Written Answers - Multi-Annual Budgeting.
Thomas P. Broughan
Question:
42
Mr. Broughan
asked the
Minister for Finance
the mechanism whereby agreement was reached by the Government in relation to the multi-annual budgeting targets; the rationale behind the target figures; the mechanism for enforcing adherence to these figures; and if he will make a statement on the matter.
[28032/98]
Multiannual budgeting aims to put in place a framework within which the Government can consider and decide its overall budgetary, taxation and expenditure priorities in a medium-term context.
Progress towards putting that framework in place was made in the 1997 and 1998 budgets.
As part of the presentation of the medium-term implications of my 1998 budget, projections were published showing expenditure by individual ministerial Vote groups for the period 1998-2000. The projections were on the basis of a no-policy-change assessment of the final 1998 expenditure allocations decided by the Government.
In my 1998 budget, I said that I would be considering, as part of the preparations for the 1999 budget, the next stage of the move to multiannual budgeting. This would involve the Government making decisions for resource allocation over a three-year period covering the main budget aggregates of taxation, expenditure and borrowing.
Voted expenditure, current and capital, would be disaggregated into financial envelopes for ministerial Vote groups. The envelopes would be the amounts to be allocated to Departments for the three years, 1999-2001, within which they would be expected to manage their spending, including the cost of any new policies or improvements in existing services, provided that the economy and the overall budgetary magnitudes developed as predicted.
The methodology for deciding on the financial envelopes is as follows: aggregate limits on spending, current and capital, are decided by the Government, in the overall budget context, on my recommendation, for the relevant period; the Estimates and public capital programme are decided by the Government for the first year of the period and the associated no-policy-change costings for the later years are agreed and decided; the difference between the decided aggregate spending limits and the aggregate no-policy-change costs is the margin by which planned spending should change. This margin, and any further margin, created by the reallocation of resources between Vote groups, is allocated across Vote groups and, when added to their agreed no-policy-change costings, equals their financial envelopes. Any decisions taken to reduce allocations below the no policy change level would add to the margin to be allocated. With my 1999 budget I again published projections showing expenditure by individual Vote groups for 2000 and 2001 on a no-policy-change basis.
These were set out in two tables in the document on Budget statistics and tables. Table 4(a) covers current expenditure. It includes, as well as no policy change projections for each Vote group for the years 2000 and 2001, a provision for unallocated current expenditure. That provision is the amount which is available within the Government's limit of 4 per cent average annual growth in net current expenditure for allocation across Vote groups above the projected expenditure for those groups on a no policy change basis. Table 5(a) dealt in a similar manner with capital expenditure, except that there the unallocated amount was that available consistent with an annual increase of 5 per cent over the total 1999 budget capital allocation. Both tables are subject to the outcome of the national plan and community support framework negotiations.
The figures for Vote groups in these tables are not financial envelopes. In the budget I said that I would address the final phase of the move to multi-annual expenditure budgeting which will involve the Government making decisions on the allocation of resources across all Vote groups, and that decisions by the Government on this issue by the end of the first quarter of 1999 will allow Departments ample time to plan their spending in 2000 and 2001.
The principal mechanisms for ensuring that multi-annual budget decisions are arrived at and held to are basically the same as those long used in deciding budgetary issues, namely decision making, by the Government, and approval by the Dáil. The Government will make the decisions on budgetary targets and financial envelopes. Dáil approval will continue to be required for the annual taxation measures and Estimates.
Multi-annual budgeting does not aim further to constrain any of the principal actors in their decision making or actions, nor to limit dialogue on what the Government's and the community's future priorities should be.
