Financial Resolutions, 1978: Financial Statement, Budget, 1978. - Public Expenditure Policy
The overriding consideration in all that I have been saying so far in this statement is the Government's firm intention to come to grips immediately with unemployment and inflation. A deliberate choice had to be made between this course of action and the no less vital need to restore stability to our national finances. That need was emphasised in the manifesto and it will be tackled with the same determination as our other objectives. As the manifesto made clear, we are prepared to accept a high level of public borrowing—13 per cent of GNP in 1978—only as a temporary feature of our overall strategy to restore economic stability and confidence. It must be greatly reduced next year and the following year. In order to bring this about the deficit on current account also has to be drastically reduced. Apart from the assistance which can be expected from revenue buoyancy arising from economic growth, it is my intention to bring about this reduction by restraining public spending and by a thorough-going reassessment of public expenditure priorities.
A critical review of all spending programmes is, of course, a standard feature of the annual Estimates review carried out by my Department. In the nature of things, however, this tends to concentrate on immediate needs and value for money. I am speaking now, however, of a more fundamental look at the whole spectrum of Government spending.
There are many long-standing expenditure programmes, which are still active, although the justification for the original decision to commit Exchequer support may have long since disappeared. There is aprima facie case for saying that an expenditure programme that has survived essentially unchanged for many years must, by definition, need reappraisal in the light of to-day's needs. In a somewhat different category are expenditure which were originally introduced for purely short-term purposes and are still maintained largely because, for one reason or another, the time has never seemed appropriate for their removal. Yet another category concerns the payment of operating subsidies to agencies on the grounds that their operations have a social or economic value which is not reflected by their revenue-earning capacity. The social value of these operations, however, appears always to be equated to the subsidy needed, no matter how high this proves to be. This equation will also be critically examined in the review.
My Department, with the co-operation of the other Departments concerned, will commence work on this review immediately. The review will form an integral part of the systematic review of policy areas referred to in the White Paper on National Development. It will obviously not be possible immediately to cover the entire field of Government expenditure in the required depth, but it is my intention that a progressive approach on these lines will become a normal feature of the machinery of expenditure control, so that over a short period of years the entire field of Government expenditure will have been subjected to a searching, in-depth, reappraisal.
The process of analysis and judgment involved in this reassessment, of itself, will not be enough. The political will to act on the conclusions reached, even if this means reducing or terminating outdated programmes, must also be present. The Government will not be found lacking in this regard.
The process of curbing public expenditure will be assisted by the reform of public service structures and methods. The Government accept that the reform programme requires sustained political commitment and to this end have appointed a Minister of State at the Department of the Public Service. I intend, with his assistance, to push forward as rapidly as possible with public service reform, concentrating initially on the most urgent areas, as envisaged by the Public Service Advisory Council.