Dáil Éireann debate -
Wednesday, 11 Mar 2009

Vol. 677 No. 4

Leaders’ Questions.

Deputy Enda Kenny

This morning we have another example of no senior Green Party Minister being present in the House. Day after day it is as if they do not exist. In fairness to Deputy Harney, she is in the Chamber for the opening of the Dáil session if she is around.

Yesterday, the Governor of the Central Bank stated that he expects the economy to contract by at least 6% and that it will have contracted by 10% by the end of the year. He cited unpublished estimates on what is now a very serious situation. Two weeks ago, the Tánaiste stated the public finances were under control. Last week, the Taoiseach indicated he was not aware of the scale of the problem until the Cabinet meeting where figures were produced.

In light of all the calls, from the Minister for Finance and others, for national solidarity and requests for suggestions and constructive proposals, is the Taoiseach prepared to make available to Opposition spokespersons for finance the options and information being presented to the Cabinet by the Department of Finance in respect of spending options and raising revenue to deal with the crisis? Is he prepared to make available the options sent to the Government by an bord snip which were transferred to it from every Department? If we are to make any constructive suggestions or proposals in the national interest to deal with this financial crisis then at least we should be made aware of what is on the table.

The presentation given in good faith by the Minister for Finance to Opposition spokespersons was very stark and bald in its outcome which was merely the shortfall in tax and the overspend on the current side but there was nothing in terms of the proposals being considered by the Government.

The Taoiseach

With regard to what the Governor of the Central Bank had to say, he and many others have been revising not only national forecasts but international forecasts. Last week we also saw this in the European Commission. It is important to acknowledge that the situation creates a very serious challenge for this economy, as it does elsewhere. It is particularly the case for Ireland and we intend to address the issue in the supplementary budget.

With regard to the question raised by Deputy Kenny on any views the Opposition has or interaction that could take place, this would be a matter for the finance spokespersons and the Minister for Finance. I must say, and Deputy Kenny is aware of this, that budgetary matters are confidential. They are within the Government remit in terms of——

Deputy Pádraic McCormack

The Taoiseach will not play ball.

The Taoiseach

——the budget itself. We would welcome any possibility for debate or discussion in the House between now and then in a structured way that would assist the Opposition if it so wishes to contribute to an integrated packet of measures that will be necessary——

Deputy Pádraic McCormack

The Taoiseach should put the figures up.

Deputy Olivia Mitchell

We will tell the Government but the Government will not tell us.

The Taoiseach

——in terms of the fiscal and budgetary situations. The Government reserves its right and duty to make the decisions.

Deputy Pádraic McCormack

In other words, the answer is "No".

The Taoiseach

If the Opposition has views it wishes to express or if the spokespersons want to interact with the Minister for Finance in a way that is consistent with this approach, we have no problem doing it.

Deputy Paul Connaughton

Nothing has changed.

Deputy Enda Kenny

For quite a long time, the Governor of the Central Bank has been pointing out in the quarterly reports the dangers to the economy of proceeding down the road of construction in the main. Following his announcement yesterday, it is clear the situation is exceptionally grave, although he did not provide the unpublished estimates he mentioned at the Oireachtas committee meeting yesterday.

I respect the fact that the budget is absolutely confidential to the Cabinet. Budgetary decisions are confidential and that is the Cabinet's constitutional business. However, the options being considered and given to the Cabinet by an bord snip and by different Departments are only that. They are only options from which the Cabinet can choose either to select some of those options or ignore them and come up with their own considerations.

The Fine Gael Party, through our spokesman, Deputy Bruton, has been raising the issue for a few years of the way budgets should be constructed, about how efficiency can be levered out of the economy in terms of securing value for money and projecting signposts ahead on the economic landscape so that people in their personal and business lives can plan for investment and what they want to do. I am being told by retailers around the country that they cannot get an overdraft for €3,000 or €5,000 and they face redundancy as a consequence. These are the practical, human considerations that apply every day.

I agree with the Taoiseach when he claims that budget matters decided by the Cabinet are confidential, but if he expects the Opposition parties to make any kind of constructive proposals to the Minister for Finance, then the least to which we should be entitled is the range of taxation proposals and options for spending cuts being considered by an bord snip and, consequently, the Department of Finance through to the Cabinet. Is there any reason the Taoiseach will not give that full range of proposals and options to the Opposition parties? We have not got a copy of the report by PricewaterhouseCoopers. We are now told that the Government is only being given very stark figures on the economy, such as a €3 billion shortfall on tax and a €2 billion shortfall on the spending side.

Aside from the constitutional confidentiality requirements, is there a reason the Taoiseach will not give us the full range of proposals so that we can offer constructive suggestions? This party has put forward proposals for drastic change in the way budgets are drafted and on regulation regarding the spending of the people's money. Is he prepared to give us the options considered by the Government, from which it has an absolute right to make its decision at the end of the day?

The Taoiseach

The best way to proceed is to have a pre-budget debate that will enable the Minister for Finance to come into the House and explain the range of possibilities available.

Deputy Pádraic McCormack

What the Taoiseach has to say is more important.

The Taoiseach

The one thing we can all say is that the decisions that must be taken will be difficult. There are no easy options here. In fact, we have seen a deterioration taking place as the year has progressed, which has mirrored what is happening in the international economy. Whatever about people's ideas on reforms of budgetary processes for the future, a supplementary budget must be brought into this House in early April. The Cabinet met this morning and we intend bringing that budget before the House on 7 April. That will enable Members to debate the budget on that Tuesday and the following Wednesday and Thursday. Perhaps we should come back a week earlier than suggested so instead of returning on 28 April, we should come back on 22 April and resume the debate.

Deputy Eamon Gilmore

I thank the Taoiseach for finally giving us the date of the second budget for 2009. I would like to pursue further the issue of providing information to the Opposition. The Taoiseach and the Minister for Finance have invited the Opposition parties to engage with the process and to put forward proposals. The Labour Party is very willing to do that. However, there is a certain amount of basic information that we need.

What is the second budget intended to achieve? What is the gap in money terms that the second budget is intended to close? When the Taoiseach announced last week that there would be a second budget, he told us that the shortfall was between €2.5 and €3.5 billion. When our spokesperson was briefed by the Department of Finance, we were told that the shortfall was €3.5 billion to €4.5 billion. Since then, there has been speculation that it may be as high as €5 billion. There is quite a gap between the Taoiseach's original estimate last week of €2.5 billion and the €5 billion that is now speculated. What is the Government attempting to achieve in the budget? Where between those two figures does the real figure rest? We need to know this before we can start out on any exercise.

Is it intended to do that for the remainder of 2009? If the Government brings in a budget on 7 April, many of the measures contained in it will have to be introduced in a finance Bill and these will not kick in until the beginning of May at the earliest. Therefore, we are talking about an eight month period. Is it intended to make up the gap within eight months?

Do the projections for our public finances given to the European Commission between now and 2013 still stand? Can the Taoiseach tell us the current Government estimate of revenue and expenditure? What is the projection for that between now and 2013?

I presume the Department of Finance would have received by now some revised estimates for 2009 from the line Departments. We need this information if we are to address the expenditure side. Individual Departments will have worked out what will happen to various programmes and what capital projects might go ahead or be postponed. I presume this information has been made available to the Department of Finance and we need it if we are to put forward realistic proposals to the Government for the budget. In support of what Deputy Kenny said, I ask the Taoiseach to provide that information to the Opposition parties.

The Taoiseach

For the purpose of accuracy, Deputy Gilmore's first reference to the €2.5 billion to €3 billion shortfall was related to the Exchequer returns, which were to be officially announced within 15 minutes. Obviously, I provided that information to the Deputy. The shortfall was estimated by the Department of Finance regarding revenues at that point. That is what the Exchequer returns are about and I gave the Deputy this information, which was in line with the information subsequently provided by the Department of Finance.

The second point relates to expenditure pressures which were arising as a result of increased unemployment and so on. The Department estimated this to be between €1 billion and €1.5 billion. That would bring the discrepancy to between €4 billion and €4.5 billion, and this relates to the Department's estimate at the end of February of the deficit on the tax side and what was emerging on the expenditure side.

It is a matter for the political judgment of the Government to decide what further necessary steps we will take beyond those points. We wish to ensure we deal with the matter for the remainder of 2009 in a way which would be seen to be credible by international markets based on the emerging figures. One of the difficulties that Deputy Gilmore and others have, no more than ourselves, is the fact that the deterioration we have seen in the last quarter of 2008 and the beginning of 2009 is a moving target in terms of the problems of addressing accurately what the ultimate position will be in the contraction of the economy during the course of this year. It was said at budget time it would be in the region of 2%, it was said in January it would be approximately 4% and the indications are now that it could be 6% or 6.5%.

This shows the fragility of the economy and the need for the Government during the course of the coming period leading up to the budget to decide the balance and the correct approach, both in terms of imposition of further taxation to meet the revenue shortfall and in addressing the expenditure overruns as they are emerging, such that we have a budgetary position which is more in line with our publicly stated position to the European Commission. I believe that not only is it necessary to indicate this for the course of the year, but it is also necessary to try to put it into a multi-annual framework, such that we can show the country and the international community our intentions in addition to what will be required this year. We do so in order that we can be as open and as frank about these issues with the people. This is the approach of Government and the process has begun.

Political decisions will be required before any final decisions are taken and this will require a good deal of political discussion within Cabinet during the course of the coming weeks. In the meantime I suggest that if Deputy Gilmore so wishes, his finance spokesperson should consult with the Minister for Finance to see in what way he can further assist in respect of any additional queries he has with regard to the broad framework I have outlined.

Deputy Eamon Gilmore

Correct me if I am wrong, but the position as I understand it is that the object or target that the Taoiseach is trying to achieve in the second budget is to find between €4 billion and €4.5 billion. I understand from what he has said that his intention is to do so for 2009. What assessment has been made by the Government or by his advisers? Will he make available to us information as to the impact such a hit on the public finances will have on the wider economy? It is rather a big hit if one takes between €4 billion and €4.5 billion out of the finances for the remainder of 2009. Several commentators speculated as to what this would do to jobs and businesses and in respect of the wider impact on the economy. It would be very helpful if we could have available to us the advice that the Taoiseach has available to him regarding the economic implications of such a move.

In his reply the Taoiseach stated that he wished to put this in a multi-annual context and I understand why he wishes to do so. This is why I have asked him to let us have the Government's projections for revenue and expenditure between now and 2013. I refer to 2013 because that is the date given. I am aware he is smiling, but the Taoiseach provided a document.

The Taoiseach

I know that.

Deputy Eamon Gilmore

The Taoiseach gave proposals to the European Commission. It is one matter to discuss the multi-annual context, but let us see the colour of it. We are entitled to be told the details of the estimate and projections for that multi-annual period.

We also require a third element, to which Deputy Kenny and I have already referred. The Opposition parties are prepared to engage constructively with this process. However, we must have available to us the information that the Taoiseach has at his disposal.

Deputy Alan Shatter

Deputy Gilmore is correct.

Deputy Eamon Gilmore

We must have available to us the information provided to the Minister for Finance from the various Departments. For example, I refer to expenditure information on education, health, the roads programme, public transport or any of the programmes and expenditures which arise. We must have access to that information, because we cannot fly blind.

I appreciate the Taoiseach's remarks to the effect that we can have a Dáil debate on the matter. That is a public exchange, which is fine, and it may be useful. However, if the Taoiseach wishes for the Opposition parties to meaningfully engage in the initiative to address the state of the public finances he must make available to us the information available to him. This is either a genuine exercise or it is a political smokescreen. I hope it is a genuine exercise, but the test of that will be whether the Taoiseach is prepared to make available to us what he has been told by the line Departments in respect of expenditures, projections and the revisions of Estimates.

Deputy Emmet Stagg

Hear, hear.

The Taoiseach

I have indicated as of the end of February what the Department of Finance estimate of the shortfall will be, that is, between €4 billion and €4.5 billion between expenditure and taxation. It is now a matter for the Government to decide based on the trends we have seen——

Deputy Pádraic McCormack

Let them at it.

The Taoiseach

Deputy McCormack should allow me to address Deputy Gilmore. I have already answered his Leader.

Deputy Pádraic McCormack

Go ahead.

The Taoiseach

I realise he is very positive at all times, constructive and highly intelligent.

Deputy James Reilly

It is like the Fianna Fáil Ard-Fheis.

Deputy Alan Shatter

The great "I am".

The Taoiseach

The situation is that €4.5 billion is the estimate based on Department Estimates at present. The Government must make a political decision on the final figures that we believe to be prudent in the circumstances. There is no sighing about the matter, it is the truth.

Deputy Eamon Gilmore

We all know the final figures.

The Taoiseach

Hold on one moment. The process has begun and the Government must make the decisions. I am providing the estimates emerging from the Department of Finance as of this time. It is a matter for the Government to make a final decision on the matter. We are in a budgetary process which is not complete, which has recently begun, and which is supplementary to the process in which we engaged last year. That is for the purposes of accuracy.

We have forwarded a stabilisation update, as it is known, to the European Commission indicating over a five-year period how we intend to try to restore the public finances to balance in line with the rules that apply under the Stability and Growth Pact, which amounts to the terms and conditions under which we are members of the eurozone. That is a requirement we must meet and we have done so.

The Deputy is aware of the broad aggregate figure submitted. We must take into account the continuing deterioration that is occurring. Regarding the multi-annual framework to which I referred, I am trying to explain that it would be good for the public if the Government indicated its intention in respect of the budget not only this year, but the following year and perhaps into the following year again. The Deputy has asked me to state exactly the position up to 2013. It is not possible to find an economist who could state accurately the position in the past three months, because this is an unprecedented situation. There has not been such a level of accuracy that far out. Therefore, the Government has indicated its intentions in terms of our Stability and Growth Pact commitments.

We are bringing forward a supplementary budget because the circumstances demand it in view of the deterioration we have seen in the public finances, even since the beginning of the year. We have brought forward a €2 billion saving as an immediate response to that and as a first signal of our intent. We must now proceed with a budget that will deal with taxation and expenditure and with necessary further corrections for this year. We would intend indicating also during the course of the following year where we are going with further requirements. The Minister for Finance has indicated as much and the best response I can provide is that the Deputy should consult with him. The Minister will engage with the Deputy and will inform the House of the position, to the greatest extent possible and consistent with his budgetary responsibilities. We must all engage on the seriousness of this issue given the magnitude and scale of the problem that we face and our ability to confront it collectively if possible.

Deputy Pádraic McCormack

The Taoiseach will do it his way.

An Ceann Comhairle

That is the end of Leaders' Questions for today.