trying to find a way through this that respects the Labour Court decision of 2008 but avoids much wider ramifications across the system. I am hopeful that we will make progress. There is an outstanding issue here that must be addressed. The Minister for Social Protection and I are working very closely together on it and I am hopeful that we can bring it to a conclusion very shortly

I have two brief questions. Reference was made earlier to the fact that in the 2021 Estimates, there is a reduction in current spending on housing and that while there is a small increase in capital spending, it is not a corresponding increase. What is meant by that phrase?

I do not have all of the figures in front of me but there certainly was no reduction in current spending for the Department of Housing, Local Government and Heritage for 2021. As the Deputy has acknowledged, there was an increase on the capital side of in excess of €500 million. The overall Vote and allocation for the Department increased very significantly, including on the current side. We have provided a lot of extra money for the housing assistance payment, HAP, tenancies and additional funding for homelessness services. I can arrange for all of the details to be provided but it is certainly not the case that there was a reduction in current funding on the housing side. In fact, it went up quite significantly.

I would appreciate additional details on that. Finally, I am concerned about the Estimates for spending on justice. We have seen a 1.2% increase in current spending for An Garda Síochána, but on the capital side there has been a 10% reduction. There has also been a 24% decrease in spending on the Courts Service and a 21% decrease in spending on the Prison Service. We should be investing more to reduce crime. I understand that some of the reductions in capital spending are due to Covid restrictions. There have been hold-ups at the planning, procurement and construction stages of capital projects.

What efforts will be made to catch up on projects that were delayed because of last year's underspend?

That is a really important issue. We have a record overall budget for capital expenditure for 2021. If one includes the carry forward from last year, it is approaching €11 billion. Of course, the reason we have that carry forward is because of the underspend in 2020, which can, in part, be attributed to the restrictions imposed earlier in 2020. We had an overall underspend on the capital side of more than €900 million, of which over €700 million was carried forward to 2021. We are in 2021 and, again, a large part of the construction sector is shut down so inevitably that will have an impact on the delivery of projects, the timeline and the spending of that money. I have asked my officials to monitor that very closely and, as the year progresses, to provide options to me, as Minister, on what we can do to make sure that as much as possible of our public capital investment programme is delivered. The definition of capital expenditure includes areas of expenditure that one might regard as not traditionally capital such as digital or research and development. A certain amount of grants that can be provided constitute capital spending as well so the Deputy will be aware of all of the money we provided for the restart grants for businesses in 2020, which was in the region of €700 million, and the funding we provided to our schools with regard to minor works grants and the ICT grants. That all counts as capital expenditure so if the major building projects get delayed, we will see what other ways there are of supporting the sectors that will be impacted negatively by that. The Deputy raised a very fair point and one that I-----

I am concerned because in some areas of rural Ireland, there are many issues around crime and criminality and the reduction in spend concerns me, particularly as party spokesperson for older people. There are many issues around elderly people in my area, which is why I am asking the question. I thank both Ministers for their answers.

I am delighted to hear the announcement on the well-being budgets today. We heard from one of our counterparts in Canada that it had introduced performance metrics and that they had not really been the transformative measure they had hoped they would be. Obviously, I am a great proponent of well-being indicators. Do the Ministers have any thoughts on how they see well-being indicators or budgets being implemented so that they are effective and not just a reporting mechanism?

I would expect that when we have a more rounded set of indicators regarding how our budgets perform, progress on them will take time and that progress will be year by year and step by step. If I was to look at how we could do better than that, I think we should pick a very particular area of Government expenditure that could have a larger effect on well-being and make some choices, for example, about spending more there or gaining more integrated Government decisions in that area. Over time, we will see change and if we were to look for some change more quickly, it could be to our benefit to pick a very specific area and make more bigger choices about that area.

Can I add a few points because I know the Chairman has a keen interest in this area? I have always made the point that narrow or traditional economic indicators only tell us so much. The memorandum that was brought to Cabinet today by the Taoiseach is really important in that respect. It sets out the approach that will be taken in developing a well-being framework building on the extensive work undertaken in the area, including the recent report prepared by the Department of Finance and the OECD framework for measuring well-being and progress.

A lot of work has been done internationally in this space. In terms of where we go from here, step one will involve defining what exactly we mean by the concept and taking the 11 dimensions of the OECD framework as a starting point. Designing the dashboard will involve deciding which indicators to include under each of the agreed domains. The CSO has indicated a willingness to assist in hosting and updating the dashboard on an ongoing basis. The work will lead to the production of an initial output by the summer of 2021. It is proposed that the National Economic and Social Council will provide a vehicle for consultation with stakeholders. I know the committee has expressed an interest in this issue so I hope it will participate and share its perspectives and expertise.

Going back to the budget, the documentation published and the responses to the country-specific recommendations, I wish to draw the Minister for Finance's attention to the third recommendation, which can be paraphrased as continuing to support small and medium enterprises and liquidity for businesses during this period. We know a number of schemes are in operation. Some of them have been tapped out. Ulster Bank, AIB and Bank of Ireland seem to have used all of the resources related to providing the recovery funds. I am interested to see if there is a view on extending that or increasing the amount of allocation, given that the credit guarantee scheme does not have the same type of appeal to businesses and is not as sought after as the other scheme.

In the context of that recommendation, the Minister will be well aware that there is ongoing discussion and increased activity regarding the future of Ulster Bank in this State. This is potentially a huge blow to consumers, the financial sector here and small and medium enterprises, in respect of which a quarter of lending is done through this institution. The Governor of the Central Bank has said that a decision to withdraw is likely to push up interest rates, which would be a problem in a jurisdiction which already has the highest interest rates in Europe at double the European average. At my request, the Oireachtas Committee on Finance, Public Expenditure and Reform has asked that the Minister for Finance formally engage in this process. I expect that there will be an announcement, probably next week at the latest, in respect of this issue. There are a number of State-owned banks or banks where the State has a majority shareholding. The worst option in all of this would be that the loan book would be sold to a vulture fund. The best option is for Ulster Bank to confirm that it is here to stay and that its footprint, staff and presence in the Irish market is here. Some of this is outside our control but I would seriously encourage and ask the Minister to explain to the committee whether he has stepped up his engagement not just as Minister for Finance but as the person who holds the shares in AIB and Permanent TSB on behalf of the Irish people in respect of the very clear discussions that are ongoing and that have in my view have moved beyond the exploratory to actionable.

I will deal with each of the Deputy's points in turn. We are reviewing the operation of the different schemes. The Deputy's analysis of them is pretty fair. Some of them have been successful in releasing credit to particular kinds of companies while with other schemes, in particular the credit guarantee scheme, we have not seen the drawdown of a large amount of much of that facility yet. I am looking at the schemes and their future because how we provide liquidity and credit at this time of strain for so many smaller companies in particular is an important priority of mine.

I wish to confirm that there has been no public statement about the withdrawal of Ulster Bank from the Irish banking sector.

The statements that are made about Ulster Bank continue to state that it is engaged in a review of its presence here and of its future. On what I have done about this, I have engaged directly with NatWest. I have spoken to the chairperson of NatWest and I have reiterated to him what I have said in the Dáil, which is that I am concerned about the commentary and speculation, what it will mean for our economy and what it would clearly mean for those who depend on Ulster Bank for employment, credit or investment. I have conveyed that directly to NatWest. I have also raised the issue in engagement I have had with the British Government, by means of a phone call I had with the Chancellor of the Exchequer. I have, therefore, raised this on a number of different levels. It is not an issue, as the Deputy knows and has acknowledged, that I play a formal role in at all. This is a commercial decision being made by a larger parent company in which we clearly do not have a share and which is making broader decisions regarding its future.

On other banks here-----

I thank the Minister. We need to take a question from another Deputy.

I raise the Sustainable Energy Authority of Ireland, SEAI, grants which have been in place for people in fuel poverty. There has been a serious slowdown in the number of inspections being carried out. I have figures stating that almost 13,000 households which qualify for the scheme and have applied for it have not had an inspection carried out. Some of this is due to the Covid restrictions but some of this happened in 2020. I am wondering if the allocations made within last year's budget are being carried forward on top of the money that has been announced for 2021. How is that being accounted for in the budget?

I will take that question. I assume the Deputy is referring in particular to the warmer homes scheme which is for the lowest income households.

We significantly increased the budget for that in 2021, as the Deputy has acknowledged. We also increased the SEAI's operational budget so it has the capacity for a major retrofitting programme which the Minister, Deputy Eamon Ryan, is very anxious to deliver, as are all of us in the Government. Any underspends on the capital side can be carried forward subject to a limit. In overall terms, the underspend was over €900 million across all the Departments and about €710 million to €720 million of that was carried forward into 2021. I do not have the precise figures for that Department with me but we can get them for the Deputy. However, based on that overall picture I envisage any overspend on the capital side was largely or substantially carried forward. I will get that detail for the Deputy. There is no such provision on the current spending side but I expect those grants constitute capital spending.

I have a comment to add. The scheme is failing on the basis that it is being run centrally by the SEAI. I suggest that the rolling-out of the scheme by local authorities be looked at. They could do it in conjunction with the disabled access grants and the housing aid for older people. The local authorities have the network to carry out the inspections and to allow the work to go ahead. It seems the SEAI has created another layer of approvals and whatever else and is excluding many local contractors from doing the work. We are talking about value for money, but I think we would get a hell of a lot more value out of it if we put the additional resources into the local authorities and asked them to run the scheme. We would deliver quickly to where it is needed to help people in fuel poverty. It is something that might be considered in the context of how the whole scheme has performed since its introduction. It has failed many people and there are many people waiting from 18 months to two years to have an inspection, which is totally unacceptable.

May I respond briefly or does the Chairman wish to move on?

If the Minister can respond in about 20 seconds he should go ahead.

Very briefly, I think the significant delay has been in getting the assessors out to homes. Deputy Canney is right that some people have been waiting for between 12 and 18 months to get this work done. That is why we have provided the extra money and capacity to the SEAI. I do not believe the Minister, Deputy Eamon Ryan, plans to transfer responsibility for those schemes back to the local authorities. That is an issue the Deputy should probably raised with the Minister himself. I will get back him on the other issues.

Deputy Mairéad Farrell is next, followed by Deputy Durkan. We have only five minutes left.

I will keep my question extremely brief because of the time pressure. The State previously declared a climate emergency and we know there is a huge job of work to be done in relation to that. It is clear that semi-State companies will be key to investing in a just, green transition. Would the Ministers support amending the state aid rules for semi-State companies when it comes to investing in a green just transition?

As part of the review of the national development plan, NDP, we are engaging directly with the commercial State companies on their investment plans and we are supporting them in their plans to transition to sustainable forms of energy. The Deputy will be aware that the borrowing limit for the ESB has increased significantly to enable it to fulfil the huge ambitions it has vis-à-vis the sustainability agenda. We are, therefore, supporting the work they are doing.

The Minister for Finance may wish to come in on state aid.

I was not aware at this point that the operation of our semi-States was being significantly curtailed by state aid requirements. I would also cite the example the Minister for Public Expenditure and Reform has used, where there has been a very significant increase in the ability of the ESB to borrow and that has been delivered while still being consistent with our state aid framework.

On the discussions with NatWest about Ulster Bank, I ask the Minister for Finance if consideration has been given to the potential negative impact on the lending market here and to what might replace Ulster Bank in it.

On the matter of the recent appointment to a senior position in a Government Department, the Minister for Public Expenditure and Reform said no precedent has been set by what has transpired and I accept that. Why then is there such debate about the issue and is there a danger it might be seen as a precedent when further appointments are due to take place?

I have given much consideration to the effects of the withdrawal of Ulster Bank from the Irish economy, were it to happen, and the effects of that for current account holders, for those who have mortgages and for those who are looking to secure credit from Ulster Bank in the future. Those concerns are really important and I take them very seriously. Ulster Bank is a very important part of the Irish banking sector and its sudden withdrawal and the consequences of same for our economy, for employment and for credit are very serious. I am well aware of them and have made those points directly to NatWest.

I thank the Minister.

I am not at all discounting the possibility that some people may seek to use any particular example as grounds for a pay claim for themselves but to reiterate the point I made earlier, when it comes to this particular grade of Secretary General across the Civil Service, there are no plans or intentions for further increases in any other posts.

I thank the Minister.

I know Tuesday is a busy day for both Ministers and I thank them for their attendance. I also thank committee members for their attendance.

The committee is now adjourned and will meet again on Friday, 12 February, in private session.

The select committee adjourned at 6 p.m. until 10 a.m. on Friday, 12 February 2021.