Other Questions. - Overseas Development Aid.

asked the Minister for Foreign Affairs if he will make a statement on the levels of overseas development expenditure by Ireland; and if he considers that we are on target to meet our development commitments. [22070/98]

Ivor Callely

Question:

85 Mr. Callely asked the Minister for Foreign Affairs the expenditure on overseas development aid for each of the years from 1996 to date; and if he will make a statement on the matter. [22202/98]

I propose to take Questions Nos. 6 and 85 together.

The allocation for official development assistance, or ODA, has increased year on year since 1992 from a base of £40 million to £137 million, an increase of 242.5 per cent. Whereas in 1992 our level of aid relative to GNP was by far the smallest of any donor country, we are now in 12th position in a list of 21 donor countries. By any standard this is a remarkable growth rate, with few parallels in other expenditure areas. It reflects the Government's continuing commitment to increasing ODA and its intention to play a role, concomitant with our status as a developed nation, in combating poverty in the developing world and in reflecting the innate generosity to the Third World of the Irish public.

In the period from 1992 to 1997, the aid allocation as a percentage of GNP rose from 0.16 per cent to 0.31 per cent, in line with the commitment to move towards the interim target of 0.45 per cent of GNP. However, a handicap in maintaining this progress has been the extraordinary growth in GNP. For example, despite a further increase of £15 million in 1998, aimed, when allocated, at reaching a target of 0.32 per cent of GNP, the rapid GNP growth in the year has meant the out-turn is more likely to be around 0.29 per cent. But that should not obscure the fact that growth in financial terms has been real and substantial.

I am not suggesting and would never accept that there are any grounds for complacency. I have stated in plain language that our present level of aid is unsatisfactory in a number of respects. In a recent speech, I indicated that the level of Irish aid is low relative to the leading countries, Denmark, the Netherlands, Sweden and Norway, all of whom exceed the UN target of 0.7 per cent; is well behind the average for EU countries, which is 0.37 per cent; and is still one of the smallest in absolute terms — only Luxembourg and New Zealand have smaller programmes. I also accept it will be extremely difficult to maintain growth in GNP terms at a time of exceptional GNP expansion. Even in financial terms, it will be difficult to maintain growth in a situation in which there are very good reasons for restraint of public expenditure and there are competing demands in relation to genuinely compelling domestic priorities. The purpose of my speech was to contribute to a debate in our democracy about where our priorities ought to lie. The establishment of priorities among competing demands — all of them legitimate — is the proper business of this House and political institutions.

As to the place of development aid among spending priorities, I have made my own position crystal clear. I believe the proportion of public expenditure going on development aid, currently about 1 per cent, should be increased further. Notwithstanding the perfectly valid arguments for restraining public expenditure and the compelling arguments for increased expenditure in some areas, I have argued that there are five good reasons we should increase aid expenditure: first, because it is the right thing to do; second, because aid produces good results in terms of reducing poverty; third, because we have benefited enormously from the generosity of others, including the EU; fourth, because it is in our own long-term interests; and fifth, because for the first time in our history we can afford to do so.

Does the Minister of State agree the ODA percentage contribution is likely to fall to 0.28 per cent of GNP in 1999? Given that Government policy is that the percentage should rise to 0.45 per cent of GNP by 2002, does she intend to pursue her threat, made on RTE's "News at One" today, to resign if the Government does not meet her demand for an increase in this year's budget? What did she mean by saying the Government has a window of opportunity between now and budget day to make good her demands?

It is a matter of fact that because of unprecedented levels of growth, my allocation of £137 million this year to ODA will fall below the GNP level we expected to reach. All reliable analysis expected it to be 0.32 per cent of GNP but because of exceptional growth it will be only 0.29 or 0.30 per cent. This issue must be discussed because it has a significant impact on the overall targets we set in 1996 to which this Government is committed. In many ways we are victims of our own economic success but it raises the spectre of us failing to reach our projected target.

In financial terms I expect there will be a significant increase in my ODA budget for 1999. The Estimates have not been published yet so I cannot go into any details but I imagine that, because of continuing growth, there is a danger of slippage in our aid budget as a percentage of GNP.

I acknowledge, as the Minister of State has done, the increases we made between 1992 and 1997. That was not always easy due to competing demands but we managed it because of the commitment made in the programme for Government. Will the Minister of State confirm that the current Fianna Fáil-Progressive Democrats programme for Government states that there will be increases in compliance with our commitment to the United Nations? Will she clarify if the Estimate for overseas development aid for the next year has been agreed by the Cabinet? I understand the Minister of State made a remark on radio at lunch-time today that if there was not a pro rata increase along the lines of our commitments to the UN, she would resign from her position. Will she clarify that matter?

The Government intends to maintain our commitment to reach the percentage increase as indicated in the programme for Government. In other words, during the lifetime of this Government we will reach the 0.45 per cent figure but it is difficult to do that when it is tied to a fast growing GNP. I hope that over the lifetime of this Government we will continue on that logical trajectory towards that target.

In relation to my comments today, I said I have made my position on this matter very clear. I am not happy that the level of increase agreed by the Cabinet during the Estimates discussion is satisfactory in terms of our overall commitment to the poor of the Third World and our European and international commitments to reach the targets to which I am committed. There is a window of opportunity between now and budget day for the Cabinet to review its position on this matter and respond to the genuine advocacy of the social partners today when they reminded the Government of our international and domestic commitments made in the programme for Government not to turn our backs on the poorest people of the world at a time of unprecedented economic growth.

Will the Minister of State agree there are approximately 3,000 million people throughout the world whose income is less than £3 per day, that the small contribution from Ireland is important from a moral point of view in terms of our role in international fora, and that it would send the wrong signal if we joined the countries outside of those the Minister of State has named and slid back in terms of our contribution to the poor of the world? It is essential that either the Estimates or the budget deliver on the commitment this and previous Governments have made to aim for the target of 0.45 per cent by 2002 and the UN target of 0.7 per cent.

I agree with the Deputy that it is a manifestation of our commitment to civilised values that we maintain our commitment to the Third World. That commitment has strong democratic support in Ireland. Irish people in their personal contributions are very generous to Third World charities and we have an excellent reputation both here and abroad, particularly in Africa where we operate long-term development projects with our partner countries. This is a moral issue and it is a litmus test of our commitment to the vindication of human rights in the Third World.

Whether the Minister of State follows through on her threat to resign will be a litmus test of her sincerity. I note in her replies to Deputy Spring and myself that she did not deny she said she will resign if these percentage targets are not met. Will the Minister of State agree that the commitments made by Ireland to meet 0.45 per cent of GNP contributions by 2002 are modest not just in terms of the UN target of 0.7 per cent but in terms of some of our EU partners, in particular the Nordic countries which have already exceeded the UN target figure? Will she agree also that the important figure is not the amount of contribution but the percentage GNP contribution, given that the Organisation for Economic Co-operation and Development contribution fell from £55.4 billion in 1996 to £47.6 billion in 1997, a decline of 14.2 per cent? Unless we strive to achieve the 0.7 per cent target figure, and not the modest figure of 0.45 per cent, we cannot ask other OECD countries to do the same.

The figure of 0.45 per cent is a modest target. The EU average is 0.37 per cent of GNP and we continue to be short of that figure. The percentage of GNP will be difficult in light of the rapid growth in our economy but it is an internationally recognised measure to which we are committed. All the developed countries of the world have signed up to this aspiration and Ireland must hold true to this and aim towards achieving that target of 0.7 per cent. The difficulty, however, is that our growth has overtaken the targets set at the beginning of this year and in 1996.

I run my budget not on the basis of percentages of GNP but in cash terms and there has been a steady 10 per cent growth each year. I got £15 million this year and I hope to get a further increase which will mean we will still be on target in financial terms, but I am not happy there is slippage on the UN target and the target we set for ourselves in the programme for Government. I have made my position clear. I cannot do any more.

I welcome the Minister of State's reiteration of the Government's overall commitment even though it will reduce the interim figure of 0.45 per cent. The figures are modest in their own right. I find it difficult to accept the Minister's statement that we are victims of our own economic success. From the figures released earlier this week, we are talking about a surplus of over £1.1 billion. This is a litmus test of the conviction of this Government. We were successful between 1992 and 1997 and I hope she will do what she said on the news today and convince her party colleagues in the first instance and her Government colleagues to maintain our commitment to the poor of the world.

I detect a little inconsistency in the Minister's statement that the Government will reach its interim figure over the lifetime of the Government. If we do not maintain the figure this year there is no possibility of achieving it in the lifetime of the Government. This year is the test and the Minister should ensure the money is provided.

In her reply the Minister of State indicated that economic growth was a handicap in reaching the targets set. Will she explain how economic growth and the buoyancy in tax income we currently enjoy is a handicap in providing relatively small amounts of money in the ODA budget? Does the handicap to which she referred relate to the criteria on spending with which we are obliged to comply by the European Union? If it does, would she consider it worthwhile to have expenditure by European Union states on ODA excluded from this calculation of Government expenditure — this generally means expenditure within the State which ODA is not?

I agree with the Deputy and I have made a number of suggestions in respect of this matter. I understand the Minister for Finance's difficulty in trying to maintain the ceiling of 4 per cent on current expenditure. However, since the entire ODA budget goes out of the country it does not have the effect of overheating the economy as do other elements of current expenditure. There has been a great deal of debate between my Department and the Department of Finance on this matter.

The economic handicap to which the Deputy referred arises if we take GNP, which is variable, as the bottom line against which progress is measured in terms of ODA. There is nothing I can do about that. At the beginning of the year, my Department's sole budgetary responsibility lay with £137 million allocated in the 1998 budget and on the basis of the best estimate of the economic indicators we predicted that this figure would represent an increase over last year in terms of GNP. The figure for last year was 0.31 per cent of GNP, 1998 was meant to be 0.32 per cent but, because of the huge growth in the economy, the figure is sliding backwards.

There is room for intellectual investment and economic thought about how we could remove ODA from the general constraints on current expenditure because it does not overheat the economy and the benefits from it go outside the country. These benefits are responsible for facilitating great work in developing countries. Those of us who saw the "visions of hell" witnessed by the Minister and myself during recent visits to Sudan or who heard the horror stories emanating from Honduras, are absolutely convinced that we must honour our commitment to the UN and meet our OECD targets. The challenge we now face is to convince others — I am glad the social partners support us in this — that we have a moral commitment to do just that.