Charlie McCreevy
Question:13 Mr. McCreevy asked the Minister for Finance if he is committed to the policy of a permanent elimination of current budget deficits; and if he will make a statement on the matter. [1580/95]
Ceisteanna — Questions. Oral Answers. - Current Budget Deficits.
The current budget surplus of £15 million recorded in 1994 represented a very satisfactory performance. However, the 1994 outturn benefited from a number of once-off favourable factors including the release of £120 million in NTMA savings carried over from previous years; the residual inflows of £51 million from the income levy which ceased in April 1994; and the proceeds of the tax amnesty in so far as they were not used to meet once-off outlays. Accordingly, at an underlying level there was, in fact, a significant current budget deficit last year.
I am fully committed to holding the current budget deficit to the lowest level possible, consistent with the Government's policy agreement A Government of Renewal. In particular, the agreement applies strict limits to the growth in current departmental spending which are set well below the levels of increase which occurred over the past several years.
Will the Minister agree that many of the problems encountered in the last 20 years revolved around the fact that, as a nation, we were not prepared to live within our means and this was reflected by different Governments during that period? When the Taoiseach was in Opposition he and other eminent people suggested that if we ever achieved a balanced current budget we should not go down the road of a current budget deficit again. Will he agree that no economic benefit accrued from Governments failing to aim for a balanced budget? Given the favourable economic circumstances which pertain this year surely there is no justification for planning for a current budget deficit in the 1995 budget?
I do not disagree with the odyssey of intellectual development to which the Deputy referred. His party is perhaps the biggest convert to fiscal orthodoxy in this regard. I sat in the House with him when the late George Colley announced a current budget deficit of approximately 13 per cent of GDP. I welcome the fact that parties, including my own, recognise the need to manage our affairs within our resources. To aspire to do that is one thing but to slowly turn the ship of state around and bring ongoing commitments of expenditure in line with resources is a much more painful and, of necessity, time consuming process. The Government is committed to speeding up that process. We have set out in the document A Government of Renewal clear commitments in that regard with which the Deputy is familiar — 6 per cent in 1995 and 2 per cent for the remaining two years to 1997 is an indication of that. No doubt the Deputy and his backbench Members will assist me in resisting demands for additional expenditure in the Private Members' motions put forward by Fianna Fáil over the next three years to ensure I reach the targets he has set for me.
Are you looking for a Tallaght strategy?
I would have little difficulty in accepting the Minister's commitment. Given the projected growth rate and the favourable financial circumstances which pertain and which proved long, hard and difficult to achieve in the last seven years at considerable political expense and hardship to many, would he not agree that we should learn from our mistakes and irrespective of demands of those to the left of his party and his own thinking we should not go down that fiscal economic road again? It has not worked and it will not work. I do not have to give my credentials in that regard.
From his extensive Cabinet experience, the Deputy will be aware that demands for increased public expenditure do not come exclusively from people with a left wing point of view.
Agreed.
If he wishes to indicate areas which could be identified by Fianna Fáil for a net reduction in public expenditure I would be more than happy to have a bilateral meeting with him and we could jointly announce the areas where reductions would occur. No doubt he would be happy to explain to the public why net reductions in expenditure would occur with the benefit of the benediction of Fianna Fáil. However, since I do not anticipate he is likely to do that, it will take time to scale down the ongoing commitment of public expenditure which is what we have realistically tried to do and committed ourselves to doing in the Programme for Government.
There are 13 minutes available to us to deal with four priority questions. I can only accommodate the Deputies concerned if Members make brief contributions.
I take it that irrespective of the favourable economic and financial circumstances it is not Government policy to have a balanced current budget for the next three years.
Government policy in this regard is set out in the policy document entitled A Government of Renewal and it is clearer than any other Government's policy.