Vol. 453 No. 4
10 Mr. McCreevy asked the Minister for Finance his views on whether, with public spending now at a level of approximately 100 per cent, the Government has abandoned any benefits that may have occurred from current economic growth and if current spending levels will grind down hard earned gains in recent years in the economy. [9414/95]
I assume that the Deputy is referring to "public spending now at a level of approximately 100 per cent" is suggesting that current public spending is growing as rapidly as national income.
There is a typing error. The figure should read 10 per cent.
That makes it a different question. Is the Deputy referring to the figure of 10 per cent mentioned by IBEC?
Yes.
I do not accept that the increase in public spending this year will be close to 10 per cent as the Deputy has suggested. The increase in gross non-capital supply services expenditure will be 6.9 per cent. This figure is provided for in the Revised Estimates for the Public Services which were recently published and includes the additional provision of £140 million towards the cost of meeting the entitlements of Irish women under the EU equal treatment directive. If these once-off exceptional payments were excluded, the increase in current supply services is 5.6 per cent which is within the 6 per cent limit imposed by the Government.
The increase of 6.9 per cent this year compares very favourably with the level of increase in gross current spending experienced over the past five years, including in particular the years 1991 and 1992 when the Deputy's party was in Government, when gross current spending increased by 10 per cent on average over those two years.
The Government's figures on public spending have been presented and published in a fully transparent manner and in precisely the same format as in previous years. There has been no attempt to conceal the true position or to resort to creative accounting in order to meet the demanding targets we have set for ourselves. We have clearly indicated the position on spending at all times and I reaffirm our commitment to ensure that current supply spending is kept to the limits we have set for ourselves in the programme. A Government of Renewal.
Why did the Department of Finance on previous occasions use net estimates and, in further calculations, gross estimates? Does the Minister of State agree that, if we exclude once-off payments and special increases such as equality payments and ignore the effect of the tax amnesty, the real increase in Government spending in 1995 over 1994 will be at least 10 per cent, if not somewhat higher?
I would not agree with that and I have explained why. On the question of the gross and net figures, my information is that it is quite transparent. The Department favours the gross figure because introducing the Appropriations-in-Aid to reach the net figure often can mask increases and an examination of the gross figure is more demonstrative of the real increases. As the Minister for Finance said in the course of his Budget Statement, that is the methodology that is being used but, if one wants to apply it to the net, obviously one will get a different set of figures but in neither case would one get 10 per cent.
I can assure the Minister of State that any comparison of the 1995 figures over those for 1994, excluding the factors I mentioned, will demonstrate an increase of expenditure of slightly above 10 per cent, using just the basic figures or ordinary mathematics.
On the matter of transparency in national accounts there is a further question on the Order Paper today. If we are to continue to increase levels of expenditure, as will be the case this year, into 1966, it will restrict economic activity and slow down growth. Will the Minister accept that we should learn some lessons from the past, demonstrating that the maintenance of these levels of public expenditure do nothing for the long term sustainability of our economy?
I agree with the premise advanced by Deputy McCreevy in that all Governments want to spend more money than is available to them. I reject that concept, overall public expenditure performance being the single most important indicator of Government performance.
Obviously there are interesting times ahead.
