Vol. 553 No. 5
70 Mr. Howlin asked the Minister for Finance the number of applications received for the special savings investment scheme at the closing date for applications; the average amount of savings per investor per month; if, on the basis of such figures, his Department has an assessment of the likely cost to the Exchequer of the special savings investment scheme; and if he will make a statement on the matter. [14582/02]
While the number of applications received by the closing date for the special savings incentive scheme is not available, the number of accounts opened at 30 April 2002 was 1,170,208. The average subscription per month is not yet available. However, I understand from the information currently available to the Revenue Commissioners that the average subscription in December 2001 was about €183 while the average subscription in April 2002 was about €148.
On the basis that the scheme closed to new applicants on 30 April 2002, the estimate of the cost to the Exchequer in 2002 is €429 million, €517 million in each of the years from 2003 to 2005, €446 million in 2006 and €89 million in 2007. The cost of the scheme will be reduced where participants die, withdraw from the scheme or vary their monthly contribution downwards, while the cost will rise if participants increase their monthly contribution. These estimated costs assume that these variations will broadly cancel each other out.
I am delighted to have been appointed as my party's spokesperson on finance. I look forward to crossing swords on many occasions with the Minister for Finance, who is very experienced in this area. I also look forward to working with my Fine Gael colleague.
With regard to the figures to which the Minister referred, do I understand that the current cost for this year will be €517 million? In light of that, how is it that on two occasions last year, before and after the scheme commenced, the Minister informed the House that his best guess cost was of the order of €127 million? On what basis was that calculation made and can he explain why he adhered to it after the scheme was launched properly?
The Deputy was not previously his party's spokesperson on finance. However, had he been present to hear the replies I provided to parliamentary questions or to debate Committee Stage of the legislation, he would have noted that I stated on many occasions that the costings were tentative in nature. On one occasion I stated that I expected the cost to rise.
During the Committee Stage debate on the Finance Bill, 2001, under which this scheme was introduced, I indicated that it was very difficult to estimate the cost, that it was new and that the size of the Exchequer contribution would depend on the take-up. In reply to a query from Deputy Jim Mitchell in that debate I stated that if all 1.7 million customers over the age of 18 saved the maximum allowable amount of money, £200, the cost to the State would be £1 billion each year. I then indicated, purely for illustration, that if everybody over 18 contributed £150 on average per annum to the scheme, the annual cost to the Exchequer would be £105 million. I indicated that, because of the variables, it was not possible to forecast with any certainty what would be the Exchequer contribution to the scheme.
In discussions concerning a parliamentary question in February 2001, I noted that it would be a difficult mathematical exercise to work out what would be the tax loss to the Exchequer. I also noted that there was no great empirical evidence concerning, for example, the numbers taking up the scheme and that our best estimate of the cost involved was €127 million in a full year. However, I pointed out that this would depend on the uptake. I also indicated that I would not like to be held to the figure because the more successful the scheme proved to be the more costly it would become.
In addition, I pointed out in reply to a parliamentary question from Deputy Michael D. Higgins in June 2001 that, although a tentative estimate for the full year cost of the scheme was €127 million, the take-up throughout might be extremely strong and that the cost might have to be revised upwards. I again pointed out that the more successful the scheme, the more relief it would entail.
In reply to a parliamentary question in April 2002, I indicated that there could be a potential full-year cost of approximately €300 million. However, I noted that the figure for March, which formed part of that estimate, was preliminary, that the figure for April was not available and that my Department would be assessing the potential cost in light of the information available in the middle of May after the scheme closed.
In replying to a plethora of parliamentary questions tabled to me on many occasions I stated that the more successful the scheme, the more it would cost. I also stated that the more attractive the scheme, the better it would prove to be. That remains my contention.
Without bamboozling people with figures, is it not true that, when this scheme was being devised and proposed by the Minister, he informed the House, on 20 February 2001 and 17 May 2001, that his best estimate both of the cost of the scheme and of the likely uptake was of the order of €127 million? Is it not correct that he predicated this figure as being the cost to the Exchequer? Did the Minister receive a briefing note on 2 February last year which included two tables of possible costs to the State? Is it not correct that, at that stage and in light of those tables provided by the Department of Finance, it was indicated to the Minister that the cost of the scheme, if people were to invest £200 or €254 per month, would be of the order of €421 million? Why, after he had been informed in February 2001 that the likely cost of the scheme that he subsequently launched would be €421 million per annum, did he twice tell the House that his best guess was that it would cost €127 million?
I suspect the Deputy is trying to make a name for himself as the new spokesperson on finance. Deputy McGrath was here for the full period of the last Government.
Will the Minister answer the question?
I will answer it now. I said repeatedly, both on Committee Stage and during parliamentary questions, that the cost of the scheme would depend on its uptake.
One also has to guess the uptake of the scheme.
I pointed out during the debate on this question back in February 2001 that it would cost more than £1 billion per year if the maximum number took it up. I said repeatedly that the cost would depend on the uptake.
We must proceed with the next question.
The other party spokesman was allowed three supplementary questions.
The Deputy should restrain himself. In the Estimates for both revenue and expenditure I have repeatedly relied on the figures provided by the Department of Finance, even to the extent that in my first year in office I included a figure of £19 million for the cost of the capital gains tax reduction despite having stated at the time that I did not believe it would cost anything. I included it because the Department told me to do so. I said on all occasions that the cost of the scheme would depend on the number who took it up.
The Minister is entirely wrong.
I am delighted 1,170,000 took it up.
