Written Answers. - Multi-Annual Budgeting.
Willie Penrose
Question:
32
Mr. Penrose
asked the
Minister for Finance
the proposals, if any, he has to further implement multi-annual budgeting; the changes, if any, he proposes to implement in relation to the estimates process and the use of financial envelopes; and if he will make a statement on the matter.
[13710/98]
Delivering Better Government, the 1996 report of the group of secretaries co-ordinating the introduction of the strategic management initiative, SMI, recommended that a multi-annual budgeting system be introduced. Moves towards a multi-annual budgeting system are a central part of SMI. The aim is to put in place a framework within which the Government can consider overall budgetary, taxation and expenditure priorities in a medium-term context.
This Government has firmly endorsed the strategic management initiative.
Significant progress has been made with the introduction of the new multi-annual system. A multi-annual projection of the major revenue and expenditure aggregates on the assumption of unchanged policies was published with the 1997 budget. The expenditure data were in aggregate form, without a breakdown by Vote groups.
I developed the approach further by publishing, as part of the presentation of the medium-term implications of the 1998 budget, projections showing expenditure by individual ministerial Vote groups for the period 1998-2000. Again, the projections are on the basis of a no-policy-change assessment of the final 1998 expenditure allocations decided by the Government.
In my 1998 budget speech, I said that I will be considering, in preparing for the 1999 budget, the next stage of the move to multi-annual budgeting, as envisaged in Delivering Better Government. This would involve the Government making decisions for resource allocation over a three year period covering the main budgetary aggregates. Voted expenditure, current and capital, would be desegregated into financial envelopes for ministerial Vote groups. These would be the amounts which would be allocated to Departments for the three years, and within which they would be expected to contain their spending, including the cost of any new policies or improvements in existing services.
The first step towards introducing this system with the 1999 budget is the settlement of benchmark projections for each Vote group of the cost in 1999-2001 of continuing the existing level of programmes and services. This work is under way and discussions with Departments on their projections are continuing.
I intend to seek Government approval to the no-policy-change projections of expenditure by Vote group for the period 1999-2001; to advise the Government on the projected development of the budgetary aggregates over that period on a no policy change basis in regard to both the expenditure and taxation; and to seek a Government decision on the targets to be adopted for the budgetary aggregates for the period 1999-2001. The targets for expenditure would not, at that stage, be desegregated by Vote group.
In the light of those targets, Departments will then be asked to propose their detailed Estimates for 1999 and for their financial envelopes for 2000 and 2001. Following official discussions, the Government will decide the 1999 Estimates and the medium-term financial envelopes. The final step will be for the Government to finalise the 1999 budget.
This move to the final phase of multi-annual budgeting is an ambitious exercise, involving fundamental change in the way in which the budget and the Estimates are prepared. I am hopeful that it will be possible to carry it through as planned with effect from the 1999 budget.
