Vol. 533 No. 6
33 Mr. J. Mitchell asked the Minister for Finance if he has revised his estimate of economic growth and budget surplus for 2001 in view of the foot and mouth disease crisis; if so, if he will give the new estimates for growth; and the breakdown of the estimated impact on different sectors of the economy. [9579/01]
36 Mr. McDowell asked the Minister for Finance his Department's assessment of the implications for economic growth of the foot and mouth disease crisis; and if he will make a statement on the matter. [9913/01]
I propose to answer Questions Nos. 33 and 36 together.
As Deputies might expect, any attempt to predict the impact of foot and mouth disease on the economic and budgetary outlook is highly conjectural. This is because the future development of the disease is itself unpredictable. If there was a significant outbreak, the main effects would be losses due to the culling of animals, losses due to restrictions on sales in export markets and losses to the tourism sector.
The main sectors at risk are primary agriculture and the agri-business and tourism sectors. Obviously, if the outbreak remains relatively limited in extent and duration then the economic and budgetary impact would not be very significant. However, if foot and mouth disease were to spread to reach the level currently experienced in the United Kingdom, it would have significant economic and budgetary implications. Commentators have estimated that, in the event of a serious outbreak, economic growth could fall by up to 1.5% this year. I would not disagree with these estimates as reasonable orders of magnitude. If the impact was of this order the budgetary outlook would also be affected.
This Government is making every effort to minimise the risk of the disease spreading. I take this opportunity to thank the public for their co-operation in this national effort and to ask them for their continued patience in our campaign to keep foot and mouth disease from spreading any further.
Do the Minister's estimates of growth for this year vary from his estimates at budget time, and if so what they are?
It is not our practice to review the estimates for growth except in the mid-year review. This was the tradition long before I became Minister for Finance and it is one to which I could adhere. There is an economic review published in July each year which takes into account factors such as foot and mouth disease. When the budget arrives I issue the new forecast for the coming year. The next time the situation will be reviewed is in the economic review and outlook. I am taking on board what outside commentators have said in this regard and I do not necessarily disagree with them.
The Minister has been good enough to indicate that he does not disagree with other commentators. He will be aware that the Central Bank calculated last year that in the event of a recession in the United States we could expect a reduction in growth in the region of 2%-3% this year. By adding the two factors of foot and mouth disease and recession in the US together, would it be unreasonable to speculate that growth this year will end up between 3% and 5% less than that projected on budget day?
The questions relate to the impact of the foot and mouth disease on the economic forecasts for this year and it is on that subject that I am replying. In the mid-year review all factors will be taken into account such as the condition of the world economy. It has been good practice that the Government of the day does not re-jig forecasts every month. However, the views of outside commentators including the Central Bank and independent commentators are taken on board. Therefore, there is a fair idea of the likely impact of these factors. The question here relates to the impact of the foot and mouth disease.
Does the Minister accept that the foot and mouth disease is of an exceptional character in relation to budget forecasts? Is he prepared to indicate, as we are now three days past the end of first quarter, what the figures show for the different tax returns for the first quarter?
At 4.30 p.m. the Exchequer returns for the first quarter will be published. There will be the usual press conference given by my officials. It is not customary to outline what the figures will be until that time.
What are the indications?
Every month the figures are published for expenditure and for tax returns. Each quarter the quarterly figures are released. The impact of foot and mouth disease should be quite limited for the first quarter but there has undoubtedly been a decline in economic activity in some corners of the country over the past five to six weeks. If the outbreak of foot and mouth disease was to be severe some commentators have estimated a worst case scenario of a drop of 1%-1.5% in GNP.
I put it to the Minister that it is a gross insult to the House to arrange a press conference within a few minutes of declining to answer the same questions in the House. It is not the first time that the Minister has done this and it is an unacceptable practice.
The Deputy throws in such snide remarks without facts. Long before I became Minister for Finance the officials of the Department of Finance have given the exchequer returns at 4.30 p.m. on a day soon after the end of the financial quarter. I do not have a role in this except to issue a press release containing a brief comment on the figures. Questions can be asked at the press conference. That was the situation when Deputies Quinn and Ahern were Minister for Finance and it was the practice long before that.
I do not intend to detain the House with this matter but it is absurd for a Minister who prides himself on his reforms to suggest that he could not bring forward a press conference by one hour.
The reason the press conference has always been after 4 p.m. is because that is when the financial markets have closed. That was the tradition concerning the disclosure of the Exchequer returns long before I became the occupant in Merrion Street.
The Minister should agree that the major impact of foot and mouth disease, aside from on the agricultural sector, is likely to be on the tourism sector. He will be aware from press reports that the United Kingdom authorities are considering measures such as remissions on rates to bodies and companies related to the tourism industry. Is the Minister considering measures of this kind?
I understand that Private Members' time tonight will deal with the impact of foot and mouth disease on the tourism industry. Tourism represents about 5% of GDP and about 9% of employment or 150,000 persons. The impact of the tourism sector on the general economy is that of a major employer and a major catalyst for recent economic growth. The Minister for Tourism, Sport and Recreation is well in control of the matter.
I want to join in protest with Deputy McDowell. The Minister will not answer questions in this House which will be answered by civil servants outside. I do not believe the markets will be rocked if the Minister tells the House there is a slight downturn in economic growth, or in receipts. It is not good enough for the Minister to do what he is doing and it should not be allowed by the Ceann Comhairle.
What is the impact the foot and mouth disease crisis on the retail sector?
It is impossible to estimate what impact it will have on the retail sector but there are a number of sectors which are affected, and I referred to them in my reply. It depends on the duration of a severe outbreak of foot and mouth disease. Some independent commentators have speculated that a severe outbreak would have an effect on GNP of up to 1%. Others have given higher figures. That depends on the extent and duration of a severe outbreak and we have not had a severe outbreak yet. What we have is an outbreak contained in one part of the country and I hope that will remain the situation. We have taken severe precautions in past weeks and these have paid off. There would be an impact on GNP if a serious outbreak occurred. The Deputy's questions relate to the foot and mouth outbreak. The Exchequer returns are published at this time every quarter and these questions have no bearing on the Exchequer returns which will be published at 4.30 this afternoon.
I repeat my last question. Is the Minister considering measures which would fall within the remit of his Department, such as remission in rates, for the tourism sector, which has probably been hardest hit so far?
The Minister, Deputy McDaid, will deal with these matters during Private Members' time tonight.
