Vol. 451 No. 6
16 Mr. O'Malley asked the Minister for Finance the percentage increase, including the proposed £140 million for equality payments, in supply services spending for 1995 over 1994 figures; the percentage increase if the proceeds of the tax amnesty were excluded from the 1994 figures; and if he will make a statement on the matter. [7042/95]
42 Mr. M. McDowell asked the Minister for Finance the percentage increase in supply services spending, including the proposed £140 million for equality payments, between 1994 and 1995; the percentage increase if the proceeds of the tax amnesty were excluded from the 1994 figures; and if he will make a statement on the matter. [6957/95]
I propose to take Questions Nos. 16 and 42 together.
Total gross supply services expenditure in 1995, both current and capital and including the £140 million payments for social welfare equal treatment arrears, is estimated, on a post-budget basis, at £12,928 million, an increase of 7.8 per cent on the 1994 provisional out-turn figure of £11,997 million. If the proceeds of the tax amnesty, which amounted to £230 million, are excluded from the 1994 figures, then the increase in gross supply services expenditure in 1995 is estimated at 9.9 per cent. The amnesty proceeds were used, in part, to fund on-going expenditure such as pensions liability in An Post and Bord Telecom. Deducting amnesty proceeds from 1994 expenditure to calculate a base for measuring the increase this year is not wholly valid, for that reason.
As the Deputy is aware, the Government's policy on public expenditure is to moderate the growth in non-capital supply services spending over the period 1995 to 1997. In the budget, I provided for an increase of 5.8 per cent in 1995 in gross current supply services spending, below the 6 per cent limit we set ourselves. The budget expenditure figures included a provision of £60 million for equal treatment payments this year. If the additional £140 million in equal treatment arrears payments, which the Government has now decided should be paid in 1995, are added to the budget figures, the increase in gross current supply services spending in 1995 will be 7.1 per cent.
Regarding the equal treatment payments, the Government has announced that it is accepting the judgment of the High Court on to the entitlements of the women affected and has committed itself to paying the full amount involved, estimated at £260 million. These payments, awarded by the court, are a legal obligation which was not created by any act of this Government. The £200 million in 1995 and the balance of £60 million to be met subsequently are an extraordinary, non-recurring item of expenditure. Meeting these exceptional liabilities does not indicate any weakening of the Government's resolve to contain public spending.
Would the Minister agree that the increase in current spending this year which on its own figures is 9.9 per cent is absolutely monstrous given that inflation is running at 2.5 per cent or thereabouts; that this kind of expenditure will grind this country into the ground once again from which we will have to painfuly extract ourselves? Is he further aware of the contents of a recent article by a former Taoiseach, Dr. Garret FitzGerald, drawing attention to the fact that the Minister's method of describing current expenditure this year is faulty and understates the position because he is referring to gross rather than net expenditure for the first time and that the actual expenditure is one percentage point higher? As a result we are now facing an increase in current expenditure of 10.9 per cent, which is monstrous and unacceptable in the management of this country's financial affairs.
I do not accept that public spending — which is the political point the Deputy is trying to make — is out of control or that this Government made up of three parties is not committed to ensuring that expenditure in the public supply of services is contained and restrained in order to improve our overall economic performance. There are once-off exceptional items for last year and this year which when added together and presented in the manner the Deputy has just done would suggest that the figure is of the order of 7.1 per cent. If you include the base from last year — which I do not accept is acceptable arithmetic in this regard — you could arrive at a higher figure. It is important to have regard to the overall trend and, as far as I am concerned, when you take the Exchequer borrowing requirement and the commitments in the programme for Government, this Government is clearly committed to the responsible management of the nation's financial affairs, including growth in public expenditure.
Does the Minister accept that the PSBR will be significantly increased as a result of this manoeuvring and creative accounting he is now involved in irrespective of its effect on the EBR? Would he tell the House how he can reconcile that this year's equality payments to married women are a once-off factor but he seeks to represent the amnesty proceeds of last year as being the norm although they were every bit as much a once-off factor as the payments being made in this present year? He seeks to include the amnesty proceeds from last year in order to try to make the overall figure look lower than it really is in order to hoodwink the public that public expenditure has not gone out of control.
Let me assure the Deputy that the Exchequer borrowing, which is one of the critical Maastricht criteria, will be maintained at 2.4 per cent and, possibly, less depending on the outcome at the end of the year.
By bumping up the public sector borrowing.
The overall performance of this Government in controlling public expenditure will be satisfactory having regard to the needs of our society and our obligations in respect of the convergence criteria of Maastricht and, in particular, to the needs of the economy with specific reference to inflation and domestic interest rates.
I asked the Minister earlier if he had familiarised himself with the contents of an article by the former Deputy, Dr. FitzGerald. Since he has not rebutted what Dr. FitzGerald wrote I presume he accepts his analysis of the change in the way these figures are presented this year, by expressing them in gross rather than in net terms and by excluding the appropriations-in-aid. Will he agree with me that the actual increase in current public spending this year is, therefore, 10.9 per cent which is monstrous?
I accept that Dr. Garret FitzGerald is a very eminent commentator and one who has always commanded the respect of Deputy O'Malley with regard to his control of national economic and budgetary matters. In this instance the figures we have presented are transparent, known to everybody and we have not tried by any method of creative accounting to hoodwink anybody. We have clearly indicated the position. Once again may I reaffirm my commitment to ensure that public expenditure is kept to the limits we have set for ourselves in the programme, A Government of Renewal, which was published on the formation of this Government.
