Deputies Noonan and Deenihan want to write into the law a compulsory provision which would oblige every Minister for Finance to prepare a White Paper on selected areas of tax policy at five year intervals, starting in October 1999. The proposed amendment would also require invitations to be issued for public comment on a list of taxation topics specified by the Minister by 1 April in the year in which the White Paper is to be produced. The amendment appears to envisage a grant strategy on tax policy being announced following public consultation every five years.
This issue was the subject of a comprehensive debate on Committee Stage last week. I fully agree that the more information there is in the public domain on issues surrounding tax policy the better should be the formulation of that policy. I share the Deputies' views on the importance of a stable and predictable tax system where businesses know as far as possible in advance what the Government has in store for them by way of future tax changes. I do not agree, however, that the proposed amendment is the best or only way to secure these aims.
The Government's approach to tax policy is set out in An Action Programme for the Millennium on which it was elected. As I said in my first budget and repeated in my second in December, I intend to deliver over the five budgets of the Government the tax proposals agreed in An Action Programme for the Millennium. There is not, therefore, as appears to be implied by the amendment, great uncertainty about the future of the Government's tax reform programme.
In many of the areas cited by Deputy Noonan as suitable for a White Paper there has been considerable debate inside and outside the House. There is the question of child care on which the Government recently published the Partnership 2000 working group report. As I said on Committee Stage, there is one initiative which may be worth while and which could be undertaken around this time each year, that is, to publish the relevant papers of the tax strategy group which cover all aspects of income tax, corporation tax, capital tax, indirect tax, environmental and other tax policies. They not only set out a general statement of the goals and objectives in particular tax areas and the options available to secure them but also give an insight into the dynamics of how policy is arrived at. If there are areas of tax policy on which Members would welcome a briefing from time to time or in respect of which the appropriate committee would wish to invite a submission, I would be anxious to facilitate such requests. I have given the Deputy a copy of these papers. As indicated on Committee Stage, it has been necessary to hold back a small amount of material. I am placing copies of the papers in the Oireachtas Library and will be publishing them on my Department's website on the Internet.
While these proposals should assist the Deputies and underline official thinking in these areas, tax changes are a matter for the Government. They are for the people to decide in elections and through that method the Government. If the people like what the Government parties are putting forward in taxation measures, they will vote for those parties. If not, they will vote for somebody else and adopt their tax policies. That is the ultimate basis for all tax changes – they come from the people who give power to the elected Government.
Various tax changes have been raised. It has been suggested that there was inadequate consultation and that there should be a White Paper leading to a grand strategy. It is useful to have wideranging consultation on topics due to come before the Government for decision – the consensus approach. This used to take the form of observations from Government Departments which were incorporated in a memorandum to the Government which ultimately made a decision on the matter. That type of approach has been developed in the past decade with the very successful partnership mechanism to agreeing wages and other matters in the national programmes by employers, Government, trade unions and the farmers.
However, I do not believe this is the only way for Ministers for Finance or any other Minister to make decisions. On the debate on last year's Finance Bill, Deputy McDowell pushed for changes to the capital gains tax as if to imply that unless a lobby group seeks changes in a specific area the job of the Minister is to do whatever his Department officials tell him and to respond likewise to other groups. That may be the way a number of Ministers, perhaps of all Governments, have operated and perhaps it is the way some would like them to operate in the future.
I do not hold that view on the role of a Minister, indeed it is no secret that I am strongly against it. In this regard, I was heartened to hear remarks, which did not get much publicity, by a former Minister of the Fine Gael Party when called as a witness in court proceedings last year which, inter alia, dealt with telecommunication changes. When it was put to him that a decision he had taken was not what his officials had recommended he replied he was proud to have done the opposite. He was right. A former official in my Department who is well known recently spoke to me of a certain matter many years ago which officials in the Department had opposed. He went on to say that, as usual, they were wrong.
I recently referred to the tyranny of consensus as an approach to dealing with matters as if it is the role of Ministers merely to reflect the views of lobby groups and others and put them into effect or to debate matters for weeks, months and years before arriving at a consensus which is then implemented. While that can be effective in some areas, in many others it is a recipe for making no decision or making one which is an amalgam of the lowest common denominator of all the different opposing groups.
If I had taken that approach many measures I have taken would not have been introduced. For example, had I waited to achieve a consensus on tax credits they would not have been introduced in this budget, nor in any foreseeable one. Similarly with my proposals on pensions and the betting tax. Nor did my officials recommend the changes I introduced to the capital gains tax last year. However, decisions such as these are political, to be taken by the Minster and Government of the day. If one looks at the decisions I have taken as Minister it will be apparent that in many respects I did not wait for consensus, nor do I intend to.
Opposition Deputies and others hold the view that the only way to proceed is by reflecting the views of one group or another. While I am probably in a minority in the House on this issue, I do not subscribe to that method of decision-making and there is no point in people fooling themselves otherwise. They will have to put up with my way of operating for my period in office. It must be borne in mind that people can decide on taxation changes at the ballot box.
Deputy McDowell referred to multi-annual budgeting. Recently he has been building a dossier of replies to parliamentary questions in an attempt to plan forward. He is right to say it leads to good government and budgetary planning to plan expenditure and taxation changes for the future. I am committed to the multi-annual budgeting approach on the spending side and in my Budget Statement I said I would develop it further this year.
At present, no policy change projections are made. This year I have also indicated the total financial envelopes for coming years on the spending side. The next logical step is to break that down on a departmental basis, whereby each Department will have a financial envelope from which they will decide their priorities.
Deputy McDowell referred to the traditional approach to the budgetary process, where Departments keep returning to Ministers for Fin ance with their agendas and priorities until they are implemented. Under the new approach they will be advised of their total financial allocation for three years which they can then work on. This process will take time and new ways of thinking will have to evolve in Departments to ensure its success, similar to what happens in private business. It is a more logical approach to the spending side.
The commitment to a cash limit in the programme for Government, developed by me when in Opposition, is effective in this approach. Deputy McDowell has argued against the 4 per cent spending limit and has questioned the way it is defined and implemented. However, it is a good thing, at least for planning purposes because it is an exact sum. It enables precise amounts to be calculated forwards, which is a more exact science than the previous methods, calculated on the basis of growth in the economy plus inflation. While my method may be crude it is effective because it can be worked forward and it lends itself to this type of approach. Agreeing with the concept is a separate matter.
Deputy McDowell also referred to the recently leaked document produced by the Economic and Social Research Institute regarding what should be included in the next national development plan. The document will be published formally in the coming week. It would be a good idea for the Committee on Finance and the Public Service to make a contribution to the next plan because I do not want it merely to consist of what official agencies or Departments want. Politicians on all sides should have an opportunity to have their priorities included as well. The timetable for that must be assessed by the chairperson of the committee.
If agreement is reached at the end of this month when the Heads of State and Government meet on the Agenda 2000 package and the regulations are put in place, the Government will have three months to produce and submit its national development plan. If everything goes according to the German plan, that should happen by the end of June. I have no objection to the committee making its contribution. When the ESRI document is published in the next week or two, it might form the basis for developments in the committee. I will relay those views to my Department because we would like to assist in that area.
Deputy Noonan and Deputy Deenihan, whose idea it is to have a grand strategy, have raised questions about the various tax heads, such as corporation tax, gift tax, pensions, powers to the Revenue, etc. An Action Programme for the Millennium sets out some of these taxation matters. The Minister for Finance and the Government of the day decide in the context of each budget on the appropriate ways forward in this area. I intend to continue with that method. As I said earlier, a grand strategy in these areas is not the best way forward. Taxation policy is a matter for the Government of the day on foot of electoral decisions made by the people.