asked the Minister for Finance if the estimated current budget deficit for 1986 is in line with the projection contained in the budget; and if he will make a statement on the matter.
Ceisteanna — Questions. Oral Answers. - Estimated Current Budget Deficit, 1986.
10.
The current budget deficit for the first three months of the year was £641 million, which was in line with budget day expectations. The deficit for the first six months will be disclosed in accordance with normal practice, in the statement accompanying the end June Exchequer returns which will be published at the beginning of next month. The latest indications are that there will be a marginal loss of tax revenue in consequence of the decision to reduce the charge on gross investment income of insurance companies. Non-tax revenue will also be down slightly.
Did I understand the Minister to indicate that he expects the half-year results to be slightly off line in view of the items he mentioned?
I just said that the deficit for the first six months will be disclosed in accordance with normal practice on the publication of the end June returns. I indicated that, as the House is already aware, there will be a marginal loss of tax revenue in consequence of the decision to reduce the charge on gross investment income of insurance companies. The House may or may not be aware that there will be some slight difference in non-tax revenue from what was originally anticipated, mainly because of a decline in the prospective profit payments to the Exchequer from Bord Gáis, as a result of the fall in oil and gas prices since the beginning of the year when the figures were originally projected.
Is the Minister acutely aware of the Government's commitment to get the current budget deficit to 5 per cent by the end of 1987? Will he confirm that the achieving of that target would involve expenditure cuts of £450 million or about 5½ per cent or 6 per cent of total spending? Does the Minister propose to make such cuts or to raise the taxes to reach the target set down in the 1983 Budget Statement?
I am aware of the budget deficit projections contained in the national plan, Building on Reality. I am also aware that the previous Minister for Finance explained, in dealing with his most recent budget and the preceding one, the policy being pursued by the Government in regard to reducing the deficit in such a fashion over the three year period as not to cause disruption in the course of an incipient economic recovery. At this stage budgetary policy for 1987 has not yet been settled and it is, therefore, not possible for me to give an indication as to the actual budget deficit projected in 1987. It remains our general objective to get to, or as close as possible to, the targets set out in Building on Reality.
Is the Minister telling this House in all seriousness that it is still Government policy to get the current budget deficit down to 5 per cent in 18 months' time, considering that it is heading for 7.5 per cent in the current year? That will cost £450 million in cuts in the next year. Is he still telling the House that he is going to get to that 5 per cent figure, while it is currently 7½ per cent? It is impossible and the Minister should admit it.
The Government have made a statement in regard to this matter stating their intentions for each of the intervening years and for 1987. It is fair to say that the deficit for 1986 is not as far along the course towards the 1987 projected deficit as one would expect if one were moving in a straight line between the deficit at the time of publication of the plan and the deficit intended for 1987. I have to acknowledge that this does pose considerable difficulties in achieving the 1987 target.
That is why I chose with some care my words in reply to the Deputy's earlier question. I said it was our aim to get to, or as close as possible to, the 1987 target. While we all share the Deputy's concern to get the deficit down as far as possible, at the same time it is not possible for me to predict at this stage what is capable of being achieved because we have not really commenced a study at this point in the Government's work for the year of the likely budgetary outline for 1987. However, work has commenced on the subject in my Department and in other Departments but it is too early to draw any conclusions.
One last supplementary, if I may. I think I am entitled to ask a question.
Not necessarily. That is one of the things which is wrong about Question Time. Nobody has a right to ask a question. It is at the discretion of the Chair.
I am spokesman on Finance.
Spokesmen on all subjects seem to think they are neglecting their duty if they do not come in at the end of a question, even if it has already been very well dealt with and there is no necessity. I will allow the Deputy one question.
Will the Minister indicate how he proposes to achieve the target on the current budget deficit of £1,250 million set out in the budget, considering that after the first three months the figure already achieved is more than half that? How does the Minister propose to achieve it? Is he now restating Government policy on the budget deficit, talking about getting it down as low as possible while previously there was a specific commitment to eliminate it in four years——
That is a speech.
I am asking what Government policy now is in relation to the budget deficit. We were told policy was to eliminate it, then that it was to be phased out to 5 per cent in 1987 and now the target is to get it down as low as possible. What is the current policy?
Deputy O'Kennedy is asking me to announce my 1987 budget. I do not propose to do that. As far as 1986 is concerned, I have already answered the question. The only thing I would wish to add in response to what Deputy O'Kennedy has queried is that it is normal that there is a larger than proportionate share of the current budget deficit incurred in the first quarter of the year.
The Minister is acknowledging that the target is unrealisable.
I was talking about 1987 in response to Deputy Brennan's question.