Vol. 553 No. 5
72 Mr. Howlin asked the Minister for Finance if a target has been set for increases in public expenditure for 2002 and for the remaining years of An Agreed Programme for Government; and if he will make a statement on the matter. [14583/02]
The position on public expenditure in 2002 is set out in the budget and Revised Estimates for public services. The target increase set for total voted expenditure is 14% for the year as a whole. As regards the general question of setting targets on the level of expenditure increases over the lifetime of the Government, the Deputy will be aware that the overriding framework for fiscal policy for all European Union member states is the stability and growth pact. This pact commits Ireland to keep the finances of general government close to balance or in surplus and to take corrective action when there is an actual or expected divergence from the objective.
The new programme for Government includes an explicit commitment to uphold the terms of that pact. I have already told the House that I cannot see how such a budgetary framework could be clearer or more measurable. It is not only the Dáil that can judge our actions in this area, but also the European Commission and all the other member states at ECOFIN.
During the five year period since 1997 the previous Government was in a position to make considerable progress in providing necessary resources to deliver on key infrastructural priorities and its commitment to better public services. The programme for Government set out the very important role that expenditure measures will continue to play in the development and success of the economy. The key objective of this Government is to achieve an appropriate and sustainable balance between spending and revenue and build on the success of the last five years.
Public expenditure is planned within an overall three year fiscal framework. Subject to achieving and maintaining the overall stability objectives, the Government needs to have the flexibility to frame and manage its expenditure policy, consistent with the pace of economic growth and the strength of revenue receipts, in order to best meet the needs and circumstances of the economy. The terms of the EU stability and growth pact provide sufficient clarity and guidance to ensure our public finances are kept in a healthy condition.
The Minister has restated the Government's position that it will meet the expenditure targets announced on budget day. I presume he is sticking to them.
I referred to the overall budgetary position which is in surplus to the sum of €171 million.
Are the expenditure targets laid out in the budget still the expenditure outturns expected? Has the Minister ruled out a mini budget between now and the end of the year? In the light of the published figures on expenditure outturns until the end of May, what measures has he taken to reduce expenditure between now and the end of the year in order that those targets can be met? Is it a fact that, as recorded in The Sunday Tribune last Sunday, a letter specifying cuts for each Department has been issued by his Department?
It is not my intention to have a supplementary budget or any type of additional budget this year. Even at this stage I expect that the overall Exchequer position outlined at the time of the budget will be met, that was an overall Exchequer surplus of approximately €171 million.
When will the budget be presented?
On the first Wednesday in December, as has been my practice since I became Minister for Finance.
That is the overall budgetary framework but as in other years, the figures may not come in exactly on target, either on the revenue or expenditure sides. Even if one goes back 50 years one will not find figures coming in on target. In at least three of the five years that I have been Minister for Finance I have had mid-year exercises regarding expenditure because it is usually up in some areas and corrective actions must be taken – I am sure the same applied when Deputy Howlin and Deputy Bruton were in Government – and we had budgetary surpluses in all of those years.
I sat beside the Minister for some of them.
Despite having budget surpluses in all of my five years I still had to make mid-year adjustments of expenditure. There are some areas where there are upward pressures on expenditure. Deputy Bruton issued a press release yesterday based on an answer I gave him to a parliamentary question last week comparing the first five months of the year with expenditure in 2001 and 2002 but it would be wrong to extrapolate from this that all Vote heads would have increases of such magnitude. The projected rate of increase for capital and current expenditure is 14% this year. The expenditure pattern for the first five months is of the order of 27%. Some of that is affected by tiny differences which I can outline to the Deputy. As usual, there will be some adjustments in budgetary headings throughout the year.
Is the Minister saying that what is happening now is a slight adjustment as happened in recent years or has his Department instructed all expenditure Departments other than the Department of Health and Children, as reported in a Sunday newspaper, to make deep cuts across a range of suggested areas?
Apart from in the Department of Health and Children, is there to be prioritising of expenditure cuts to meet the targets the Minister has set for the December outturn?
No Department ever thinks the adjustments made by the Minister for Finance are of a small nature. Departments fight tooth and nail to retain their financial allocations. Besides, Departments are inclined to overspend. I intend that the budget will come in on target and that we will have a budgetary surplus and a general Government balance as I have suggested.
Has the Minister sent out a letter suggesting cuts?
In three of the past five years I made some adjustments in this regard in the middle of the year. That process will be ongoing. Departments will have to live within their allocations or the money will have to be supplied from some other source.
