andMr. J. Bruton asked the Minister for Finance the latest estimate of the current deficit for 1982; and by how much this figure will have been reduced by cuts in expenditure.
5.
Ceisteanna—Questions. Oral Answers. - 1982 Current Deficit.
4.
andMr. J. Bruton asked the Minister for Finance if he will explain changes in the estimates of the outturn of the 1982 Current Budget since 1 July.
It is proposed to take Questions Nos. 4 and 5 together.
In a statement issued on publication of the end-September returns, I indicated that the current budget deficit for 1982, which had been estimated at £679 million at budget time, would be above £900 million. Because of continuing uncertainties about the pattern of tax receipts for the remainder of the year, I am not in a position at this stage to give a more precise estimate of the likely outturn.
The excess on the budget deficit is attributable to a shortfall in revenue. Current expenditure appears likely to be some £30 million below the budget estimate of £5,949 million, even taking account of an excess of about £40 million on Central Fund services. The fact that the figure is being kept within the budget estimate is attributable to strict Government control of spending and in particular to the measures announced on 30 July.
Changes since 1 July in the estimate of the current budget have been the result of updating of information on the main budget aggregates. Forecasts of tax receipts especially have been subject to revision in the light of changed expectations here, as in other countries, of the rate of recovery of world economic activity and its repercussions on Ireland.
The Minister says that the current budget deficit will be in excess of £900 million. Will it be in excess of £1,000 million?
No.
Will it be between £900 million and £1,000 million?
I said in the September statement, and I said I cannot be more precise than that, that it would be about £900 million, mainly as a result of revenue shortfall. The expenditures are below target notwithstanding the fact that spokesmen from the Opposition parties have made comments, carried extensively in the media, that Government expenditure was out of control. Government expenditure at this stage of the year, for the first time in 12 years, is on target and in fact Estimates for the end of the year will be about £30 million below what was estimated in March. Government expenditure is not out of control. In fact it is in control for the first time in 12 years.
Will it not be above £1,000 million?
I have given the reply to the question twice.
I did not catch it.
I said I announced in September that it will be above £900 million. I cannot be more precise than that.
Will it be above £1,000 million?
I twice said no.
Can the Minister explain why so many of the taxation revenue yields have been seriously underestimated, whether it be Post Office receipts or VAT? Would he agree that the original figures given by him in relation to VAT from the point of entry of £145 million will be from £24 million to £26 million less than projected last March? Surely, in terms of strategy, the revenue side of the budget was completely wrong?
One could accept the last statement that the Deputy has made, but in relation to it being wrong, the bulk of the figures used on the revenue side were those contained in the January budget produced by the Deputy's party and the Fine Gael Party while in Government. In relation to the first part of the Deputy's question, generally speaking, as I said in the reply, it is the changed expectations in revenue because of the continuing recession and the world economic outlook generally.
Would the Minister not agree that in the tables he presented in the budget of 9 March there were revised income tax revenue projections quite a separate character to the January projections and at that stage the Department of Finance and the Revenue Commissioners had up-to-date data which projected at year end a basic yield, and that were it not for a deliberate overestimation at the time to accommodate budget expenditure notably based on the Gregory deal and on other aspects——
This is a very long question. Could I ask the Deputy to put a short question?
Were it not for that, since we are talking about revenue and expenditure the budget deficit of over £900 million approximately — say £920 million — would not have come about? Would the Minister not concede that?
We cannot get away from the fact that most of the figures that were used on the revenue side in my budget of March were those contained in the January budget. Taking the income tax case, for which I have the figures in front of me, we had £1,581 million for income tax in the January budget; £1,590 million in the March budget and the expected outturn now will be £1,500 million.
Would the Minister not concede on that very point that in terms of the income tax concessions granted in the March budget there was no corresponding decrease included on the revenue side and that it was quite erroneous to maintain that in the March budget the revenue yield given as £1,591 million would be just £10 million in excess when in fact we all knew that arising out of the March budget and what Fianna Fáil said they would do in the course of the February election campaign, automatically tax revenue yields would be down by £50 million or £60 million? Similarly, the VAT at point of entry proved to be a non-starter as regards bringing in £140 million.
It is not the case. I have replied already to the observations on VAT, that the general downturn in economic activity is the reason for changing the figure from £145 million estimated return to an updated one of, I think, £125 million.
As I understand it, the Minister is now speaking of a possible outturn following the measures he has taken of between £900 million and £1,000 million. Deputy Desmond now mentions £920 million. Is that the kind of figure the Minister is thinking of or is it nearer to £950 million?
In excess of £900 million.
I replied three times in the Deputy's absence.
Let us take it as £920 million. The estimated outturn was £680 million. That is a difference of £240 million. The Minister has said that the cuts which have got it down to this he announced as £120 million. That means that if there had been no cuts the shortfall would have been £360 million. Does the Minister agree with those figures on the assumption that £920 million was the starting point?
Are you asking me questions now?
I am. I want to be clear on the fact that the taxation figures are correct before I put my questions and I will put them again. If the Minister is suggesting that after the measures he has taken the deficit will be £920 million which is £240 million more than the budget deficit, then the deficit that would have occurred had the Minister not taken action would have been £360 million. I understand also that the Minister has said that there is a shortfall in revenue of £200 million. Does that mean there is an overrun of expenditure of £160 million? Or would the Minister like to correct my calculations or explain what the overrun in expenditure will be on that basis?
I do not know what the Deputy is getting at. Obviously he was not here for the reply and I shall give him the details again in relation to the question asked. I said that the excess on the figure for the budget deficit as I announced in September would be about £900 million and I could not be any more precise than that at this stage and that the excess on the budget deficit is attributable to a shortfall in revenue and in fact current expenditure appeared likely to be some £30 million below the budget estimate of £5,949 million. That is even taking account of an excess of £40 million on Central Fund Services.
The budget deficit was £680 million as presented to the House by the Minister. It now looks like being over £900 million after £120 million in expenditure cuts by the Minister. That has come across. That being so, the shortfall that has occurred and which has been partially bridged by the Minister's action is of the order of £360 million. He then tells us that follows a £30 million cut in expenditure by comparison with the budget. Is he then telling us that there is a revenue shortfall of £390 million?
I am telling the Deputy that first, one of the figures he is using, £120 million, includes capital cuts in the July announcement——
What is the current figure?
£100 million. If the Deputy wishes to put down questions with combinations of various figures as they come into his head he may do so and we can deal with them question by question but I think I have replied very adequately, openly and honestly as he himself asked.
Not adequately, because the questions I asked were designed to determine whether on the basis of £680 million projected deficit which is now going to be £900 million — plus say £920 million, after £100 million savings in expenditure, does that not mean that we are talking of a figure of excess there of the order of £360 million? In those circumstances, if expenditure is going to be down by £30 million it argues that the shortfall is £390 million — is that what the Minister is telling us? He could answer the question yes or no.
No.
Either my calculations are incorrect and if so he should say so or if they are correct they would logically yield that figure.
No.
Would the Minister then say what is the shortfall in revenue and how he reconciles the figures as I have done.
If the Deputy wishes to put down a question I shall gladly answer it.
I am asking a supplementary question ——
The Deputy is asking a question he did not put down.
I am asking a supplementary to my question which follows directly from it and the Minister is deliberately evading it for reasons I do not understand.
Not deliberately, no. I have answered the question that is down and in fact numerous supplementaries before the Deputy even arrived.
This is the supplementary question I am asking and I think the Minister ought to answer it because it arises directly from the question. I shall put the question again in case the Minister has not got the figures. He does not disagree with the budget deficit of £680 million; he does not disagree that the outturn now will be over £900 million; he does not disagree that this follows expenditure cuts of £100 million. Therefore, had those cuts not taken place the outturn would have been over £1,000 million. There is therefore a difference between the budget and the outturn, before the expenditure cuts took place, of the order of £320 million. He says that is despite a cut in expenditure of £30 million. Are we therefore not talking of a shortfall in revenue of between £350 million and £400 million — yes or no.
I am not going to be cross-examined by the Deputy or anyone else. If he wants to hear a reply, he should sit down when I am giving it.
What the Minister is here for is to be cross-examined.
Yes, and I do not mind being cross-examined. I am quite capable of being cross-examined even by the Deputy, the infallible being. The shortfall, as announced, for the revenue at the end of September was roughly £90 million income tax; VAT £65-£70 million; excise £40 million and Post Office revenue £20 million. Those are the revenus shortfalls as we indicated at the end of September.
To get back to my question, if the shortfall now is £215 million what is the revenue shortfall estimated for the year as a whole?
I cannot be more precise than I have been already.
But the Minister has not answered the question.
I have. I have given the Deputy all the figures to the end of September, all I have available.
I am asking what is the estimated revenue shortfall for the year as a whole on the basis of those figures. It is a straight question and it could have a straight answer if the Minister wishes to be straight.
Not only have I been as the Deputy requested on numerous occasions, publicly honest and open, but I have given him all the figures that I have available myself.
Would the Minister not agree that on the basis of the March budget, the budget he introduced, the revenue shortfall cannot be less than £348 million on the basis that there is now a projected current budget deficit of £920 million plus £100 million in current expenditure cuts, which means £1,020 million? With a projected budget deficit in March of £672 million the shortfall in the Government's budget cannot be less than £348 million? Would the Minister not agree with that?
No.
At the end of September it was £215 million and what we are saying is that at year end it must be £348 million on the basis of the budget.
I do not accept that. I have already said that various items of revenue outlined in the January budget were the ones used by us in the March budget. There are shortfalls, for example, on income tax alone, £80-£90 million, and on post office revenue, £20 million. Those figures were prepared by the then Taoiseach and his Minister for Finance.
Would the Minister not consider that the use——
(Interruptions.)
I have given all the facts honestly and openly.