Bernard J. Durkan
Question:106 Mr. Durkan asked the Minister for Finance the degree to which the Government's public expenditure guidelines have been breached; and if he will make a statement on the matter. [12566/02]
Written Answers. - Government Expenditure.
The public expenditure guidelines set out in the Government's An Action Programme for the Millennium were (i) net current spending growth would be limited to 4%, calculated on an annual average basis, (ii) capital spending growth would be limited to 5% on average up to 1999, and (iii) overall Government spending would be reduced as a share of national output. An Action Programme for the Millennium as reviewed in November 1999 referred to planned higher increases in capital expenditure without recourse to borrowing and supplemented by public private partnerships.
In terms of current expenditure, as I indicated in my reply on 20 March, given the allocations for departmental expenditure included in the 2002 Revised Estimates, the average annual increase in total net current expenditure in 2002 over the 1997 outturn is estimated at 8%. Against a background of strong economic growth in recent years, the Government has been in a position to make considerable progress in providing necessary resources to deliver on its commitment to improved public services. The Government is satisfied that the benefits flowing from the increased spending in key areas such as health, education and social welfare more than justify its acceptance of a growth rate in net current expenditure above the target set out in the 1997 programme.
In terms of capital expenditure, voted capital expenditure grew by an annual average of 20% over the period 1997 to 1999. On the basis of the 2002 Revised Estimates allocations, voted capital spending will grow by an annual average of 33% over the period 1997 to 2002. The higher increase is in line with the provisions of the national development plan, which accounts for nearly 80% of voted capital and is seen as necessary to meet the needs of the economy, particularly in the area of infrastructure.
The main capital spending area is the Department of Environment and Local Government which accounts for 49% of the total spend across roads, housing, water and waste services. Capital spending by the Department of Education and Science accounts for a further 11% of the total and health capital spending is 9% of the total. These three areas taken together account for 70% of net voted capital spending.
Progress is ongoing on the development of public private partnerships. The first contract was signed last November for the building of five post-primary schools and other projects are at advanced stages of procurement.
In 1997 general government spending represented 37% of GDP. In 2002 general government spending is projected to represent 35% of GDP. However, it should be noted that the composition of spending changed over this period with general government current spending declining from 33% of GDP in 1997 to 29% of GDP in 2002. General government capital spending increased from 4% of GDP in 1997 to 6% of GDP in 2002.