Vol. 631 No. 1
104 Mr. Bruton asked the Minister for Finance the timetable to which the Government is working in respect of the decentralisation of State agencies; if it includes an examination of the business case for the proposed move; and the special arrangements being prepared to deal with the entirely different role and contractual arrangements which exist in the State agencies compared to the public services. [4363/07]
As the Deputy will be aware, 30 State agencies are due to relocate under the Government's decentralisation programme. Some 2,340 posts are involved, or just over one fifth of the programme.
The decentralisation implementation group, DIG, did not set a specific timeframe for State agencies as it believed that it was the responsibility of the board and senior management of each agency to implement the Government decision and to report to its parent Department in the first instance on the progress being made. The DIG noted in its latest report that while progress had been made by some State agencies, there was a marked lack of action among others. The group is meeting CEOs from a number of State agencies to get an overview of progress to date and to identify the challenges remaining in implementing Government policy.
The main issues facing the State agencies are those relating to the filling of posts in undersubscribed locations, the placing of staff choosing to remain in Dublin and promotion arrangements. These issues are further complicated by the absence of any tradition of or agreement on interchangeability between public service organisations, and between the public service and the Civil Service. The decentralisation implementation group is of the view that the resolution of the outstanding issues is central to the overall implementation process in the State agencies. The group has asked my Department to pursue directly with ICTU proposals on getting central discussions under way on the full range of industrial relations issues relating to the decentralisation of State agencies.
An approach based on consensus and agreement has enabled significant progress to be made as regards the Civil Service moves and it is the intention to continue with this policy in the State agency sector.
I thank the Minister for his reply. I am sure he was invited to a recent meeting that was organised by some of the representatives of the workers affected. It was notable that there was no Fianna Fáil representative and many people were disappointed. Nonetheless, some very important questions were put at that meeting that require answers if the Government is intent on fulfilling what it says in its policy.
There is a tiny number of people volunteering to move within the State agencies. In the case of five agencies, not a single person has volunteered and in the case of seven, fewer than ten have opted to do so. Overall, fewer than one in ten specialists is volunteering to move. How does the Minister propose that State agencies will continue in a decentralised location if 90% of the skilled expertise is melted down in that process? The Minister raised the question of interchangeability and this goes to the core of the issue. People working in particular State agencies do not have the option of moving to others. Their contract is with the State agencies by which they are employed.
What is the Government's proposal on interchangeability? Has the Minister some idea whereby, say, skilled mappers who have opted to stay in Dublin may continue to be used effectively or shall we just see the meltdown of that expertise and the enormous expense of trying to re-employ it in some new location? There needs to be some clarity, other than palming this off on the implementation group, when plainly nothing has happened in the three years by which, in the Government's admission, it was to have been completed.
Will the Minister outline his vision as to how this might possibly be dealt with? Has he received from any of the CEOs or boards involved clear indications that they do not believe there is a business case that will stack up the proposal and what does the Government propose to do?
As I said, we believe the outstanding industrial relations issues can only be dealt with in the context of a centralised discussion with ICTU, at that level rather than at individual State agency level, which has been the case up to now. The DIG, which has responsibility for moving this forward, has suggested to us, and we have agreed, to pursue proposals directly with ICTU for getting central discussions under way on the industrial relations issues, including the ones raised by the Deputy as regards the decentralisation of these agencies. That is where matters stand. Until the industrial relations problems are sorted out, clearly very little progress can be made. Progress has been made in some agencies but overall, as the Deputy has said, because there is no tradition of interchangeability or greater operability, we must explore with ICTU how this might be moved forward at central level.
That element of the programme will take longer to achieve, but progress is evident in a number of areas. A number of agencies are progressing their moves where location, mix of staff, business and size of organisation are favourable. The Health and Safety Authority has established an advance office in Kilkenny in preparation for its moves to Thomastown, and Pobal has set up an office in Clifden. This year it is expected the Road Safety Authority will be located in Loughrea and Ballina. FÁS will have a further small advance office in Birr. The Equality Authority will have an advance office in Roscrea and SEI will have a presence in Dundalk. In addition, Enterprise Ireland will have established a presence in Shannon, including the transfer of some existing Shannon Development posts to that organisation.
Officials in my Department are in contact with the Irish Congress of Trade Unions on the matter. The decentralisation implementation group has expressed a view that resolution of the outstanding issues is central to the overall implementation process in the State agencies. I agree with that view and I hope that matters can move forward. As with all industrial relations negotiations, it is impossible to give a precise timeframe for their conclusion.
What is the offer to people with expertise in State agencies who opt to remain in Dublin? This is supposed to be a voluntary programme. The Government wants people to volunteer to do one or the other. The only offer that I have heard from people who wish to remain in Dublin is unemployment. If they do not move and the Government pushes ahead, then unemployment is their only option if they remain in Dublin. The onus is on the Government to make an offer, as decentralisation is Government strategy. This negotiation must be opened up by putting some thoughts on the table as to how it will work. These ideas have not yet come forward.
We are hopeful that discussions with the Irish Congress of Trade Unions at a central level will help resolve these matters, rather than dealing with individual State agencies and unions that represent individual groups of staff.
It is important to understand the process in place to manage the issue of staff remaining in Dublin. Staff will come on stream in Dublin on a phased basis as their organisations progress through their timeframe for relocation. This phasing allows for the absorption of Dublin staff into vacant posts to be managed over the full transitional phase of the programme.
Into what vacancies are people being deployed?
Of the 6,000 general Civil Service posts being moved out of Dublin, approximately 3,400 applicants are coming from Dublin. This is only a snapshot of the central applications facility and it is changing all the time. There is a significant turnover each year at the clerical grades and junior management grades in the general service, where the majority of staff are employed. Therefore, we do not anticipate significant difficulties in placing these staff in Dublin.
That does not apply to Stage agencies.
I am going through each detail. The turnover at senior levels is not as great, but the overall numbers at that level are smaller and can be managed over time. The phasing has been arranged so that the locations with the best take-up are moving early. The Department of Finance is currently analysing retirement patterns over its transition phase and has been liaising with Departments and offices to plan the phased relief of staff into vacant Dublin posts.
Professional and technical staff make up about 10% of the overall programme. Proposals have been tabled in talks with the unions on options for staff remaining in Dublin. While the issues are more complex for professional grades, discussion and dialogue on the full range of options is the only way forward, including inter-oganisational mobility in the Civil Service and mobility in the wider public service.
There have not yet been any substantive discussions with union representatives of the State agencies on the detailed implementation arrangements. Progress on issues such as mobility between State agencies and between agencies in the Civil Service would expand the range of options for all staff, including staff remaining in Dublin.
105 Ms Burton asked the Minister for Finance if his attention has been drawn to the recent warning by the Central Bank of the risk posed to the Irish economy and its competitiveness by continued high inflation and its prediction that annual inflation is set to rise to 4.5% in 2007; and if he will make a statement on the matter. [4210/07]
I am aware of the report by the Central Bank and welcome its broadly positive assessment of the Irish economy. The best measure of underlying inflation is the EU comparable measure of inflation, known as the harmonised index of consumer prices. Average HICP inflation in Ireland was 2.7% in 2006 and my Department is forecasting HICP inflation averaging 2.6% in 2007.
The annual rate of inflation as measured by the consumer price index was 4.0% in 2006 and is forecast to be 4.1% in 2007. The CPI differs from the HICP in terms of coverage. The main difference between the CPI and the HICP is the inclusion of mortgage interest repayments in the CPI. Recent CPI inflation has been impacted by six interest rate increases since December 2005, each of 0.25%. I agree with the point expressed by the Central Bank in its bulletin that the outlook for CPI inflation will depend in large part on the future path of interest rates.
Where it can, the Government is taking action to contain inflation by implementing responsible fiscal policies. With the exception of an increase in indirect tax on tobacco in the last budget, which was done for health reasons, indirect taxes have not been raised in the past three budgets. The Government also removed the groceries order and this is beginning to have an impact on food prices. The Minister for the Environment, Heritage and Local Government specifically requested that in order to support competitiveness in the economy and to protect the interests of communities, local authorities should exercise restraint in setting any increases in commercial rates and local charges in their budgets for 2007.
We are also investing heavily in public infrastructure which will enhance our ability to produce more goods and services more efficiently, and that will help keep inflation down. To the extent that the prices of Government services reflect increased wage cost factors, we need to make the provision of the services more efficient. This is what we are seeking to do in modernising the public service.
The stable macro-economic environment created by the Government through the pursuit of sound public finances will support the economy's competitiveness, and will in turn provide the basis for achieving further economic and social policy objectives in the long term.
Does the Minister appreciate the plight of the ordinary family who must do a week's shopping? The report of the Central Bank shows that Ireland is now the country with the highest level of prices in Europe and in the eurozone. Our price levels are 19.5% higher than the eurozone average. Ireland is significantly more expensive than either the UK or Germany. The Government is the primary party responsible for a great amount of price increases which the people must face. The Euro barometer in which the Minister placed so much faith during his answer showed that the Irish figure is 3% for December. The only country that is higher than Ireland is Greece, which is at 3.2%. We are joint second for the highest price levels with Slovenia, which only recently joined the eurozone.
The family that must do a week's shopping is living in the country with the highest price levels and we are drifting to the top of the inflation league. We are also at the bottom of the competitiveness league in areas like broadband penetration. Does the Minister have any kind of response to the impact of this on families and on the many workers who are getting redundancy notices? Even workers in high-tech jobs at Motorola are losing their jobs. Our competitiveness is simply not keeping pace with that of our competitors. What does the Minister say to that after ten years in Government?
In ten years we have seen unprecedented economic growth, massive employment and relative price stability. Since we have come into the eurozone, there has been a divergence in inflation, which drifted to 3.2% higher than the average at one stage, but came down to zero in 2005 before going back to 0.5% in 2006. There have been recent interest rate increases which have fed into the inflation figure. That is affecting all economies in Europe. There are other issues for which we are not responsible. We cannot direct the cost of crude oil or gas prices as these are regulated sectors in the economy.
The most recent inflation forecasts produced by my Department were published in the budget. The Department forecasts that the CPI will increase marginally to an average of 4.1% this year, before falling to 2.4% next year and 2% in 2009. In the same period for the harmonised index of consumer prices, inflation is forecast to average 2.6% this year, 2% next year and 1.7% in 2009. We have good reasons to believe that the harmonised index inflation will average 2% over the medium to long term in line with the ECB target. Apart from the fact the 2% rate is the ECB's target measure, there are other reasons specific to Ireland which should cause the harmonised index to average around 2% in the future. For example, price levels in Ireland are currently the second highest in the EU. As inflation in Ireland cannot diverge continuously, the rate of inflation can be expected to fall over time, leading to the attainment of an average harmonised index rate of 2%. Demand will not be as strong in the future as the economy moves through a more stable growth phase. As competition increases across the economy, we can expect an easing of inflation. We have a more open labour market, which has already started to reduce wage pressures, particularly in the construction industry.
We have to be vigilant. It seems some of the recent high-profile job losses can be attributed to the fortunes of individual companies, rather than problems with national competitiveness. I am aware of the comments of the various finance houses. It is estimated that in the ten years to 2006, taxation added an average of just 0.5% per annum to the consumer price index. As the health and education sectors, for example, have relatively small weights in the basket of consumer goods and services, their impact on overall inflation is relatively low. Many of the factors which influence health inflation, such as the fees charged by doctors and dentists, are outside the Government's control. The increase in the price of oil is not exclusive to Ireland, as I have said, because all oil-importing countries are similarly affected. Its impact on our competitiveness will ultimately depend on how we respond.
During the term in office of the Minister, Deputy Cowen, Ireland has performed consistently badly on the European harmonised index of consumer prices, which is compiled by EUROSTAT. Since 1998, prices in Ireland have increased by almost 30%, which is the highest level among EU countries and almost twice as high as the EU average. The nurses' claim, in respect of which they are threatening to go on strike, is partly based on the fact that they can no longer afford to buy houses in the greater Dublin region. They want a Dublin cost of living allowance because it is so expensive to live in this part of the country. The builders, who are the Minister's friends, have not been slow in jacking up house prices. The EUROSTAT figure is lower than the official rate of inflation in Ireland because it does not include the cost of a mortgage for people, particularly young families, who have to spend 25% or more of their net wages on mortgage payments. Can the Minister answer the question he was asked? The Government said in Towards 2016 that it would try to reduce inflation, but what is it actually doing to that end? It is all talk and no action.
It is not all talk and no action, obviously, because we have been experiencing growth rates which are two and half times the EU average. I assure the Deputy that the finance ministers in Germany and France would love to have a little more inflation in their economies, so they could have annual growth rates of 5.3% or 5.4%.
People can buy houses in France and Germany.
They would love to have more domestic demand in the economy.
A nurse in France or Germany can afford to buy a house.
Wage increases in Ireland have significantly outstripped inflation. Pensions have increased by 85% in the period mentioned by the Deputy, whereas inflation has been 30%. We would have been waiting a long time to get to that level if pensioners got increases of just £1.50 a week, which is what they were getting the last time the Labour Party was in Government. Under the social partnership agreement, a committee meets to ensure we monitor the position in respect of this matter. Our long-term strategy for responding to higher oil prices involves continually repositioning the economy so it produces more knowledge-intensive goods and services. Such services tend to be less energy intensive, which should help to reduce Ireland's exposure to international energy price developments. The impact on the economy of higher energy prices will ultimately depend on how economic agents, including policy makers, react in such circumstances. In the past, higher energy prices resulted in demands for higher wages. The subsequent increases in public spending had a detrimental effect on our economic performance. We now have a greater awareness that we cannot compensate ourselves for such increases. We intend to increase significantly the productive capacity of the economy by investing an average of 5.4% of funds in the public capital programme each year, thereby ensuring there are no inflationary pressures. This measure will ensure that our growth is not accompanied by the inflationary pressures which would arise if we did not expand the productive sector of the economy. Deputy Burton spoke about builders, who are needed to build houses.
Can the Minister do something about the manner in which builders engage in land speculation?
I do not know who else the Deputy expects to build houses. The capacity of the construction industry has expanded in recent years, thankfully, so it is now able to meet demand by providing up to 80,000 houses per annum. That contrasts with an annual average of between 30,000 and 35,000 houses when Deputy Burton's party was last in office.
A nurse could afford to buy a house at that time.
These are all indications of increased capacity.
Nurses could afford to live in the Dublin area.
Annual house price inflation has decreased to approximately 5% over the last six months.
106 Mr. Connolly asked the Minister for Finance his plans to control the degree of credit card debt, which is double the 2006 level; and if he will make a statement on the matter. [4305/07]
As the Minister for Finance, I am charged with putting in place an appropriate and robust legislative framework for the regulation of the financial services sector, with a particular focus on the consumer. I am satisfied that such a framework has been in place since the Financial Regulator and the Financial Services Ombudsman's Bureau were established. All credit card providers must comply with the regulator's consumer protection code, which states that the providers of financial services must not provide financial products other than those which are suitable for the relevant consumer. When credit institutions change their interest rates, they must state the effective date of the new rates and update the interest rate details on their information services as soon as the changes come into effect. The limits on credit cards cannot be increased unless such increases are requested by consumers. The Financial Regulator spends significant time and uses considerable resources to inform consumers about the potential risk of excessive credit card debt. Credit card cost surveys, which have been undertaken by the Financial Regulator, are available to help consumers to choose the credit card that best suits their needs. The Financial Regulator recommends that consumers take on the right type of credit for the right purpose — credit cards are not suitable for long-term debt as rates are considerably higher than other forms of credit. The Financial Regulator issues information to help people who have problems with credit card debt. This information is available through its publications, helpline and website. The Minister may wish to note——
That is a death wish.
I was referring to the Minister of State, Deputy Parlon, who has an interest in this question as well.
It could happen.
The Deputies opposite are not on my horizon.
The Deputy may wish to note that credit card debt represents less than 2% of personal sector credit and less than 1% of overall private sector credit. In addition, credit card data refers to debt outstanding on all credit cards at the end of the month and includes balances that may be paid in full at the payment due date. The increase in the number of credit cards issued and the amount of debt outstanding is in line with a general trend of increased market penetration in the EU and a move towards electronic retail payment methods.
I am sure the Minister will agree that the level of debt at this time of the year inevitably leads to a major debate about access to credit and credit card limits. It has been reported that an additional €166 million was spent last Christmas. While that may be good for business, people will eventually suffer if their purchases are made using credit cards. Total debt for December stood at €1.2 billion. Given that credit card debt has increased by 15.8% over the last year, does the Minister intend to introduce any measures to control the credit limits which are offered by banks to card holders? Does he have any proposals to deal with non-mortgage credit, which increased by 31.7% in December 2006? Does he appreciate the inflationary effects of increased credit card debt and its potential dangers for the economy? Does the Minister have any plans to control total lending in the economy, which increased by €59 billion in 2006? Does the Minister agree that excessive credit card limits encourage people to live beyond their means? Misery is heaped on people when their credit card bills are pushed through their letter boxes, particularly at this time of the year. The banks dream about people who are bad at managing their money because they made their real money from such cases.
Current levels of credit debt could become a cause of concern if they continue. However, I do not believe the current levels of indebtedness represent a substantial risk to the economy. It is to be expected that consumers seek to make use of the continuing levels of interest rates, which are historically low. Nevertheless, I fully support the vigilance of the Central Bank and the Financial Regulator on the issue of personal credit and mortgage debt, in reminding borrowers and lenders of the need for responsible behaviour. The high proportion of household indebtedness in Ireland relates to borrowing for house purchases which, in turn, involves the acquisition of an asset for such households. In the same way, borrowing by the business sector, which generally underpins investment, and the creation of business assets, which yield future income, reflect the strong performance of the economy and confidence in our economic prospects.
As far as overall economic and financial stability is concerned, an overall measure of credit encompasses both public and private sector credit and debt levels. The Minister for Finance has a key role in this regard in ensuring prudent management of the budget and overall sustainability of the public finances. In this context, our fiscal performance is among the best in the developed world, with Government indebtedness the second lowest in the euro area. Responsible budgetary policy has made a significant contribution to economic performance overall and to the achievement of record employment levels.
With regard to the issue of what legal protection consumers get in the face of increases in the cost of credit, the provision of consumer credit in Ireland is effectively regulated by the Consumer Credit Act 1995, which is administered by the financial regulator. It obliges credit providers to include specific information in all credit agreements with regard to such matters as the total cost of credit, the amount of each repayment instalment, the number of instalments and so forth. The purpose of obliging credit providers to provide this information is to ensure that consumers, when making credit decisions, are armed with full information about any credit agreement they are entering into and, most importantly, the impact that servicing a loan will have on the consumer's household budget.
On the issue of Ireland's private sector debt to income ratio, I fully support the vigilance of the Central Bank and the financial regulator with regard to personal credit and mortgage debt. House mortgage finance represents approximately 83% of the outstanding stock of personal debt. Accordingly, a high proportion of private sector indebtedness in Ireland relates to borrowing for house purchase, which in turn involves the acquisition of an asset for the households concerned. In the same way, borrowing by the business sector generally underpins investment and the creation of business assets, yielding future income.
As far as looking after the interests of the individual borrower and investor is concerned, the function of government is to provide an appropriate legislative framework for regulation of the financial services sector that is both comprehensive and robust. Within the implementation of the overall legislative framework, private sector credit debt and growth levels are, in the first instance, a matter for the Central Bank and Financial Services Authority of Ireland. This follows from its role as part of the European system of central banks and its functions as the financial regulator in the prudential supervision of financial institutions and the protection of the customers of those firms. In this regard, I fully support the vigilance of the Central Bank and the financial regulator regarding these matters.
I accept that credit agreements and arrangements are regulated. The difficulty is that they are not capped or kept under some level of control. It was indicated at one time that the Money Advice and Budgeting Service, MABS, would be put on a statutory basis. That body provides a great deal of useful and beneficial information to people who get into trouble with debt. Putting it on a statutory footing might encourage people to go to it. Are there plans to put the service on a statutory basis?
The Money Advice and Budgeting Service was established to help people manage their money with a view to regaining control of their finances, including how to avoid falling into difficulty as a result of debt. MABS provides an extensive range of money advice, personal budget and community education services where necessary and liaises with financial institutions on behalf of clients. There are 52 independent companies nationwide operating the service. In 2006, a sum of €16.4 million was provided to fund the service, representing an increase of 20% on the previous year. This year, I further increased the annual allocation to €17.64 million. Last year, almost 27,000 people availed of the service, compared to 18,000 in 2001.
I also note the measures proposed by the National Youth Council of Ireland in its report, Can You Credit It: The Real and Growing Cost of Credit Cards for Young People, to better protect young consumers, such as a minimum balance warning and an annual statement outlining all interest and fees paid. I welcome that report, which raises many important issues regarding young people and their management of credit card debt. It is further evidence of the increased awareness of the importance of consumer protection in the financial services area. The financial regulator is examining the report prepared by the National Youth Council of Ireland and this will inform its study of the transparency of information provided to all holders of credit cards.
I understand from the discussion on the Order of Business yesterday that the Money Advice and Budgeting Service Bill is to be introduced this year.
107 Mr. P. McGrath asked the Minister for Finance if he will require all agencies with capital projects of over €30 million to publish the cost-benefit evaluation before committing to proceed with the projects. [4364/07]
Under the Department's February 2005 guidelines for the appraisal and management of capital expenditure, a full cost-benefit analysis or CBA is required to be carried out by public sector agencies as part of the detailed appraisal for all major projects over €30 million in value. It is the responsibility of the project sponsoring agency to carry out the cost-benefit analysis. The cost-benefit analysis is an important input into the appraisal of major capital projects and it must take place prior to entering into any commitments to proceed with the project.
As a general rule, the cost-benefit analyses are not published. They contain commercially sensitive information, the publication of which could be prejudicial to the State's capacity to get best value for money in the procurement of capital projects; for example, they include the estimates of the capital and operating costs of projects. It would not be in the interests of getting best value for money to share this information with potential tenderers in advance of procurement.
There are, however, a number of checks in place as part of the Government's value for money framework to ensure reporting on and scrutiny of the appraisals undertaken by Departments and agencies for capital projects, without compromising the confidentiality of commercially sensitive information. Under the arrangements applying to the multi-annual capital investment framework, Departments must put systems in place to carry out spot checks of compliance with the various elements of the value for money framework, including appraisal and cost-benefit analysis where appropriate, and they must report the findings of these spot checks annually to the Department.
The central expenditure evaluation unit, which I recently established in the Department, will review these spot check reports and will, both on its own initiative and as part of this review process, also directly undertake a series of spot checks of individual capital projects. More generally, the new unit has a remit to promote best practice in pursuit of value for money, including appraisal and cost-benefit analyses. Individual projects and the associated appraisal processes, including the cost-benefit analysis, may also be subject to audit or examination by the Comptroller and Auditor General.
The Minister referred to 2005, when he reduced the cost of projects which would require a cost-benefit analysis from €50 million to €30 million. The Minister said the various agencies are producing the cost-benefit analyses and they are being sent to his Department. It is unfortunate that he will not allow them to be published. He said they might contain commercially sensitive information. However, will he allow the publication of any of these cost-benefit analyses retrospectively? Is it not important from a public perspective point of view and for public confidence that the Department is spending money wisely?
The recently announced Transport 21 plan will cost approximately €34 billion and the national development plan will cost €184 billion. There are also various local announcements that projects will go ahead but there is no mention of the cost-benefit analysis that will be required for each of those projects. Perhaps the Minister would examine the situation in New Zealand, which has a very open system. In New Zealand all these information documents are published and they are even available on the worldwide web. One can see the cost-benefit analyses for all the projects. It does not seem to cause damage in New Zealand and does not appear to cause the problem cited by the Minister with regard to commercial information being seen by the opposition. We must take the road of being more open and honest with the public by publishing these cost-benefit analyses.
With regard to Transport 21 and the national development plan, there is a strong framework in place for the delivery of value for money in the planning and administration of projects. As regards appraisal, a full cost-benefit analysis is required for projects worth over €30 million, with other forms of appraisal required for projects below that level. We are moving to fixed price contracts to ensure greater cost certainty. Departments and agencies are extremely proactive in monitoring the cost of projects by reference to project level budgets. Recent experience is positive, with the bulk of projects now coming in at or below budget and on or ahead of time. Constance vigilance is, however, required in this area.
My Department, in co-operation with other Departments, notably through the agency of the central expenditure evaluation unit, will seek to ensure that best value for money practice is applied in the national development plan and in all expenditure under it. If we want a value for money culture across the system, the responsibility for carrying out the cost-benefit analyses and, more generally, for delivering value for money at individual programme and project level should rest with the sponsoring Department or agency. This is the best way to inculcate a culture of value for money across the system. It is fully consistent with the concept of delegation from the centre which is a key part of the public sector modernisation agenda. My Department's role is primarily to set out the framework to be implemented across key value for money areas, such as procurement, PPPs and capital appraisal. It can also offer advice and assistance and as stated in my reply it will carry out spot checks to verify compliance. More generally, cost-benefit analysis is just one element, albeit a very important one, of the appraisal and management process for major capital projects. In my view it is essential throughout this process to have an identified sponsoring agency responsible for all major projects of the appraisal and management of the project and ultimately for the delivery of a value for money outcome for the taxpayer.
All the projects in Transport 21 must be evaluated in accordance with the Department of Finance capital appraisal guidelines. A significant amount of analysis has taken place relating to various aspects of Transport 21. The DTO Platform for Change provides the basis for the proposed investment in Dublin. This was subject to an independent economic evaluation which was reported in the document. Iarnród Éireann carried out an appraisal of its greater Dublin integrated rail network plan. This was reviewed by independent consultants and found to be robust. A full appraisal was undertaken of the strategic rail review by the independent consultants who prepared it. Major projects of more than €5 million such as the metro and the interconnector will require the specific approval of Government before any contract is signed. I am not aware of the New Zealand experience as referred to by the Deputy but I will ask my officials to follow it up and brief me on the situation there.
The Minister and I agree on a lot of things. We agree it is necessary to have the cost-benefit analysis and we agree that the sponsoring body is the body that should be responsible for producing this. However, the major disagreement between us and where we differ is that the Minister wants to keep secret all this cost-benefit analysis material such as the research and so on. Is there not a case to be made that this should be made public at some stage, not under the 30-year rule but within a much shorter timescale? There must be public confidence in these projects. Public confidence has been lost in recent times because of overruns and so on but thankfully, this situation has tightened up now. Will the Minister give a commitment that he will move forward towards making this material available and give the public an opportunity to see and analyse it?
During the course of the latter years of the last development plan, a level of expertise and competence has been built up in the implementing agencies and as a result large projects are coming in on time and within budget, even before time in many instances. Everyone now recognises that this learning curve has been achieved and will continue.
It has been achieved at a big cost.
I disagree. The price of these projects included the cost of acquiring the land which was an issue and subsequent negotiations put a much higher figure on the cost than would have been the case in the original appraisal. It is a fact that construction inflation occurred because we did not have the capacity in the economy. Construction inflation in 2000 amounted to 12% and 9% in 2001 but it is only 3% to 4% in the recent past. We now have the benefit of fixed price contracts, improved procurement procedures, revised capital guidelines and increased expertise in the agencies. We are achieving results such as project cost equalling tender price. There has been more heat than light shed in the many arguments about project costs and the basis for the initial pricing and original tender price. The test is whether the job is completed for the tender price when the tender is approved. For example, the cost of building a house today will cost more than it did six years ago. If a bigger extension is put on the house and the final result is a different design from the original then it will cost more than what it would have cost six years ago and it is a nonsense to argue otherwise. Such a discussion undermines confidence. The Deputy has acknowledged the much greater degree of confidence in our capital programmes because we are delivering them in the way that taxpayers are entitled to expect.
The Deputy's ultimate point is whether they will ever be published. It may be that in some exceptional circumstances — on the basis that it will not compromise a future tender or contract — it will be possible to show that the work was done in accordance with procedures. However, the easiest way to find out whether there has been value for money is to test whether the job was done for the tender price, within time and on budget. If a contract is given for the construction of a road and it costs €200 million, then that is the cost of the project. When it was designed by a local authority 20 years ago and the cost was estimated at €20 million, it is a nonsense argument to suggest it could be done for that price of €20 million which would only supply a tenth of the road now. The tender price is the issue and the bottom line is that all of these projects, almost without exception, are now coming in on time and within budget. I believe we all recognise this fact. It is good for the taxpayer and it reflects well not just on Government but on the implementing agencies and on the level of expertise and competence with which they are delivering projects.
The Government's job is to ensure that funds are available to proceed with those projects in the way that they wish to do it. There has been some re-profiling of expenditure on Transport 21 and the national development plan on the basis that the NRA had the capacity to do more work than three years ago when Transport 21 was introduced. This level of flexibility with such a framework and being able to respond in a way that does not cause construction inflation but gets the job done more speedily makes eminent sense and proves both the robustness and the appropriateness of the framework we are setting out.
108 Mr. Boyle asked the Minister for Finance the existing available tax reliefs and the estimated tax foregone in the most recent annual period from which information is available. [4209/07]
The Deputy may wish to note that a table headed Classification of Tax Reliefs — where Tax Expenditures Go and providing classification of the income tax reliefs costing an estimated €11.6 billion for 2003, the last available year, is included on page B.15 of the Budget 2007 book. This gives a full breakdown of the reliefs in question. I will read out the details if the Deputy wishes.
The Minister should be aware that my supplementary question is a development of the point that the most recent statistics relate to 2003. A significant amount of alteration has occurred in the tax reliefs available. The Minister has chosen to extend some but he has not renewed many and some have been brought in that have not been costed since 2003. The Minister has also indicated in the last two budget speeches a new procedure for assessing the introduction of new tax reliefs. However, this does not seem to be as open as it could be.
Will the Minister consider making statistics of this type available on a regular basis? He could measure not only the anticipated tax expenditure with each of these tax reliefs but where loopholes have been identified with each of these tax reliefs — I have brought them to his attention before — the estimated amount of loss to the State as a result of each loophole. Each year the Finance Bill prevents a number of loopholes being closed. Members of this House and the public are given no assessment of the loss that has been accruing to the State as a result of the existence of those loopholes. Has the Minister any proposals in mind for making this information more widely available?
The two major reports on tax reliefs undertaken in the context of last year's budget were published along with the Finance Bill. They give a detailed and clear assessment of many of these reliefs. The majority of the moneys are in respect of the following categories. Basic personal credit amounts to more than €5 billion; personal reliefs such as child benefit, €327 million; mortgage interest relief worth €222 million; private health insurance, such as VHI and BUPA, €191 million; PAYE expenses, €112 million; reimbursement of health expenses, €82 million; other reliefs such as trade union subscriptions, rent reliefs and redundancy reliefs are worth €80 million, bringing a total of personal reliefs of more than €1 billion. Other discretionary or incentive reliefs on pensions amount to €2.8 million; capital allowances for companies include over €1 billion for self-employed and €560 million for farmers; for SSIAs it is €530 million; Government savings schemes, €230 million; rent and residential reliefs for section 23, €69 million; charities, €49 million; profit sharing schemes, €36 million; artists, €22 million; films, €25 million; business enterprise scheme, €17 million; maintenance of spouses, €15 million; others, such as heritage items and stock relief, €108 million. This gives a total of €11,647 billion.
The majority of the reliefs I have cited are in respect of credits and reliefs available under the tax system for the vast majority of taxpayers. When pensions are included, these reliefs account for more than €9.5 billion of the total figure, which includes entirely legitimate items such as capital allowances for business, etc.
In circumstances in which Revenue seeks to change a tax provision on the basis of how the courts subsequently interpret it or as a result of a practice that develops beyond the contemplation of the specific section, when enacted, it advises the Department and I take its advice in practically all cases. It would be open in an individual case for a Deputy to table a parliamentary question to determine whether Revenue could estimate the expenditure incurred.
I do not want circumstances to arise in which it becomes necessary to commission a further three-volume report examining the effects of particular tax reliefs. The massive Indecon report dealt only with property based tax reliefs. The information available to Deputies is out of date. We have still not been informed what type of public accountability mechanism the Minister has introduced for new reliefs, what type of modelling was carried out and what decision was made on the basis of information supplied to the Minister. We must be better informed if loopholes and wanton abuse of tax reliefs are to be avoided. The current system invites future reports of the type finance spokespersons had to wade through last year and could result in widespread overuse of tax reliefs, which would render them ineffective. I ask the Minister at least to consider making the relevant information available in a more timely manner and improving awareness of the citizenry, specifically taxpayers, as regards the way in which decisions on tax reliefs are made and the effects of such reliefs.
The Deputy is being a little unfair in neglecting to mention the benefits delivered by tax reliefs, as outlined in the Indecon report. It emerged from the report that many of the reliefs could be phased out because the economic objectives for which they had been introduced had been broadly achieved. Considerable benefit accrued from many schemes, including in the area of urban renewal and regeneration, and there are many excellent examples of incentivised investment delivering real community benefit in addition to personal benefit to those who availed of the schemes. For this reason, I do not take as negative a view as Deputy Boyle.
The consultants also left open the possibility of introducing further tax relief schemes in future. They did not rule out new schemes but stated they should be assessed. The Department has done this and the most recent scheme, announced in the Finance Bill, includes characteristics in line with what was recommended. The consultants may regard the proposal as having limited potential because it is not in a traditional tourism area. This is precisely the reason some incentivised investment might help. The approach envisaged, under which a certification body will be brought in and a quality assurance mechanism will determine eligibility under the scheme before construction of any facilities, is sensible and one I am willing to adopt.
The Department is learning. It does not propose to give open-ended approval or take a non-time limited approach. We have taken on board some of the ideas Indecon stated should be part of any future tax relief schemes. As I indicated, it is possible that economic objectives in specific areas of activity may be more rapidly or best achieved by some degree of incentivisation. One can assess the measures subsequently. Having a certification body will assist the Department in making precise assessments of the projects which receive approval and the expenditure involved.
