Ministers and Secretaries (Amendment) Bill 2012: Second Stage

Minister for Public Expenditure and Reform (Deputy Brendan Howlin)

I move: "That the Bill be now read a Second Time."

The challenges we have faced over the past number of years continue to be a reality we must all confront. The sheer scale of the task to stabilise the public finances has been indisputable but nevertheless they are challenges my colleagues and I have addressed head on and this is borne out by the fact that we continue to meet or exceed all of our fiscal targets under the EU-IMF programme.

We must continue to push forward the reforms that are necessary for the country to recover its economic sovereignty. While we are making significant progress, the Exchequer deficit so far this year stands at over €4 billion. This is not a sustainable level of borrowing and this Government remains steadfast in its commitment to balancing the books while introducing positive, sensible and prudent reforms to ensure the scarce resources at our disposal are directed toward delivering well-managed and well-targeted public spending, through modernised, effective and accountable public services.

This Government has now been in office for over two years. During this short time, we have introduced a number of important budgetary reforms aimed at enhancing the openness and transparency of the budgetary framework and improving expenditure management across Departments, which had through the good times been allowed lapse into disorder. We have completely modernised and reformed the annual Estimates process, built performance-related information into the heart of the budgetary documentation, and brought evidence-based policy-making to the forefront of public service delivery.

These reforms are in keeping with the broader Government commitment that performance information should feed into the decision-making process at all levels, and that active performance management should be a key feature of how projects are delivered and continually evaluated within the public service. It goes to the heart of parliamentary oversight that Ministers and public service managers should be held accountable against clear targets set out in the budget.

In November 2012 my colleague, the Minister for Finance, introduced the Fiscal Responsibility Act 2012 which came into effect on 31 December 2012. The Act imposes a duty on the Government to ensure compliance with the budgetary rule and the debt rule, which were introduced as part of wider EU fiscal reforms. The Act also puts the role of the Irish Fiscal Advisory Council onto a statutory basis. The council has been assigned the monitoring and assessment functions required of an independent national institution under the fiscal compact treaty and, under EU rules, macro-economic forecasts on which budgetary decisions are made must in future be independently endorsed by the council.

The reports of the independent fiscal council provide another useful perspective for Oireachtas committees to assess how well the Government is managing the public finances.

Aside from these domestic reforms that have been introduced-----

Deputy Stephen S. Donnelly

I beg the Minister's pardon. On a point of order, will we get copies of this?

Deputy Brendan Howlin

They are here if somebody was here to distribute them.

Deputy Stephen S. Donnelly

Apologies.

Deputy Brendan Howlin

Is there an usher?

An Leas-Cheann Comhairle

Yes.

Deputy Brendan Howlin

Aside from these domestic reforms that have now been introduced, Ireland is committed to adhering to and implementing the wider fiscal reform measures that have been introduced across EU member states. In particular, and with reference to the topic of today's discussion, the Medium Term Expenditure Framework which established multi-annual departmental expenditure ceilings on an administrative basis was first introduced in the Comprehensive Expenditure Report 2012-2014, published in December 2011. This important framework is being given legislative underpinning in the Bill. The Medium Term Expenditure Framework, MTEF, is a long-term reform which will provide greater transparency to the public finances in terms of establishing spending ceilings and associated rules which will mean better, more reasoned and longer-sighted expenditure policies. They will help disaggregate demographic, repetitive spending from once-off or discretionary purchase-type items.

The Bill, when enacted, will put the ceilings established in the Medium Term Expenditure Framework on a solid statutory footing through the amendment of section 17 of the Ministers and Secretaries (Amendment) Act 2012. This Bill logically follows on the introduction of the Fiscal Responsibility Act 2012, which gives full effect to the rules contained in the Treaty on Stability, Co-ordination and Governance in the Economic and Monetary Union, passed by the people, otherwise known as the fiscal stability treaty.

This Bill gives effect to the expenditure piece which falls out of the so-called "six-pack" of five directives and one regulation which introduced, inter alia, an expenditure benchmark. The purpose of the benchmark is to help ensure that general Government, GG, expenditure, including the local authority sector and other GG subsectors, does not grow faster than the potential growth rate of the economy in good times and that, in bad times, GG expenditure reduction makes a major contribution to consolidation. This expenditure benchmark, introduced under EU Regulation 1175/2011, already has a direct effect under Irish law and as such, does not require to be transposed into primary or secondary legislation here to have effect. Accordingly, this now acts as a binding expenditure limit on General Government expenditure under Irish law.

The Ministers and Secretaries (Amendment) Bill provides for Government expenditure limits to be set down each year by the Minister for Finance having consulted with me, as Minister for Public Expenditure and Reform, and similarly, for the setting down of Government expenditure limits each year in respect of the three subsequent years - this is the new multi-annual framework. Then, as Minister for Public Expenditure and Reform, I establish, in consultation with the Minister for Finance, ministerial expenditure ceilings, that is, Department by Department.

Under the scheme as set out in the Bill, once the Government expenditure limits for each of the subsequent three years are decided by Government on the basis of a proposal from the Minister for Finance having consulted with me, as Minister for Public Expenditure and Reform, the Government decides upon an apportionment of these overall limits into ministerial expenditure limits on the basis of a proposal brought to Government by me. It is in this way that the legislation provides for my role, as the Minister for Public Expenditure and Reform, to dovetail with that of the Minister for Finance. The relationship and roles are such that both I and the Minister for Finance take the lead in one part of the process.

In this regard, I want to place on the record of the House the importance of maintaining a close and co-operative working relationship between the two Departments, a point that has been raised previously by Deputies opposite in questions. I am happy to say this is the case and that my Department works closely and harmoniously with the Department of Finance on these and other crucial areas involving aggregate governmental spending and funding matters are generally harmoniously resolved. I should say, on a personal basis, both the Minister for Finance, Deputy Noonan, and I also work very well.

In the Bill, "Government expenditure" is defined in practical, operational terms as the amount of expenditure that is voted by the Dáil each year along with the annual expenditure from the social insurance and the national training funds. Government expenditure is thus designed to match up with the gross expenditure that is set out in the annual Revised Estimates Volume.

It may be noted that the Government expenditure ceiling is not identical to the expenditure benchmark which, for example, excludes cyclically-sensitive expenditure, but there is extensive overlap between the two terms. It is certainly the case that prudent and disciplined management of the Government expenditure ceiling will essentially ensure compliance with the expenditure benchmark. More detailed reconciliation tables etc. will be reflected in the annual budgetary documentation to demonstrate how the benchmark itself is being respected.

Both the Government expenditure ceilings and the ministerial expenditure ceilings must be laid before the Dáil - obviously they must be published - "as soon as may be" after the decisions are made. The subsequent annual Estimates of Expenditure, setting out the detailed expenditure proposals for the coming year, must not exceed in aggregate the Government expenditure ceilings for that year.

Taken together, the effect of these various provisions is as follows. The expenditure benchmark is the core expenditure rule with which the Government and the State are legally obliged to comply in the annual and multi-annual budgetary processes, by virtue of the direct effect of the regulation and the supremacy of EU law. The Government expenditure ceiling, which as I stated is not identical to the expenditure benchmark, must nevertheless be fully compatible and compliant with the benchmark, and the compliance will be demonstrated in the annual budgetary documentation. The ministerial expenditure ceilings are an apportionment of the Government expenditure ceiling and they may not in aggregate exceed the Government expenditure ceiling. It sounds more convoluted than it is. Obviously, the apportioned individual expenditure of each Department added together must comply with the overall Government expenditure ceiling.

In the past, expenditure growth was at times allowed to outpace the economy's underlying ability to finance it. Arising from this, value for money tended to suffer, along with the efficiency of delivering services for the public and the effectiveness of public expenditure in achieving its objectives. This new trans-European approach radically changes the Estimates process and introduces a major reform by setting out the Government's medium-term budgetary plans and overall spending allocations clearly in advance, thereby allowing Departments to plan carefully their budget structure well in advance.

The detailed and practical operational aspects of the Medium Term Expenditure Framework are being finalised by my officials taking into consideration the valuable input of their colleagues from other Departments, and will issue as a circular to all Departments and offices following the enactment of this legislation.

This new approach will set fixed and binding current expenditure ceilings for each ministerial Vote group over a rolling three-year period and makes clear well in advance the level of savings that need to be planned for in each Department to ensure that the allocations are adhered to each year. Special arrangements will apply to certain demand-driven blocks of expenditure, notably the live register, which is related to the economic cycle and is less amenable to multi-annual planning and control.

A comprehensive review of expenditure exercise, such as we undertook shortly after coming into office, will be conducted approximately every three years and will allow for the multi-annual ministerial expenditure ceilings to be re-evaluated reflecting new or developing Government priorities.

I will briefly describe each section of the relatively short Bill. As I stated, section 1 amends section 17 of the Ministers and Secretaries (Amendment) Act 2011. This section provides for the Government, following a proposal from the Minister for Finance, to approve an upper limit on Government expenditure, which comprises the aggregate amount of voted expenditure and the expenditure of the Social Insurance Fund and the national training fund, for each of the following three financial years. It also provides that the Government shall, following a proposal from the Minister for Public Expenditure and Reform, approve the amount of Government expenditure to be apportioned to ministerial expenditure ceilings for each of the three financial years.

Section 2 states the Short Title of the Bill and provides for the commencement of the Act.

I also propose at Committee Stage to include a new section in the Ministers and Secretaries Act to allow for the provision of information necessary for the proper and effective operation of ministerial expenditure ceilings.

The section will provide that public service bodies shall make available to the Minister such information as is necessary for the purposes of the proper and effective operation of ministerial expenditure ceilings. This is a permissive section to allow public service bodies supply the necessary information to the Department of Public Expenditure and Reform to enable me, as Minister, to properly monitor and operate the expenditure ceilings set out in the Bill.

It is proposed on Committee Stage to introduce a provision to allow the Minister for Finance, following consultation with the Minister for Public Expenditure and Reform, to allow the Irish Fiscal Advisory Council to endorse, as it sees appropriate, the macroeconomic forecasts prepared by the Department of Finance for the purpose of the fiscal planning on which the budget and the stability programme will be based. Deputies will be aware that it is a condition of the recently agreed six pack set of EU rules that a body be nominated for the purposes of independently endorsing the macroeconomic forecasts on which the budget is based. This task will be assigned to the Irish Fiscal Advisory Council and involves amending the Fiscal Responsibility Act to provide for this. As this legislative vehicle is before the House now, I propose to do that formal endorsing in law of the Irish Fiscal Advisory Council using the Ministers and Secretaries (Amendment) Bill, as it is dealing with similar issues and in the same general context. This amendment may mean the Long and Short Titles of the Bill will require change on Committee Stage also. I hope Deputies will understand that it is a finance measure but since this legislative measure is before the House we are using it to formally appoint the Irish Fiscal Advisory Council in the role required for it in the agreed six pack arrangements.

The Bill will provide in statute for the medium-term fiscal expenditure. Instead of having annual expenditure limits, by law we will have multiannual expenditure limits. We have been doing that in practice on an administrative basis since we came into office. This will underpin confidence, at home and abroad, about the soundness of the Government's overall budgetary plans. Its design will help to restore Ireland's public finances to a strong and sustainable position over the coming years. It will facilitate greater structural planning based on priorities and ensure there is a focus upon the core principles of Government and will continue the Government's commitment to return Ireland's economy to a position of growth while ensuring sustainability of the public finances. This new enhancement to the Estimates process is both sensible and practical while representing a responsible and necessary change in the approach to budgeting. I hope it will be acceptable to the House.

An Leas-Cheann Comhairle

I call Deputy Sean Fleming.

Deputy Sean Fleming

How much time do I have?

An Leas-Cheann Comhairle

The Deputy has 30 minutes, which is the speaking slot for spokespersons.

Deputy Sean Fleming

I welcome the opportunity to speak on the Ministers and Secretaries (Amendment) Bill 2012. As the Minister has said the Bill is quite short and deals with some specific matters. While it is useful in that regard, it is only useful in so far as it goes. The legislation leaves much to be desired and should have included other matters. I will deal with one or two of those points specifically. I do not believe the public will fully appreciate what has been omitted from the legislation and should have been included. I ask the Minister to take that on board and for a common sense approach to prevail on Committee Stage when it comes to amendments we will propose. We are supporting the legislation at this Stage as it is an important step in the overall process of improving our public finances, but I believe the Bill can be improved as it goes through the House.

The Bill allows the Government to anchor its already operational multiannual expenditure limits in national law. This is a requirement under the EU-IMF programme of financial support for Ireland signed almost three years ago. Specifically, the Bill amends the Ministers and Secretaries (Amendment) Act 2011 and provides for medium-term expenditure management in Ireland through both multiannual Government and ministerial expenditure ceilings, which is important. This was required under the EU-IMF programme agreed in November 2010. We are within six months of November 2013 when we will exit the programme and this issue should have had much greater priority. The EU-IMF troika will practically have left our shores before this legislation will have been enacted.

Deputy Brendan Howlin

Please God.

Deputy Sean Fleming

Please God - and rightly so. It is important to have these arrangements in place because the troika would not have confidence leaving us without some of these additional measures being in place. It should have been in place but be that as it may, it is coming through now.

The main change the Bill will effect is to provide for medium-term expenditure management in Ireland and it makes provision for multiannual Government expenditure ceilings and most importantly ministerial expenditure ceilings. I will come back to that point specifically.

In looking at the policy context of the Bill, we are dealing with the finances of the State. To an extent this is a technical Bill. There is no great issue involved other than managing our finances better. It is important that people understand what is included in the scope of the Bill. I want to deal with what should have been included but has not been. All State revenues must be paid into the Central Fund, the Exchequer. The Government draws on this for expenditure in respect of State services. Government expenditure consists of voted expenditure and non-voted expenditure. I do not know the public at large knows that. I do not believe everybody in this House even knows it. If I asked people the difference between the two, they probably would not be sure. If I asked them about the Central Fund they would not be sure. That is why we are here today. This is part of our job and people rely on us to know what we are talking about and they have trust in us to do that.

The larger part of Government expenditure consists of voted expenditure which is for the ordinary services, including health, social protection, education public services, the Garda, the Army, etc. However, excluded from this legislation is the non-voted expenditure, which is paid out of the Central Fund under specific legislation, without annual reference to the Dáil each year. This consists of expenditure on items such as: servicing the national debt and repayment of loans; running the Houses of the Oireachtas Commission, which involves paying our salaries and the operation of this House; share subscriptions to State bodies as required as has happened with banks in the past; and the salaries and pensions of judges, upon which we went to the people with a referendum and yet it is excluded from this legislation.

Deputy Brendan Howlin

It is part of the separation of powers.

Deputy Sean Fleming

I have given the context of these figures. Non-voted expenditure, which we do not get to discuss in the House, can increase by 36% while what we can discuss is reduced by 9%. I am detailing these figures because they are not discussed in the House and we do not vote on them. The Minister can say they are in the book but it needs to be said on the public record. Note 4 of the 2013 Estimates of Receipts and Expenditure for the Year Ending 31 December 2013 details non-voted current expenditure, and I will read the figures, of which I am sure the Department officials are aware. The cost of servicing the national debt is projected at €8.111 billion and the contribution to the EU budget will be €1.444 billion. Neither of these figures was discussed in the House as part of the Estimates process. This is taxpayers' money which we pay to the EU.

Deputy Brendan Howlin

We get a lot of it back.

Deputy Sean Fleming

Of course we get money from the EU, but we certainly do not get back the money for servicing the national debt. That money is gone.

Deputy Brendan Howlin

Correct.

Deputy Sean Fleming

I am just saying we do not get to discuss as part of the Estimates process the €8 billion which goes to service the national debt. We also do not get to discuss the contribution to the EU budget of €1.444 billion, and if we did there might be greater understanding about it. I believe we receive approximately €2 billion per annum from the EU through the Department of Agriculture, Food and the Marine, but people would be surprised to find we pay back three quarters of it with no discussion in the House. I am not saying we should not do so, but the public needs to know that the mechanism of the House and legislation do not allow for discussion of this as part of the Estimates process.

This year €5 million of taxpayers' money is budgeted for payments to PSE Kinsale Energy Limited under the Finance Act 1992. I presume this has to do with the Kinsale gas field, but €5 million of taxpayers' money will go there and will not be voted through the House. This year we will pay €50 million in salaries and pensions to the Judiciary and holders of constitutional office and pensions and allowances to certain Members or former Members of the Oireachtas; this is not part of the Estimates process and is not voted through the House. It goes through a bank account somewhere in the Department of Finance called the Central Fund and is paid directly to all of these people with no discussion in the House as part of the Estimates process.

This year we will spend €5 billion on payments to political parties under the Electoral Acts. This is a new development which is welcome and necessary. If the tribunals taught us anything it is that there should be a more public and transparent method of funding parties so they are not reliant on big business. I agree with this and support it. It is right and correct, but how did it get slotted in to be paid out of the Central Fund without discussion during the annual Estimates process? This figure should be discussed. I am not saying it is too much or too little, but it should not be excluded from the Estimates of the line Departments.

This year we will spend €3 million on election postal charges under the Postal and Telecommunications Services Act 1983. I do not know with what this is in connection, but I suspect it is for a referendum, probably on the Seanad. I have an excellent suggestion which I have made several times, and perhaps the Minister will take heed of it. The Taoiseach came before a meeting of the Select Sub-Committee on the Department of the Taoiseach to deal with Estimates. A figure of €2 million was included for the referendum this year on the abolition of the Seanad. All of this will be allocated to the Referendum Commission for the information campaign, and rightly so. I made the point to the Taoiseach that last year the Department of Children and Youth Affairs abused taxpayers' money by not spending it in an appropriate manner. This year it will all be spent by the Referendum Commission. It makes no sense that we can spend €2 million this year on an information campaign for the referendum and still spend €3 million on postal communication to each registered voter. The Minister knows that many houses have four or five voters and, for example, my constituency had 16 candidates in the most recent general election. There should be a mechanism whereby registered candidates can include their names and photographs with the ballot paper. This information could be sent to a body such as the Standards in Public Office Commission and one booklet could go to each registered voter with a list of candidates and pen pictures of them. This would be preferable to the sending of this information separately by all political party candidates and independent candidates at full postage cost. Each voter should receive details of who is running, but this could be included in one document. The way it is done at present means up to 20 documents could be sent to a household if several voters are living there.

The Houses of the Oireachtas Commission has a budget this year of €112 million, and €37 million has been provided for miscellaneous items, giving a total, according to this Estimates figure, of €9.796 billion this year. All of this money needs to be spent, but it should all be discussed as part of the expenditure process. This is not captured in the legislation, which only deals with voted expenditure.

Note 6 on page 8 of the 2013 Estimates of Receipt and Expenditure for the Year Ending 31 December 2013, prepared by the Government and presented to Dáil Éireann in accordance with the provisions of Article 28 of the Constitution, deals with non-voted capital expenditure, which is not discussed in the House and is excluded from the legislation in which the Minister states ceilings will be put on expenditure. If we have a ceiling on how much we can spend on health we should have a ceiling on how much we can spend on the interest on the national debt.

It is as simple at that. If any household is in difficulty, it must look at its total expenditure, including living expenses, mortgage payments and other debt commitments. There has to be some resolution. I am not talking about write-offs but about the proportion one spends on a mortgage or, in the State's case, paying the national debt and interest. There should be a discussion every year here as part of the Estimates process and these aspects should not be excluded. What I am saying is pure common sense.

I now wish to mention the Schedule dealing with non-voted capital expenditure, which is never discussed in this House as part of the Estimates process. I was surprised to read the figures under the capital expenditure headings. We were discussing the Construction Contracts Bill in committee but had to suspend that work to attend this debate. With regard to payments under the European Communities Act, there is capital expenditure of €10 million on European Regional Development Fund and the Cohesion Fund repayments this year, and under FEOGA there is a payment of €800 million. That sum, plus the €1.444 billion, means that Ireland is making a total contribution this year of €2.454 billion. Since Ireland is paying almost €2.5 billion to the EU in 2012, are we a net beneficiary or a net contributor to the EU? Looking at this figure, I think we could be a net contributor.

Deputy Brendan Howlin

Not yet.

Deputy Sean Fleming

Maybe not. I am delighted to see that we are getting more than €2.5 billion back, but I do not think people realise that we are paying that sum into the EU's coffers this year. My point - which I will continue to make until people are tired of hearing it, so that maybe somebody will act eventually - is that it is never discussed in this House. It is excluded because it is called non-voted capital expenditure.

In addition, this year we are making an Exchequer contribution to the insurance compensation fund of €272 million. The promissory note payments for certain banking institutions amount to €3 billion. The ESM share capital obligation is €510 million, while miscellaneous payments amount to €34 million. Given the €510 million for the ESM capital obligation, where is the ESM helping us out in dealing with our debt, including what we had to invest in our banks in taking a shareholding? I note that €510 million is going from Ireland to the ESM this year, but I thought the traffic should have been going the other way. It is extraordinary, given what we did to look after German bondholders, that we have to pay €510 million to the ESM this year. That is on top of the same amount paid last year.

This year alone we will be paying out in the order of €15 billion in non-voted expenditure, yet there is no discussion about it in this House and no reference to it in the Minister's legislation. The legislation is good in so far as it goes, but what it leaves out needs to be examined in further detail. We will come back to ask about these matters in due course. All those items are not included on constitutional grounds. One cannot discuss FEOGA, payments to politicians, the ESM capital obligation, payments in respect of the Kinsale gas field, and postage for referendums. All of these issues should be discussed here annually. It is not right to have a debate that only deals with certain elements of expenditure while we are not allowed to discuss other matters.

I wished to ventilate those points concerning what is not in the legislation. It has been a fault with the whole expenditure process in this House for a quite a while. The largest areas of expenditure are excluded from the Bill before us, so to that extent the legislation is deficient.

I now wish to move on to some other points. The Minister referred to the Estimates procedure in his opening speech. It was nearly the last sentence in that contribution. Barring those of the Department of Public Expenditure and Reform and the Department of the Taoiseach, none of the Estimates for line Departments have gone to committees yet. We will be here in June passing that. The Minister is talking about a new enhancement of the Estimates process, yet we do not even get to discuss it in the first half of the year. That is a poor reflection of the process. Is someone trying to fool us by calling that an enhanced Estimates process? We are discussing it halfway through the year when most of the money has already been spent. That is not a process at all and it is certainly not an enhanced one.

The voted expenditure we are discussing also takes into account net expenditure after appropriations-in-aid. Therefore, income raised by line Departments is included and netted off against an expenditure ceiling. As I said earlier, all expenditure has to go into the Central Fund, except where legislation states that it can be retained directly by Departments which use it to offset their departmental expenditure. Therefore, they must go to the Minister, Deputy Howlin, when voted expenditure is reduced by the amount of the funds they collect.

I will mention one or two issues that arise under the heading of expenditure in aid. In the Department of Health alone, €1.5 billion of income is raised through the Department. The biggest part of it is the amount raised from private insurance companies for private beds in public hospitals. The tobacco levy is also included, as well as a number of other items. I am not exactly sure into which account in the Department of the Environment, Community and Local Government or the Department of Transport, Tourism and Sport motor tax goes. Such issues arise from those figures, yet they are not being discussed as part of this legislation but are being netted off in the expenditure figures we are discussing. It would be more useful if we discussed the total income for the State in those areas that are not captured in this legislation and the total non-voted expenditure.

The budgetary system has been criticised, and rightly so, for facilitating levels of annual expenditure growth that were not prudent over the years. This is illustrated by the fact that there was average growth of 10% in the years 2001 to 2007, which outpaced economic activity in the country at the time. One of the flaws in the budgetary process at that stage was that while there was always a three-year expenditure plan, one analysis of expenditure growth identified as a shortcoming in the system the fact that there was almost a complete focus on the current year in setting the Estimates. The Department of Finance undertook a study which showed that the first year's outturns - those voted by the Dáil as part of the Estimates each year - typically came in within approximately 1% of the projection. I will come back to the thing that blew that figure out of the water last year, which was the largest Supplementary Estimate in the State, after the setting up of the Department of Public Expenditure and Reform. I do not understand that. The second year outturns came in ahead of projections by 6% because people were over-optimistic in what they projected the expenditure figure to be, including restrictions. The projections for the third year were out by 12% on average. In other words, every time somebody produces a projected figure for the next 12 months, even though it is done as accurately as possible, there is always a rose-tinted-glasses approach to figures for the second, third, fourth and fifth years. We always think there will be more growth and that the figure will be better. This probably applies just as much in the private sector, with companies going to banks seeking finance. It certainly happens here with public expenditure figures also, including the budget deficit and growth figures. It is good to be optimistic but somewhere along the line all those figures have been proven by the Department of Finance to be between 6% and 12% off the mark. We need to get that in order, so it is important to have tighter medium-term fiscal targets.

The Department of Finance acknowledges that our budgetary system is based on cashflow. All private businesses work on their income and expenditure and have figures for debts incurred and money owed. While it has its uses, our budgetary system is basic and simplistic. People understand what is taken in and what goes out, but it does not take account of money owed or debts incurred, which are omitted. It is also recognised that the system does not facilitate proper multi-annual planning, as it works on a cash receipts basis. Therefore, the system needs to be adjusted.

The Minister mentioned some key reforms of budget matters. In 2006, we brought in the pre-budget outlook to replace the previous approach, under which an economic review and outlook was published each summer by the Department of Finance.

In 2007 we produced a unified budget approach under which the annual Estimates of expenditure were published separately. They were the abridged Estimates but now it is a unified budget approach and that is important. We also have the annual output statements, which have the potential to be very good, but have not got there yet. Some of the changes the Minister is bringing in regarding the budget Estimates process are very good but some have yet to be implemented.

There have been some developments as a result of international developments. The EU-IMF programme has made us change some of our rules. The legislative programmes in terms of the six-pack the Minister mentioned have made us change some of our approach and that is welcome. The adoption of the Treaty on Stability, Co-ordination and Governance in the Economic and Monetary Union, known as the fiscal compact treaty by the Irish people, was a key element in why we are doing what we re doing here today. The medium term expenditure framework to which the Minister referred is consistent with the document I referred to. The medium term fiscal statement is important there too. They all contribute into the discussion we are having here.

Last year the Minister published a schedule for the expenditure ceiling within the Department but it has already been breached by the Departments of Social Protection and Health and he had to give them more money because the Ministers could not be reined in. I would like the Minister to have a strong arrangement in place when the EU-IMF troika leaves here in December, so that there will be proper expenditure control on those two Departments. We had the largest Supplementary Estimates in the history of the State here last year. I mentioned this in passing before and I will not labour the point. Some €1 billion had to go through in December for the Departments, some of it connected with the two Departments I just mentioned. I have also mentioned that the 2013 Estimates timescale is hopeless. There is no organisation. We would support the Minister. Thank God, because of the EU we will have our budget Estimates in October this year and our Estimates should be completed before the end of the year, which will be very helpful. We will fully support the Minister on that.

I say to my colleagues in the House, "Please pay attention to the Estimates debate at the committees." I have seen the following in some committees in this House year in year out, on all sides of the House, whether Government or Opposition. The Minister comes in and gives an opening statement, and there could be €10 billion going through a Department and they spend time talking about one small aspect of that sum. Years ago Deputy Rabbitte, when he was in opposition and on the Committee of Public Accounts, did an analysis of the time spent by the various Dáil committees studying the Estimates, and the average time was less than 90 minutes. Only one committee, the finance committee, had even spent more than two hours.

Deputies will spend the rest of the year complaining about Government expenditure, the money being spent in Departments and waste, and yet when they have the opportunity to grill the Minister and the senior officials at the Estimates debate they give it only cursory time. I plead with Members to take it more seriously. I ask that in future the Minister considers the social impact of the Estimates and ensures they are poverty-proofed, gender-proofed and employment-proofed.

Spending on public private partnerships is not included in this. Another item excluded from the legislation is what I would call the tax incentives. We do not know the cost-benefit ratio of the many tax incentives. Some of them are valuable in encouraging private expenditure but they should be factored in and counted as income foregone as part of this issue, almost like an expenditure.

I have covered most of my points. The Minister has inherited the spending pattern across all the Departments and he has given them all a ceiling. Somewhere along the line the Minister should stand back and ask whether that is the proportion we would like to spend. He is tied by the current spending commitments in the historical arrangements of what we spend in each Department. Perhaps there is a need for some Departments to get a higher proportion than others in the future and that is something that needs to be looked at.

Deputy Mary Lou McDonald

Unlike the previous speaker, I dare to take as a hopeful signal the fact that the Minister has not rushed the Estimates through the committees. Let it be borne in mind that there is now a substantive dialogue in respect of the public sector and the Croke Park proposal as it was a proposal that was defeated. Unlike Deputy Sean Fleming, I would say we cannot have it both ways. I was very critical of the Minister when he moved the Estimates for his own line Department through committee and it is only prudent and appropriate that he does not rush in that manner.

Providing for multi-annual Government expenditure ceilings as part of a medium-term expenditure management framework brings us in line, as the Minister has indicated, with other European states. This Bill gives legislative effect to our international commitments, and goes some way to put in place medium-term safeguards for public spending, falling as it does within with the EU's agreed twopack framework, bringing the annual budget announcement forward to October, which is welcome.

Fianna Fáil’s "If I have it, I spend it" approach did not serve this State very well. Annual budget announcements have traditionally been used by outgoing Governments as a pre-election giveaway with the harshest measures reserved for the beginning of a term in office. Multi-annual budgeting and medium-term budgetary processes are a step in the right direction. The legislation includes the necessary flexibility to accommodate unforeseen budgetary demands. We could usefully discuss that further on Committee Stage. Like all plans in life, we need to stick to them but we must also allow for the necessary fluidity to alter the plan as needed. This will be a challenge to any Government but a balance must be struck between budgetary safeguards on the one hand and an ability to ensure public spending serves the public needs on the other. However, what is in this legislation is certainly not a revolution or revelation of reform, and despite the work of the Minister over the last two years he has fallen far short on his Programme for Government commitments.

Does the Minister remember that Fine Gael and Labour on entering Government promised to "open up the budget process to the full glare of public scrutiny in a way that restores confidence and stability by exposing and cutting failing programmes and pork barrel politics"? Fine words, but completely contrary to what was delivered last December for the announcements in respect of budget 2013. The Minister rowed back on this commitment in way not seen before. The Expenditure Report 2013 did not include a full breakdown of spending for a number of Departments. Unlike previous years, where key departmental spending would have been detailed, we got the sparsest of information. The health Vote, bad as it was, was not the worst but let me give it a particular mention.

A summary of €1.2 billion in cuts to the health budget was detailed over ten lines. Where was the public scrutiny or the glare of the public in that? There were no specifics on savings on the Department Vote of €60 million or on other changes to primary care schemes to save €44 million. Fast forward by five months and we discover that, for instance, the assessment criteria for the under-70s had be changed. We discovered that months later. It is not said up-front. There were no specifics on increased generation of private income amounting to €115 million. That is no way to proceed.

Cuts to the Garda, prisons, other areas of justice and equality, local government funding and education were all astonishingly short on detail. All provided less information in the budget document than previous years. So the public was left in the dark about where exactly the impending cuts were coming from, as were the Opposition Members. All this falls far short of the Minister's statement in the Dáil last December that the setting up of his Department of Public Expenditure and Reform "represents the Government’s commitment to more effective and open Government". Transparency requires that one actually submit the data to the public domain for public scrutiny. During the same budget speech the Minister told us he intended to bring proposals to Government for Ireland to participate in the global Open Government Partnership, reinforcing our commitment to progress in this area. This global Open Government Partnership initiative requires a commitment to fiscal transparency.

Last year’s expenditure announcements not only were not transparent but were a step backwards for this Government's aspiration for open government. Last February the Minister stated that Ireland’s participation in the open government partnership had "a clear potential to contribute to the continued recovery of Ireland’s international reputation". Huge strides are needed if we are to bring ourselves up to the base-line of best practice but we should also see ourselves as potential champions of open government. What we appear to be seeking at every turn, however, is the bare minimum or, as happened during the budget 2013 announcements, a step backwards.

This legislation should be a statement of intent from the Minister that he intends to make radical changes to the budgetary process, as called for by his own party colleagues. Last year at the Labour Party conference or Ard-Fheis - I am not sure what it is called - calls were made for the annual budget to be equality proofed by undertaking a distributional analysis of proposed budgetary measures on all income groups, and for the evidence generated as part of the proofing process to be published as part of the budget documentation. That is a very strong and worthy idea. Labour Party members, colleagues of the Minister, went on to demand that the measures to be implemented be subjected to an equality audit that would quantify the impact of budgetary measures on all income groups, and for this information to be published within six months of the budget.

The programme for Government commits to ensuring that the rights of women and men to equality of treatment and full participation in society are upheld. The ultimate measure of any reform agenda will be the experience of citizens in seeking and accessing services. The people will be the jury and they will decide ultimately the success or failure of any administration and its reforms. Whenever I put the straight question to the Minister, as I have done several times, asking whether he will equality-proof the budget and publish the data, I am told time and again that the primary objective is to reduce the deficit and return public finances back to a sustainable footing. I never understand this response as it suggests equality budgeting and sound public finances are somehow opposed objectives, which is not at all the case. In reality, they are two sides of the same coin.

The Minister has told us Cabinet procedures require that proposals put to Government must indicate clearly whether there is any impact of the proposal on, among other things, gender equality, persons experiencing or at risk of poverty or social exclusion and people with disabilities. However, whenever I and, I imagine, others have sought this same information I am told the information cannot be released due to Cabinet confidentiality. The Minister tells us he champions the reform agenda yet when real reforms are put to him, not only by the Opposition but by his own party colleagues, he balks and refuses to countenance them. In light of successive reports detailing the outright failure of Government to put in place the required policy responses and resources to tackle deepening inequality and systemic unemployment, my advice to the Minister would be to open his ears and his mind.

The latest reports of the ESRI and the National Economic and Social Council, NESC, on the impact of the economic crisis on young people and families are damning. The author of this week’s ESRI report describes the impact of the crash on younger groups as "large, both by international standards and in a historical comparison". The report asks how policy can best address the disproportionate impact the crisis has had on Ireland’s young households. The NESC report notes that the succession of harsh budgets since 2008 has had the hardest impact on families with children. Some 22% of all households are now without any work and the report notes that a quarter of all children are living in jobless households. Youth unemployment is a shocking 50% in Limerick, 49% in Donegal and 47% in Wexford, and is at intolerably high levels in Dublin's inner city.

These reports are not news. The ESRI's Distributional Impact of Tax, Welfare and Public Sector report told us that last year, following budget 2012, the greatest reduction in income was to those on the lowest incomes, with a fall of about 2% to 2.5% for the poorest 40% of households. This compared with a fall of about 0.7% for the top 30%. Square that circle. These results reflect the truth that increases in indirect taxes are regressive and cuts in welfare have a greater impact on low income groups. That is logical. A study carried out by TASC revealed that the group most at risk of poverty in Ireland, namely, lone parents, lost the highest percentage of income in budget 2011. Clearly, this situation will have worsened in light of the ESRI report findings from earlier this year, and given the increased cuts to supports in the following budgets. There are years of evidence, yet the Government, like previous ones, doggedly refuses to make the link between equality budgeting and public expenditure.

The Campaign for Equality Budgeting in Ireland, which I wish to commend in the Dáil today, has done some constructive and positive work on setting out proposals for the implementation of equality budgeting. Just last month the campaign submitted a detailed proposal to the Minister for Finance. In light of Labour Party members' support for equality budgeting, it is deeply disappointing that the Minister, Deputy Howlin, has failed to grasp not only the value of but the necessity for this approach to expenditure planning. Equality auditing and impact assessments can provide information to Government on how different sections of society are affected by its economic and social policy measures. How else can Government tackle inequality in wider society, or take informed decisions, if it does not have the necessary data to inform such decision making? Under the Government’s current budget process it cannot achieve the very best equality outcomes for society, particularly those hit hardest by disadvantage and unemployment.

We know the crisis is hitting families, women, youth, and people with disabilities but the Minister's current approach to expenditure does not include impact assessments and analysis detailing how specific sections of society are affected by public spending. The Departments of Finance and Public Expenditure and Reform both continue to look at fiscal planning from the bottom line up, thereby deliberately restricting their own analysis and, indeed, the analysis of those measures they have put in place as the Government's checks and balance. Equality budgeting would increase the level of information available on public expenditure, have an impact on equality markers and increase levels of transparency. The concept of equality budgeting is not new. Since the 1980s more than 60 countries have embraced some form of equality or gender budgeting. Some positive work has been done in this area by previous Governments in as much as strategies were developed and a small number of initiatives saw the light of day, some only very briefly.

The equality budgeting campaign specifically detailed the Scottish model in its submission to the Minister for Finance and I urge the Minister to consider it in detail. The Scottish budgetary process involves the publication of a draft budget which allows for public consultation and debate before final publication. An equality statement is issued with the draft budget, outlining the equality implications of the budget. However, this is just one model - there are many more that can be drawn upon internationally. It might be worth the Minister's while to look up the road to the North of Ireland, at its section 75 provisions, and see how equality requirements are processed there. The measure is not perfect but is infinitely better than the system we have down here.

Proposals for equality budgeting could include, for example, setting up a unit with responsibility for integrating equality horizontally across all economic policy processes and planning, with particular reference to the nine grounds of the Equal Status Acts and to socioeconomic status.

This equality budgeting unit must be adequately resourced to undertake or commission research on the impact of the economic crisis on differing sections of society and to ensure data used in policy making are disaggregated on the basis of gender, disability and other relevant socioeconomic indicators. At the very least it should publish impact assessments alongside the budget to allow members of the public and elected parliamentarians to see how the budget affects different sections of Irish society. The Minister has repeatedly indicated this information is provided to Government by Departments through expenditure-related budget submissions and proposals. I am simply asking him to put it in the public domain and be guided by it in making budgetary and expenditure decisions.

At the outset of his contribution, the Minister spoke about positive, sensible and prudent reforms. I will always support such reforms but I fear the Minister and his Department are not so much prudent as overly cautious and timid in respect of overhauling the budget process. I accept the need for discipline in expenditure and that we have to cut our cloth according to our measure but we must also ensure the services we provide meet the fluctuating needs of people. Crucially, the issue of equality and fairness should not be located in the budget process in a whimsical sense but firmly rooted in practice and regulation through a system of equality budgeting. The Minister indicated that he intends to introduce additional provisions on Committee Stage. I am not in a position to comment in detail on such provisions until I see them but I look forward to debating them on Committee Stage and I urge him to make equality budgeting a reality.

Deputy Stephen S. Donnelly

I welcome this Bill as a small step towards significant budgetary reform, although I shall outline the specific concerns I have with it. I have the greatest of respect for the Minister of State at the Department of Arts, Heritage and the Gaeltacht, Deputy Dinny McGinley, but it is ironic that the Minister, Deputy Howlin, stated in his contribution, "We have introduced a number of important budgetary reforms aimed at enhancing the openness and transparency of the budgetary framework", only to leave when Deputy McDonald started her speech. There are only three Opposition Deputies on the Minister's sub-committee, namely, Deputy Sean Fleming, Deputy McDonald and me. The Minister's departure set the tone for our contributions. There is a lot of big talk from the Government but its culture and actions belie its words. Ministers claim they are listening only to leave the Chamber when we speak. By leaving at the start of Deputy McDonald's speech, the Minister perfectly illustrated this problem.

We know that budgetary reform is badly needed. In 2005 we were scored by the World Bank in the lowest quartile internationally. We are in the same category as Greece, Cambodia and Kenya. In an index of legislative capacity produced in 2006, we scored zero out of ten in the quality of information given to parliaments to assess budgets and in the time given to parliaments to assess budgets. In another study of OECD and other countries, we came 35 out of 36 countries. The only country worse than us at doing budgets was South Africa. We are appalling at this process and previous Government and officials are to blame. The culture of secrecy and protecting information is extraordinary.

The programme for Government states: "We will open up the budget process to the full glare of public scrutiny in a way that restores confidence and stability". I have spent several years working with numbers, budgets and financial analyses in the public and private sectors and nothing in this process instills confidence in me or leads me to believe that it will achieve stability. The Minister regularly makes speeches like the one he just made to tell us he is doing everything he can. Opposition Deputies are constantly asking for improvements but we do not seem to get them. Government backbenchers are now calling for reform. I read in this morning's The Irish Times that there was a surprising amount of support in Fine Gael for Deputy Eoghan Murphy's proposals on political reform. We know it is wanted on all sides of the House, that it has been promised and that it would make a big difference but it does not seem to happen.

This Bill will not introduce these much-needed reforms for two buckets of reasons. These are the mechanics of the process, which are bad although getting better, and, more important, the culture in which it happens. Without a change in the culture, nothing else will change. The Minister stated that the Government has "completely modernised and reformed the annual Estimates process, built performance-related information into the heart of the budgetary documentation, and brought evidence-based policy-making to the forefront of public service delivery". That is nonsense. This Government has not modernised and reformed the Estimates process. I am heavily involved in that process and it remains a shambles.

In regard to performance information, I have studied closely the documentation on the revised Estimates provided by the Minister. It contains a few performance-related metrics but nothing which would allow us to hold anyone to account. The font is probably 4-point or 6-point. One would not want to be hard of sight because it is a dense and impenetrable document. I have years of experience of interrogating financial information but it was impossible for me to use the documentation provided by the Minister to hold him to account, which is part of my constitutional role. As for evidence-based policy making, Deputy McDonald summed it up. Policy making may be based on evidence but any evidence is being kept from us. The Minister explicitly refused to share evidence of policy making with me. When he announced the capital expenditure programme, which involves a vast amount of money, I asked for a technical appendix, a cost-benefit analysis and decision criteria but he told me I could not have these details because they would be too complicated for me to understand. That is just one example. I do not buy the claim that the Government has completely modernised the process by building in performance-related budgeting and bringing evidence-based policy making to the forefront of public service. I certainly do not see these reforms as a Member of the Oireachtas.

Deputy Sean Fleming's arguments are well made. There is a huge amount of non-voted expenditure that the Dáil does not get to see.

This practice must be stopped.

I draw the Minister of State's attention to subsections 1(5) and (8), which neatly segue into the culture underpinning the legislation. Subsection (5) reads: "The Minister for Finance shall, on behalf of the Government, inform Dáil Éireann of a decision under subsection (2) or (3) as soon as may be after the decision is made." Subsection (8) is identical except in respect of the subsections to which it refers. Under the Constitution, Dáil Éireann is the only institution in the State which may authorise public expenditure. The previous Government, with the support of the current Government parties, passed an Act which bypassed the Dáil and provided that the Minister for Finance can spend any amount of money on the banks, for any reason and at any time. We are now €64 billion into that particular act of lunacy. The only requirement the legislation imposed on the Minister was that he must inform Dáil Éireann of his intentions. Similarly, the legislation before us does not require Dáil approval for the various binding estimates, ceilings and important multi-annual targets. On the contrary, it provides that the Government, having agreed such measures, will inform the House of what is to be done. We are, therefore, hard-wiring the problem in the early Act into this legislation.

Let us address the culture behind the Bill. Last week, I asked the Minister for Finance, Deputy Noonan, a question on the stability programme update, an important financial document which, as in the case of the expenditure in the Bill, is a multi-annual medium-term estimate that is submitted to the European Commission. The Commission may return the document with binding country-specific recommendations. When I asked if the Dáil could be given more notice than the two and a half hours we received this year and if the committee could be given more than one hour to debate the document, he stated he had brought it to the committee "at the first available opportunity" and that I had not been "inhibited in any way whatsoever" before describing my intervention as "a wrangle about process rather than dealing with the document", which was, he said, "a waste of time." I was allowed to speak for five minutes, having received the document only two hours before the committee met. It was subsequently submitted to the Commission as it had been presented to committee and without proper Oireachtas oversight. The Minister placed the document under our noses one hour before it was e-mailed to Brussels and basically told me to stop wasting his time. He refused to give me any comfort on my request that Deputies be allowed to scrutinise what was a very important document.

Two weeks ago, I asked the Taoiseach if the budget would be signed off on 15 October, to which he replied in the affirmative. The point of the European semester is to co-ordinate and try to drive good budgetary practice into countries such as Ireland. Under the current requirement, a draft budget must be submitted to Brussels by 15 October. In other countries, a draft will be submitted to the Commission and subsequently debated in the national parliament, where it will be changed through parliamentary input and oversight, before being passed in December. This is not the process we are adopting. Instead, the Government has decided to avoid parliamentary oversight and bring the budget forward to the day on which the draft document must be submitted to Brussels.

Some months ago at a committee meeting, I asked the Minister for Public Expenditure and Reform, Deputy Brendan Howlin, if he would consider including in one of the forthcoming referendums a question on removing from the Constitution the preposterous provision that only Ministers may propose amendments that incur charges on the State. Deputies may not propose any amendments that would give rise to a cost. The Minister declined my suggestion on the basis that every Deputy would spend time making silly proposals that would either cost a substantial amount or result in tax reductions.

As Deputy McDonald noted, last year's budget is a perfect example of the culture of locking Parliament, including Deputies from all sides, out of the budgetary process. Guillotines were used for every measure and Deputies were given practically no time to speak on the social welfare, finance and local government tax Bills, all of which were rushed through the House.

I am not sure why the Minister is not present. Perhaps the Minister of State, Deputy McGinley, who is not in the Department of Public Expenditure and Reform, will inform the Minister that Labour Party, Fine Gael and Opposition backbench Deputies want a modern budgetary process introduced. Contrary to the Minister's claim that he has already done this, the culture at the top - namely, in the Economic Management Council - has not changed. The council is controlling and stifling debate and shutting out the Oireachtas. This practice is repeated in the Bill in the provision that the "Minister for Finance shall, on behalf of the Government, inform Dáil Éireann of a decision".

I ask the Minister of State to relay to the Minister a number of proposals. First, the budget should not be passed in October and, second, the stability programme update should not be waved under the noses of members of the Joint Committee on Finance, Public Expenditure and Reform one hour before it is sent off to Brussels next year. I emphasise that the European Commission can make binding recommendations based on this document. I also fully concur with calls for the Government to introduce equality budgeting.

If we want to have best practice, we should examine a report on the matter issued by the OECD, which states: "In no case should this be less than three months prior to the start of the fiscal year." As Deputy Sean Fleming noted, we will receive this year's Estimates in June. The report continues: "Non-financial performance data, including performance targets, should be presented for expenditure programmes where practicable." While this is being done to some extent, I have not seen anything I could usefully use to hold a Minister or Department to account. The OECD also recommends that "comparative information on actual revenue and expenditure during the past year and an updated forecast for the current year should be provided for each programme." It states that monthly reports should be prepared showing progress in implementing the budget and a parliamentary budget office should be established, which would allow Government backbench Members and the Opposition to properly interrogate budgets.

This legislation has been introduced because the European Union requires us to do so. Underpinning the Bill, however, is a culture whereby the Government is in charge and there is nothing for Dáil Éireann to see in it. While I accept the budgetary process is improving, I repudiate the idea that we are even close to good international practice, because the culture at the top of government is stifling the House and preventing it from doing its job.

Deputy Mary Lou McDonald

Hear, hear.

Deputy Finian McGrath

I welcome the opportunity to speak on the Bill, which addresses the management of the public finances, expenditure and budgets. This debate provides an opportunity to examine, reform and change the system. We must be clear and honest with people. The days of false promises and inefficiency should be consigned to the past and the game-playing replaced with sensible management of the public finances. If this is done in a fair and equitable manner, we could build for the future. People want hope and a vision for change. Above all, they want action which will have a positive impact on their lives.

The Bill allows the Government to anchor its already operational multi-annual expenditure limits in national law. This is a requirement under the EU-IMF programme of financial support for Ireland. Specifically, it amends the Ministers and Secretaries (Amendment) Act 2011 and in doing so provides for medium-term expenditure management through multi-annual Government and ministerial ceilings. This is the core element of the legislation.

We must address the issues of banking, the economy and distressed mortgage holders, because families are suffering as a result of what took place in this country. We must deal with the €64 billion put into the banks. Small businesses are being devastated.

At the same time, there must also be accountability and transparency. There are examples of the latter in many parts of the public service. I was previously employed as the principal of a small school in a disadvantaged area. The school in question was probably one of the poorest in the country and I recall how every single cent of its budget had to be accounted for and how the books were checked regularly by inspectors from the then Department of Education and Science. If we were €1 or €2 over our budget, someone would be on our case. The money in that school's budget was spent on the weakest and most disadvantaged pupils in the country. I am aware that this is also the case with the modern DEIS schools. The Minister of State, Deputy McGinley, knows a great deal about this matter and has a good understanding of the position. DEIS schools receive taxpayers' money and they keep records and must account for every single cent. That should be the case across every Department.

In the context of the legislation before the House and the broader economic issues by which the country is affected at present, Deputy Donnelly put forward many sensible suggestions for reform. It is not acceptable for Ministers to state continually that members of the Opposition do not put forward constructive proposals. I ask the Minister, Deputy Howlin, to take on board these sensible proposals. We were all elected to this House on the basis of a vision for change and reform. When we knocked on their doors during the 2011 election campaign, people asked if we would take action to fix what was wrong and if we would do our best for the country. That must also be measured in the context of State revenues and expenditure.

The Constitution states, in Article 28.2°, that the executive power of the State is exercised by or on the authority of the Government. The Constitution also states that the Government, which is responsible to Dáil Éireann, is collectively responsible for the Departments of State administered by its members and that the Taoiseach, the Tánaiste and the Minister for Finance must be members of the Dáil. All State revenues must be paid into one fund - called the Central Fund or the Exchequer - and the Government then draws on this for expenditure in respect of State services. As stated by previous speakers, Government expenditure consists of voted and non-voted expenditure. The larger part of Government expenditure consists of voted expenditure, which is for the ordinary services, called supply services, of Departments. Following the Government's proposals, the Dáil is asked to vote on authorising the moneys in respect of these services each year. Non-voted expenditure is paid out of the Central Fund under specific legislation, without annual reference to the Dáil. This consists of expenditure on items such as servicing the national debt, the Houses of the Oireachtas Commission, share subscriptions to State bodies, judicial salaries and pensions and the salaries and pensions of Uachtarán na hÉireann and of the Comptroller and Auditor General. What I have just outlined are the nuts and bolts of the legislation before the House.

Under the EU-IMF programme of support, Ireland is committed to implementing a number of reform measures in respect of its budgetary management process. These will build on reforms undertaken to date, particularly since 2006, which were aimed at increasing the transparency and effectiveness of the budgetary process. The two words on which we must focus in this regard are "transparency" and "effectiveness". Both previous and current reforms are outlined in the Bill, as are a number of the weaknesses identified in the Irish system.

I welcome the Bill and the broader debate on this matter. I urge the Minister to listen to what Opposition spokespersons are saying. We were all elected on a platform of reform. I would like the Estimates process to be modernised. In that context, an evidence-based process is required as a matter of urgency. In addition, there is a need for transparency in respect of non-voted expenditure. Real reform, real change and real accountability are required. Imposing guillotines in respect of important legislation such as finance and social welfare Bills is not sensible, does not represent good practice and is a danger to the State. I am grateful to have had the opportunity to address these issues and I hope the Minister will take our views on board.

Deputy Seamus Healy

I wish to take the opportunity provided by means of my contribution to the debate on the Bill to commend the Ballyhea Says No group on its actions and to place its proposals on the record of Dáil Éireann. The group in question has been marching in Ballyhea for the past 115 weeks. The group in Charleville has been marching for 100 weeks and the growing Ireland Says No movement has been doing so for 15 weeks. The Ballyhea group commenced its protest on 6 March 2011, shortly after the most recent general election and in the immediate aftermath of the announcement by the Taoiseach, Deputy Enda Kenny, that burden-sharing with the banks would not happen. The latter was, of course, a complete U-turn and represented a reneging on the promises and commitments made by Fine Gael during the general election campaign. Apart from its weekly march, the Ballyhea group has visited Dáil Éireann on three occasions, has travelled to Brussels on two occasions and has been in the ECB's headquarters in Frankfurt. Its members did all of this at their own expense. The Ballyhea group includes members of all political beliefs and none. Collectively, the group is apolitical. The members of the group are not economic experts and do not pretend to be. In the context of age, gender and employment status, they represent a cross-section of society. However, they have a single, united agenda, namely, to lift the unjust bailout from the shoulders of the people. Those in the group are not going to rest until they have been successful in that regard.

The Ballyhea group has put forward a number of proposals in respect of bank debt, the Europe-wide crisis and the major imbalance that exists in the context of Ireland's contribution to resolving that crisis. It has called on the ECB to write off the €28.1 billion in sovereign bonds currently held by the Central Bank in lieu of the promissory notes-----

Acting Chairman (Deputy Seán Kenny)

Will the Deputy address the content of the Bill?

Deputy Seamus Healy

I am doing so. This is Second Stage and all the matters to which I refer are germane to the debate.

Acting Chairman (Deputy Seán Kenny)

Yes, but perhaps the Deputy could speak on the actual legislation.

Deputy Seamus Healy

The promissory notes were issued in 2010 to cover a flagrant abuse of the emergency liquidity assistance fund, when €31 billion was pumped into two already insolvent institutions, namely, the former Anglo Irish Bank and Irish Nationwide Building Society. This was an abuse which the ECB approved. The group is also seeking that the EU - through the European Stability Mechanism - restore to the Irish Exchequer the €3.1 billion already destroyed on the basis of those promissory notes, the €20.7 billion taken from the National Pensions Reserve Fund to bail out the banks to which I refer and the remaining €13 billion or so borrowed from the various emergency funds to bail out the Irish banks in general. The first proposal in this regard would ease the long-term bank debt burden and the second would ease the current situation, provide money to be invested in job creation and enable us grow our way out of the recession. I support these proposals and I hope other Members of this House and the Seanad will do likewise.

The Bill before the House has been introduced on the instructions of the troika. It facilitates the implementation of the six pack and the EMS treaty and is part of a plan to hand over detailed control of our economy to the larger European powers. In other words, it is a plan to diminish Irish sovereignty.

When we joined the EU in the 1970s, we were told by Fianna Fáil and Fine Gael that it was not a surrender of our sovereignty but a pooling of it. Due to the reckless lending of European banks and the collaboration with same by the wealthy Irish establishment and its political representatives, namely, Fianna Fáil, Fine Gael and the Labour Party, total control of Ireland has been handed over to international financiers.

Deputy Anthony Lawlor

And Deputy Ross.

Acting Chairman (Deputy Seán Kenny)

Order, please.

Deputy Seamus Healy

International vulture capitalists are roaming the country buying up assets for a song. The Government led the way in these fire sales when it allowed 37% of Bank of Ireland to be bought by the American financier Wilbur Ross for just over €1 billion, leaving the State with a 15% stake in the bank in which it invested €5 billion.

This Bill is related to a deliberately misleading analysis that alleges that Ireland's public expenditure is excessive. Nothing could be further from the truth. Irish public expenditure in 2011, at 42% of GDP, was lower than that of the UK, Germany and Sweden, at 47.3%, 43.7% and 52.5%, respectively. Irish public expenditure increased in the 2000 to 2008 period, but it was still behind other European countries and started from a low base.

The budgetary deficit is mainly due to the collapse in tax revenue, although low and middle income families are heavily and unfairly taxed. The main reason for the collapse was the transfer of the tax burden from the rich to stamp duty on property transactions. At 30.8% of GDP, the Irish tax take is well below that in other European countries - 38.9% in Britain, 40.6% in Germany and 47.9% in Sweden. To a considerable extent, this is due to tax breaks for the rich. In a 2012 report, Social Justice Ireland stated that investment property-related tax breaks - for example, car parks, hotels and section 23 and section 48 properties - were costing the Exchequer €435 million per year.

The super-rich often claim that they are in favour of free enterprise. They are opposed to prudent regulation, as we know from recent years. They are also in favour of profits subsidised by Irish citizens.

The Bill sets in stone the policy of austerity being pursued by the Government. That policy unfairly taxes low and middle income families while wealthy people with significant incomes and assets get off almost scot free. I oppose the Bill.

Acting Chairman (Deputy Seán Kenny)

Deputy Terence Flanagan is next and is sharing time with Deputies Lawlor and Donohoe. Is that agreed? Agreed.

Deputy Terence Flanagan

The introduction of this short, technical Bill is a requirement under the troika programme of financial support for Ireland. It will provide for medium-term expenditure management and will amend the Ministers and Secretaries (Amendment) Act 2011. The aim is to set a limit on the annual budget of each Department, resulting in each Department prioritising its resources and working more efficiently. Having defined limits in place will focus the minds of Ministers and senior departmental staff. This is not before time, given the events of the past ten years.

The Government recognises the importance of introducing a more transparent expenditure system with a longer-term outlook. The Bill's provisions number among a range of regulations to promote this change. It has been made clear in recent years that Ireland must implement reform measures in its budgetary management process to increase the transparency and effectiveness of the process. Fine Gael sought such changes in opposition and is continuing in its policy with the Labour Party in government. It is vital that the system be accountable to the Oireachtas and, most importantly, the public.

The current budgetary process has a short-term outlook that focuses on the year ahead instead of a number of years in advance. Financial pressures that fall outside the annual frame of reference do not receive the same attention and projections are regularly outdated and incorrect by the time the year in question is reached. Ireland operates a traditional annual cash-based system of Government accounting. While this has strengths, a number of areas of public financial management are not addressed.

In recent years, several significant policy developments have taken place at national, EU and EU-IMF levels. Methods of economic and budgetary governance are now under review at EU level and specific proposals have been tabled to help to ensure that all EU member states manage their national budgets in a sustainable way. Ireland has already moved to implement a number of these proposals. In this regard, some commitments were set out in the National Recovery Plan 2011-2014 and budget 2011.

Multi-annual expenditure planning is in place in a number of other countries. It is only right and proper that the Oireachtas would introduce such a system. It sets fixed expenditure ceilings for each year in a multi-year cycle and for each main area of expenditure rather than for just one year. Under the terms of this Bill, for each financial year the Government will approve an upper limit of expenditure for the following three financial years. The Minister for Finance will submit a proposal about the limit and can later propose to the Government that this amount be revised upwards or downwards. The new section 17(6) inserted by section 1 outlines that the Government will decide the amount of expenditure to be apportioned to each Minister's area of responsibility for the financial years concerned.

This short, technical Bill will change the accounting exercise involved in the annual budget. Any move to improve transparency in Government expenditure should be welcomed by all Deputies. This system will enable the public to hold Departments to account and to ensure there is effective management of scarce public resources. The introduction of a more complete medium-term framework for fiscal planning will inevitably lead to the greater planning and control of expenditure.

Deputy Anthony Lawlor

I come from a business background. Anyone with that perspective understands how budgets work. One tries to budget or plan a number of years in advance.

We must welcome anything the Government can do that is similar to what happens in business, such as putting long-term budget plans in place. I am astounded by the criticism of some Opposition speakers of what the Government has done to date. We are trying to ensure we do not allow the type of economic collapse that happened in 2008.

My first election was in 1977. At the time, the Fianna Fáil Party-----

Deputy Alan Kelly

Deputy Lawlor must have been very young then.

Deputy Anthony Lawlor

I was only a nipper.

Deputy Paschal Donohoe

Deputy Lawlor looks well for his age.

Deputy Michael Healy-Rae

Was Deputy Lawlor running in that election?

Deputy Anthony Lawlor

Deputy Healy-Rae’s father might have been running at the same time. At the time promises were made to scrap rates on property – we are bringing back property tax now – and car tax in order to get a party elected. If we had in place what we are endeavouring to put in place now, none of the ridiculous promises that caused economic hardship for the next ten years in this country would have been possible. From 2002 to 2008, we regularly spent 10% more than we took in on tax receipts. That did not make economic sense. The economic growth during the period was less than what we were spending at the time. We are taking these little steps to ensure there is inherent regulation of the budgetary process.

I welcome the fact we are planning ahead by introducing budgetary ceilings. Previously, when Governments introduced budgetary ceilings for two or three years, they were not adhered to. It is incumbent on us to adhere to the budgetary ceilings we put in place in conjunction with the Department of Finance. That would give us an opportunity to put in place a budgetary process on which we could plan ahead. From what Ministers have said, it is clear what we will do in this year’s budget. Everyone knows the breakdown of the cuts and taxation elements of the budget and that we have to take €3.6 billion out of the economy in 2014. The plan has been clearly set out by the Minister for Finance. Although the figures are large, the fact that they exist is a benefit because they will help the markets to understand where we are going. There is a challenge to maintain the upper limits in the future. We must work hard with the Department of Finance to ensure the figures we set out are achieved. That creates problems for various line Ministers.

Because we will have narrower budget deficits, at times we will end up with surpluses and we must learn how to deal with them. It might be necessary to introduce a Bill on how to deal with surpluses in the future. Deputy Catherine Murphy is laughing but I always look at the long-term picture rather than short-term, narrow gains.

Deputy Catherine Murphy

Deputy Lawlor should get his Zimmer frame out.

Deputy Anthony Lawlor

Many Opposition speakers, especially from Fianna Fáil, were disparaging of the fact that we were told to do this by outsiders. We would not have had to do it if Fianna Fáil had not put us in the current situation by not adhering to a proper budgetary process.

Deputy Paschal Donohoe

I wish to comment on the brief exchange between my colleague, Deputy Lawlor, and Deputy Catherine Murphy on a potential budget surplus. Deputy Murphy encouraged Deputy Lawlor to get his Zimmer frame ready. It is probably worth pointing out that we will have a primary budget surplus within the next two years. A primary budget surplus is what one gets when one strips out interest payments on the national debt. We expect to run a small surplus in the budget once we exclude the interest on our payments. While the cost of servicing the national debt will be onerous and we will seek to reduce it, and while we still have a considerable deficit that we are currently seeking to reduce, Deputy Lawlor is correct to make the point that we should engage in some kind of planning for what we should do when we get to the point where the level of tax is roughly enough to pay for the level of expenditure. It is the lack of such discussions in the past that created the environment within which our budgetary situation and ability to regulate our banks fell completely apart. We are getting to the point where we need to have a discussion on the kind of country we want, the level of spending we want for public services and the level of taxation without having the troika in town.

One of the most provocative comments I heard recently on the troika came from Dr. Don Thornhill, chairperson of the National Competitiveness Council. He said the following recently: “Yet when the Troika came to town, Government committed to, and began implementing reforms which many long ago recognised as necessary”. He went on to list the reforms. He also said: “If Ireland regains access to the international financial markets, at acceptable cost and if we say goodbye to the Troika what will happen?” He later went on to say in the context of the troika leaving this country:

Sadly our history suggests that the risks of reform, fatigue and failure are very real. If we fail, the costs will be reflected in high levels of embedded unemployment and emigration, higher levels of taxation which impair economic growth, as well as diminishing levels of provision and quality in our public services. This would be an ironic and tragic consequence of our efforts to restore economic sovereignty.

As the man who runs the National Competitiveness Council, it is Dr. Thornhill’s job to look at what this country should be doing and what progress we need to make to retain levels of competitiveness sufficient for the country to prosper. Rather disturbingly, he is questioning whether the country and its institutions will have the ability to do that if the troika departs. I am certain that the troika will go. I am also certain that in the absence of the troika, the Government, Parliament and all the institutions have the ability to come up with plans and deliver strategies that ensure the country can get to better days, and that we do not need the troika for our country to make the right decisions. The Bill and the introduction of multi-annual budgeting is a small but important part of the process. That is the type of measure sought by many commentators in this country before the boom. It is a system that is already in place in many other countries.

The elements of good budgeting I would welcome in legislation exist on four different levels. The first is that we must get to a point, towards which we are making steady progress, whereby we ensure the taxes we raise roughly pay for the level of public services we want. The moment a country is unable to deliver that, it sets itself on a path that makes it vulnerable to outside forces, be they the financial markets, other institutions or, in extreme cases, entry into a programme such as prevails currently. The second element that is vital is that we must be aware of the impact of levels of private credit within the economy.

We have to know if they are fuelling an asset boom or levels of lending or personal debt that are becoming unsustainable. Again, Ireland under the last Government lost the ability to do that.

The two final points that are essential are as follows. First, we must have a tax base that is broad and capable of weathering any sudden collapses in economic activity. Second, we must also ensure, with such a tax base in place, that the level of spending allowed by that tax base is roughly in line with the kind of growth happening in the economy. That is why legislation like this, which puts in place the requirement for multi-annual budget forecasting, is something I welcome. Those four ideas are very simple and most people would agree with them but they are ideas that our country, and the last Government in particular, was incapable of delivering. This legislation requires that this and any future Government look at these metrics and be aware of their impact on our budgetary situation.

All of that being said, when this legislation is passed and up and running, there are other areas that will be important in order to ensure that it works successfully. Those areas relate to what happens with current and capital spending. It is very important to recognise that capital spending is different from current spending. We must ensure that as each year goes by, if a given Department - for example, the Department of Transport, Tourism and Sport - decides not to spend all of its capital budget in a particular year, for whatever reason, the money is not lost to that Department in year two. Departments must be able to ensure they spend their capital allocations at what they believe is the best time in terms of getting the best value for the taxpayer.

On the issue of current spending, in order for a system such as this to work, Departments and Ministers must stick to the allocations made available to them. The moment that stops, legislation such as the Bill before us today stops working. Finally, the Government must have the ability to allocate money among Departments as it deems appropriate. If a particular Department is not spending its full current spending allocation, for whatever reason, the Government should be able to intervene centrally and decide where else that money should be spent. That is particularly important at the end of the fiscal year.

Of course, what this legislation is silent on is the Dáil. The Bill seeks to ensure that the Dáil will play a greater role vis-à-vis multi-annual budgeting in the future but does not envisage a greater role for the Dáil beyond that. It is clear to me, as a member of the Committee of Public Accounts, that the Dáil could play a greater role in two particular areas. The first area concerns the annual output statements that each Department publishes. My strong sense, having looked at how they are dealt with in the Dáil and in Oireachtas Committees, is that we are still not making enough use of them to confirm that the money allocated to particular Departments is actually spent in the way in which the output statements say it should be spent at the start of the year. The second area relates to the recommendations made by Oireachtas committees. As the committees move through the sectoral Estimates of a Department, scope should be provided for those committees to make recommendations on the reallocation of money within that spending area and to outline how the money could be spent. Obviously, it is exclusively the decision of the Government to accept or reject such recommendations, but there are many good ideas emanating from Deputies in the two main parties in government, not to mention our colleagues on the Opposition benches, that we should be capable of hearing within the budgetary process. If those ideas are good ones, the Government should be capable of making a small number of them happen. Of course, the other consequence is that it would force people who are against everything and in favour of nothing to engage more constructively with the budgetary process. This is an approach to devising budgets which, had it been in place in the past, might have prevented some of the difficulties we are now in and averted some of the misery that the people we represent are dealing with. For that reason alone, I look forward to the implementation of this legislation.

Deputy Catherine Murphy

I wish to share time with Deputy Tom Fleming, with the agreement of the House.

First, I wish to pick up on something Deputy Lawlor said about the 1977 election. I agree it was an election that was bought and also that we have paid a price for that type of behaviour. Essentially, we need to balance our budgets, but we must balance them within a social context. The introduction of this legislation is very much a part of the European fiscal compact, which is something that was accepted by the citizens of Ireland. Clearly, the compact was accepted and we must live with the consequences of that. I feel that we let ourselves down badly in that regard by not negotiating some debt write-off before entering that process. We have been left with very little tolerance in the running of public services. The requirements of the compact add to our difficulties in raising funds and covering the cost of public services.

Had this legislation been passed ten or 12 years ago, we would possibly have been able to manage ourselves better. Having said that, a whole raft of legislation would have been required because budgetary management was not the only thing that went wrong in the context of the bubble in the economy. I also believe that the Maastricht treaty was a flawed process and thought so at the time. However, the euro is clearly a fact of life now and we must stick to the rules, which are very unfair in terms of the burden that the Irish people have been asked to bear.

I wish to draw attention to a number of issues with this legislation. State revenues must be paid into one fund, called the Central Fund, as outlined in the Bills digest. However, that can be misused. If one takes the example of the carbon fund, there is major resistance to a carbon tax because it is seen as just another tax rather than a fund that is used to counterbalance the harm caused by the use of dirty fossil fuels. The money is not ring-fenced and we do not see an output from it.

There is a certain amount of dishonesty surrounding how our budgets continue to be devised. I would have thought that now, more than ever, we need to be honest with people. We need to be honest about how money is raised, how it is spent and what funds are available. The local property tax, for example, is not spent locally. As money is being raised through a property tax, it is being withdrawn from the local government fund. This means that there are no visible new services provided on foot of a new tax.

The way in which we devise our budgets is important, but we get very little time. Budgets are rushed through and often guillotined. Very often, amendments proposed by members of the Opposition are rejected out of hand. I completely accept that the Constitution does not allow us to put a charge on the State but sometimes the power to rule amendments out of order is overused because, on some occasions, what members of the Opposition are proposing will result in a saving rather than a charge to the Exchequer. That issue must be examined in the context of how we devise our budgets in the future.

It must be asked if there really is Cabinet responsibility, especially in the context of something like the Irish Bank Resolution Corporation Bill on the so-called prom night, when it was the Irish Fiscal Advisory Council that was in the loop and not the Cabinet.

Sometimes it is not only a question of the Dáil not being fully informed; in that case, the Cabinet was not even fully informed. People find it offensive when they read in a newspaper about our budgetary process or aspects of our budgets being debated in the German Parliament in advance of our considering them, and that has taken place several times.

There should be a greater honesty about how we do things. Not long ago we were debating the Motor Vehicle (Duties and Licences) Bill, the purpose of which was to raise additional taxation under each category from motorbike up to articulated lorry. Licence fees were being raised. Less was to be raised in that Bill than the amount it allowed to be taken out of the motor taxation fund to put against the national debt. Why did we not simply call it the national debt tax? We are trying to hoodwink people into believing that these are taxes for specific things when in fact they are not for what we have claimed they are for. There will be a price to pay for such dishonesty.

Funding for the Houses of the Oireachtas Commission is included in the Bill. That is non-voted expenditure which comes from the Central Fund, but the commission is not representative. For example, no one from Sinn Féin, the Technical Group or the Independents in the Seanad has any involvement in the Houses of the Oireachtas Commission, a forum at which one may put forward proposals to reduce the amount of expenditure. I have tabled several proposals in the past in this regard. However, because the legislation was laid before the House on the last sitting day of December last, it was rushed through as a matter of course. Such so-called oversight is completely unacceptable.

We have been forced to do this because we signed up to the fiscal compact. We held a referendum and the proposal was accepted. There is no option but to put forward this legislation because the troika is effectively telling us that we must do it. However, we have not heard from the European Union about whether there is a social union, whether housing is an issue that should be provided for within our budgets, or whether our health care or education will be properly provided for. I believe this is one-dimensional in that regard. Further, I believe the Government has been responsible for a great deal of spin, referring to the protection of headline rates and core rates when in fact we know virtually everything outside of these have been cut, as has funding for the issues I have drawn attention to previously. I call for a more honest approach to how we do business, because people are not foolish. They will recognise these things and there will be a price to pay for trying to hoodwink people into thinking they are getting something they have paid for when in fact the money is going elsewhere.

Deputy Tom Fleming

Under the EU-IMF-ECB programme, we are committed to implementing several reform measures in respect of our budgetary management process. These will build on reforms undertaken to date in Ireland, especially since 2006, which have been aimed at increasing the transparency and effectiveness of the budget process. For several years our budgetary framework has been identified as substandard with regard to multi-annual fiscal planning and management. For example, annual expenditure growth averaged approximately 10% between 2001 and 2007, which outpaced the annual rates of economic growth during the same period.

The existing budgetary process focuses attention on the immediate year ahead, whereas expenditure trends and pressures which fall outside the annual frame of reference do not receive the same attention or control. By the time these future years are reached earlier projections will invariably have been superseded. Ireland operates the traditional annual cash-based system of government accounting. The Department of Finance often acknowledges that this approach has strengths in terms of management and control of the cash allocation from year to year. However, many key themes of public financial management during recent decades have not been ideally catered for by these arrangements.

One key budgetary reform has been the pre-budget outlook, which replaced the previous economic review and outlook published mid-year or during the summer by the Department of Finance. The pre-budget outlook is published in October and November and presents a multi-annual review of the economic and budgetary contexts within which the following December's budget is framed. Another key reform has been the introduction of a unified budget whereby all expenditure and tax policy decisions are put together on budget day and expenditure estimates are produced as part of the budget documentation. As a result of these reforms, Ireland is gradually reaching the required levels for a medium-term expenditure framework and for the development of multi-year budgeting and expenditure planning. These features have become an integral part of the financial management systems of many countries, including Sweden, Finland, the United Kingdom and the Netherlands. They have been practising these methods for several years, approximately since the turn of the century.

The Bill proposes that each financial year the Government will, upon a proposal from the Minister for Finance, approve an upper limit on the Government expenditure ceiling for the following three financial years. Section 17(3) provides that the Minister for Finance may propose to Government that this amount be revised for any one of the financial years in question. I welcome this initiative and I am pleased that there is provision for flexibility by the Minister for Finance.

Recently, there has been much emphasis on austerity measures. Let us consider the debate on the promissory notes. At the time, last February, I highlighted the fact that as far back as last October Christine Lagarde and the International Monetary Fund directed the European Central Bank and the European Union to ease off on the extreme austerity measures which were being imposed on the Irish public. It took six months before that was reiterated by a senior member of the troika. That is shameful. It should have been acknowledged if the Irish Government was informed behind the scenes. That much should have been brought forward to Dáil Éireann. I only became aware of it because I saw it in a newspaper article, which I put aside at the time. It is noteworthy that within the past five or six weeks it has been acknowledged and recognised that this statement came from someone in European officialdom.

There is good will from the Government.

There have been utterances from a number of Ministers. The Minister of State at the Department of Finance is here tonight and I would like him to give some clarity on Government policy on what is coming from the top down. Our situation has been compounded by layer after layer of harsh measures and people cannot take any more. From now on we must plan a strategy to get ourselves gradually up off our knees. We must have stimulus programmes and reach out to Europe to get additional support and help; we have made a start on this. We must accelerate our efforts in this area. We may then offer some hope to the public, who have been driven into the ground in many cases with the weather and shortages for farming communities at present. Great efforts are being made by the Minister for Agriculture, Food and the Marine and the Government on that, with co-operation from everyone. People are acting in a neighbourly fashion and helping each other out. The IFA and the farming organisations are on board as well. We hope we will get over this dire situation, because we are well aware that farming is the backbone of the Irish economy.

The ECB must recognise some of the damage done by the EU and all involved in it. I am sure the Government is trying hard and this is a delicate situation involving a whole European and global situation. There is recognition that we need a huge boost so we can lift the economy. There should be small business incentives which would stimulate more job creation, which is paramount to lifting us out of our deflation and reviving the ailing economy. It is crucial over the next three to five years if we are to make any sort of return to normality.

There are a number of issues. Section 17 provides for the Government, following a proposal from the Minister for Finance, to approve an upper limit on Government expenditure, which comprises the aggregate amount of voted expenditure and expenditure of the Social Insurance Fund, SIF, and the national training fund for each of the following three years. The reality is that a review in September 2012 of Ireland's SIF showed a significant shortfall. The fund, which forms the core of the country's system of social insurance, is set to expand to €25.7 billion by 2066, or 5.7% of GDP, according to the most recent official actuarial review. The SIF finances long-term benefits such as pensions as well as short-term payments, including maternity benefit, jobseeker's benefit and carer's allowance. The actuarial review of the SIF set out the position of the fund at the end of December 2010 and gives projections as far as 2066. The fund currently has a significant shortfall of income over expenditure, provisionally at €1.5 billion for 2007, with expenditure of €9 billion but income of just €7.5 billion, according to the review. This poses an alarming situation that we must set about rectifying, and whatever measures that will have to be carried out must be put in place over a number of years. It certainly will not be done in the very short term. The Minister for Social Protection, however, is committed to rectifying this. She has stated the significant shortfall in the fund is being met by the Exchequer, and the prospect of acceleration of this deficit in the future represents a daunting challenge that must be addressed. The one thing we cannot lose sight of is our pensions, maternity benefits and the different funds for jobseekers, carers and those with a disability. We must ensure they get adequate funding.

We must acquire assistance from the European Social Fund and funding globally. I welcome the national training fund, which was also mentioned in the report.

Deputy Mattie McGrath

Tá súil agam go mbeidh an Cathaoirleach ann maidin amárach nuair a bheidh mé ar Leaders' Questions. Deputy Broughan is a great man to keep order and I apologise for whispering to my colleague when Deputy Tom Fleming was speaking. He would be a great man for Leaders' Questions and would keep order on the Government side while I was trying to make my points against the adversity of the onslaught of the shouting and everything else. Sin scéal eile.

I am delighted to speak on the Ministers and Secretaries (Amendment) Bill 2012. At least the Government had the manners and respect to call it what it is - it is the Ministers and Secretaries (Amendment) Bill - unlike some of the Bills it has brought in recently. One was called the land conveyancing and something something else Bill, a total misnomer. It is the Bill to throw people out of their houses, the evictions Bill. It is not the first one the Government has brought in, so at least this is called by its proper title and amends an existing Bill. It is about time there was some accountability there.

Mar a dúirt mé riamh, ar Bille eile, the Government is closing the stable door when the horse is gone. The Chair will give out to me for mentioning names but Mr. Cardiff is in Brussels or somewhere else and many of the Ministers of the day are swanning around on big pensions. The bankers are at large roaming the countryside like predators, as they always were. One of them has possibly been charged but nothing has been heard about a court case. He presented 30,000 documents and when we hear the likes of that we know nothing will ever come out of it. It is simple enough to charge people with fraud - naked, basic fraud. I am a small businessman and I know that if financial returns are misstated by any amount of money, be it €1 or €5 million, and I mislead the accountant who signs off on the basis of the figures I supply him-----

Acting Chairman (Deputy Thomas P. Broughan)

I ask the Deputy to address the Bill before us.

Deputy Mattie McGrath

Táim ag teacht ar ais so fan cúpla nóiméad. I am coming back to it, although I am going the circuitous route.

I am elected to the Dáil like everyone else for the time being and I cannot understand the charade that is going on in this country and how people have plundered it and walk free. If I mislead my accountant it is basic, naked, simple fraud and I can be charged. There is no need to wait for 30,000 documents or anything else. We know that in the case I am talking about it was millions and billions that were moved in and out of accounts before the books were done. Lo and behold, we find the accountancy firms that were helping out have now been appointed under the IBRC Bill to look after the winding up of those two banks.

Reference was made to the multi-annual fund. The first time I heard of it was at a meeting of South Tipperary County Council when we trying to get certain byroads included and we were told they had to be national secondary or national primary roads and that there would be a multi-annual fund that would go on forever, but the road was never done.

We are now bringing this in because the troika wants us to bring it in. Herr Angela is our god now. Previous speakers mentioned that our budget can be discussed in the German Parliament before we even see it here.

It is sad.

There was reckless carry-on. The 1977 election was mentioned. Certainly, I was out canvassing that time, putting up posters promising no motor tax and no rates on land. At the time, rates on land were a heavy burden to pay. They were always paid by my father and his father - God rest them - and most others. Anyway, there was out-bidding by the others and it was about who could bid the highest. More fool I was, but we learned by our mistakes and I admit that.

Certainly, the last election was auction politics. When Fine Gael was running away with it, the former party of the Acting Chairman, Deputy Broughan - like myself, he is in exile - could not offer enough. They were going to burn the bondholders. They were going to have smoke going up into the skies - the planes could not fly with the smoke that would be going up and the chafe and the dust from the bondholders' bonfire. What were they not going to do? They stated "Not another cent," and the exact opposite was done then when they came into government. The people are wary now. I am involved in politics since 1976. Certainly, it has been an education, but it is sad the way the public has been caught, cajoled and led astray by Governments and the permanent government.

On the Bill, while the Bills digest contains nice points, it even mentions, if one would not mind, Bunreacht na hÉireann, the Constitution into which so much effort went and which has stood us well over the time. Of course, now it is used when we feel like using it and abused when we feel like abusing it. Bunreacht na hÉireann, the Constitution of Ireland, states that the executive power of the State is exercised by or on the authority of the Government - Article 28.2. The Government, which is responsible to Dáil Éireann, is collectively responsible for the Departments of State administered by its members. The Taoiseach, the Tánaiste and the Minister for Finance must be members of the Dáil, and I thank God they are. All State revenues must be paid into one fund, called the Central Fund or the Exchequer, as we painfully know it. The Government then draws on this for expenditure in respect of State services. Government expenditure consists of voted expenditure and non-voted expenditure. The larger part of Government expenditure consists of voted expenditure, which is for the ordinary services, called supply services, of Departments. Following the Government's proposals, the Dáil is asked to vote on authorising the moneys in respect of these services each year. Non-voted expenditure is paid out of the Central Fund under specific legislation, without annual reference to the Dáil. Is mór an trua é sin. This consists of expenditure on items such as contributions to the European Union budget; servicing the national debt, that monstrosity that we must service at all costs even though the ordinary humble citizen had little say or part in creating such a monster; and the Houses of the Oireachtas Commission, a wholly extraordinary body which could not be described as being fair or representative when it includes no representative of the Independents, of which there were previously 19 and there are now 22 or 23, a sizeable portion of this Parliament - and, as I heard earlier from Deputy Catherine Murphy, Sinn Féin is excluded as well.

What did I do wrong now?

Acting Chairman (Deputy Thomas P. Broughan)

You are okay.

Deputy Mattie McGrath

Are you sure?

Acting Chairman (Deputy Thomas P. Broughan)

I am chairing.

Deputy Mattie McGrath

Go raibh maith agat. I thought I did something else wrong but I thank God I am spared this time.

The non-voted expenditure also consists of expenditure on share subscriptions to State bodies, judicial salaries and pensions, and with which I have no difficulty at all, salaries and pensions of Uachtarán na hÉireann. We have a good Uachtarán na hÉireann and I respect him. He came up the hard way and he understands life in Ireland. On his recent interjection on tax, in spite of the attempts to corral him back, it is time someone in authority in this country gave representation to the people and the anguish they are going through because of the recklessness of previous Governments, permanent government and this Government.

This Central Fund, unless otherwise stipulated by law, is where all State revenues are deposited and is also the source of all Government spending. The fund is provided for under Article 11 of Bunreacht na hÉireann. The Central Fund, therefore, equals the credited amount in the Exchequer account kept at the Central Bank.

As there is mention of the Central Bank in the Bills Digest, I welcome the Minister of State, Deputy Brian Hayes. I am glad he is here. With all the talk about the Cyprus experience and the Minister of State and his European colleagues discussing over the past number of days the sequence of punishment or whatever repayment when persons get reckless again, and to which this Bill should apply as well, I am reliably informed that there is nothing like what should be in the Central Bank to cover deposits up to €100,000 that are guaranteed. What is there would not go within an ass's roar of it. The Minister of State might be able to clarify the matter for me when he replies. We are told that up to €100,000 is guaranteed and we are delighted. They tried to interfere with it in Cyprus. The Government has the Presidency and Deputy Brian Hayes must take responsibility in that his senior Minister was involved in this up to so high, and the officials, because Ireland holds the Presidency and the Government is in charge. I am informed that there is nothing else-----

As nobody on the Government side is offering, I call Deputy Healy-Rae.

Deputy Michael Healy-Rae

I thank the Technical Group for allowing me some time to speak on the Ministers and Secretaries (Amendment) Bill 2012. When it comes to guillotines, the present Government parties were highly critical of the previous Government. However, the first thing they did when they came to power was to avail of the guillotine at any and every opportunity that suited them. It was one of the big disappointments I have had with the Government because it represented another false promise of reform.

The Bill before us amends section 17 of the Ministers and Secretaries (Amendment) Act 2011. The main changes provide for medium-term expenditure management by making provision for multi-annual Government expenditure and multi-annual ministerial expenditure ceilings. Planning ahead is, of course, very important. The reason we are in the state we are in is probably that there was not enough prudence and planning. However, I believe this is definitely a case of closing the stable door after the horse has bolted.

A number of broad themes can be identified in the process of reforms taking place in Ireland and internationally - the evolution of a stronger medium-term framework, including expenditure management, and a stronger focus on performance. With such proposed reforms, Ireland is moving towards good international practice in a number of areas, which is, of course, to be welcomed. Under the EU-IMF programme of support, Ireland is committed to implementing a number of reform measures in its budgetary management process. The Bill will build on reforms undertaken to date, particularly since 2006, aimed at increasing the transparency and effectiveness of the budgetary process.

Despite all that, since taking office the Government has continued down the road of breaking every commitment and every promise it made.

Deputy Catherine Murphy spoke about incoming governments buying elections. To borrow a phrase used by a Minister this morning - I will use it in its proper context - one silly thing the Government parties did was to buy the election, because they did not have to do so as it was being given to them in a bag and was there for the taking. They made false promises to students and signed pledges in front of them swearing what they would do. They made commitments with regard to abortion, and to old, disabled and vulnerable people. They have continuously broken every commitment and promise they made. When they were canvassing in the last election, did their members tell elderly people they would put a carbon tax on their bags of coal and their bales of briquettes? They stop people from cutting turf but want to place a carbon tax on those who do cut it. We have the hypocrisy and irony of the Government breaking every commitment and promise made to vulnerable, disabled and old people, to students and young people struggling to pay mortgages, to the living and to those who have not been born yet, and it is absolutely frightening. Firm commitments were made with regard to upward-only rent reviews but the Government broke these promises and hid behind advice it received. When we asked in the House for this advice to be published it refused to give it to us. We would have had much more respect for the Government if it had finished the story and explained why it was reneging on a promise.

I take grave exception to the way Deputy Mattie McGrath was treated this morning. As was his right during Leaders' Questions, he was asking questions but he was continuously badgered and told he was being silly. He was accused of being silly because he was highlighting the plight being suffered and endured by the farmers of Ireland at present. These are people affected by budgetary matters and false promises. Two or three months ago we were highlighting on a weekly basis the fact that there would be a fodder crisis. This fodder crisis will most certainly not end in the coming weeks; it will continue throughout the summer and into next winter, and the Government will have to engage in a continuous programme of importing fodder because next winter there will not be enough to feed the animals. The Acting Chairman may fear I am straying from the point, but I am not. This Bill plans for the future through budgeting for the future and these budgets are for all sectors of society. The issue of the farmers was described as being silly this morning, and when the issue of the contractors - who were here today, and we are very glad they were - was raised it was also described as silly. It was a low day to see a senior respected member of the Cabinet using such words on a continuous basis. It would not happen on a sheep dipping committee that a member would shout at another that he was being silly. We will see who is silly in the future.

Of course a debt write-off was required. We took our eye off the ball and gave too much for too little. That is why we are in the mess we are in and why young couples, the people I think of from when I start in the morning to last thing at night because, like other Deputies, I deal with them, are saddled with insurmountable debts and live in houses that cost €300,000 or €400,000 but that, if they were sold tomorrow, would not make €100,000. For the next 30 or 40 years these people will pay massive mortgages and will never have the luxury of having disposable income. The Acting Chairman, Deputy Tommy Broughan, is a politician with an extremely thoughtful conscience and I see him in his office until 10 p.m. or 11 p.m. working in a very diligent manner. Like many of us, he has these people firmly in his heart. They will never have the comfort of having a spare €500 to treat themselves or their children. They will never have this luxury because they will have a continuous battle with the budget.

Deputy Mattie McGrath mentioned the smoke that was to fly up into the sky when the bondholders were burned. What happened to this? It was another false promise, like all the others by the Government, which has now been in office for more than two years. The Government has failed miserably because it has broken the commitments it made and continuously removes itself from reality.

The centralising of services was supposed to save us money, but decentralising the medical card system removed the community welfare officers from the process. They had an intimate knowledge of the people in their areas and could work in conjunction with local representatives to deal swiftly with those in urgent need of medical cards. Drivers' licenses were also centralised and taken from local authorities, which had given excellent service. What will this eventually do to local authorities? It will cost jobs. Those in employment are not being let go, but when they retire, get sick or die they will not be replaced. These jobs will be gone from locations throughout the country.

Acting Chairman (Deputy Thomas P. Broughan)

Ten minutes remain in the slot and Deputy Boyd Barrett is also offering. Does Deputy Healy-Rae wished to cede any time in the slot to him?

Deputy Richard Boyd Barrett

The debate will roll over, as it is not scheduled to finish this evening.

Deputy Michael Healy-Rae

If it is helpful to Deputy Boyd Barrett of course he can speak now.

Deputy Richard Boyd Barrett

I thank the Acting Chairman; I appreciate it, and I am ready to speak when Deputy Healy-Rae concludes.

Deputy Michael Healy-Rae

With regard to student grants, I received a text yesterday, in the middle of May, from the mother of a student whom I had been helping. She thanked me and let me know the grant had just come through. In the middle of May a student received a grant. This is because the system was centralised.

We have a crazy situation whereby the Government and the HSE are closing down our ambulance control bases and centralising them to Townsend Street in Dublin and Ballyshannon. Our bases in Cork and Kerry are being centralised to Dublin, where people do not know the terrain or the areas. They will not have the knowledge that has been built up over the years by the people working in the ambulance base in Tralee. It is being taken from our county tomorrow and landed up in Dublin. No disrespect to the people in Dublin, but they will not have the knowledge of the areas that those working in the service locally had.

This Government is one of failure. It lacks common sense and is devoid of reality. I would much prefer to be able to stand up to praise the Government and compliment it. I give credit where credit is due, but I will point out honest deficiencies and mistakes and what is being done wrong. People are being crippled with property taxes while our roads are falling into a state of disrepair because the Department will not provide enough in maintenance grants. People are being asked to pay for better services but they receive fewer services.

I will give way to Deputy Boyd Barrett to ensure he will have time. I thank the Acting Chairman for pointing this out.

Acting Chairman (Deputy Thomas P. Broughan)

Seven and a half minutes remain in this slot.

Deputy Richard Boyd Barrett

Will the debate roll over if I am not finished?

Acting Chairman (Deputy Thomas P. Broughan)

Yes.

Deputy Richard Boyd Barrett

I have a big problem with the rationale behind this Bill. The legislation is part of a suite of measures that arises from our commitments under the troika programme and under the fiscal treaty, both of which I oppose. On the face of it, the Government's arguments might seem reasonable - that we require budget discipline, need to balance the books and have medium-term planning. In addition, the Government says we need monitoring of budgets to ensure that things do not become unbalanced and go out of control. Those all seem like reasonable aspirations but context is everything when it comes to the economy. This suite of measures, which arises from the fiscal treaty and the troika programme, is not taking place in normal economic conditions. It is taking place in the context of the most severe economic crisis Europe has faced since the 1930s. It is unprecedented in modern Irish history.

The Bill before us is one part of that suite of measures which comprises a new architecture of monitoring, surveillance and co-ordination. All those measures are unfolding against a background where our economy - as with other economies across Europe - has been loaded with enormous debts that are not ours. If we continue to have to pay off these debts and meet strict targets for doing so, it will consign this economy to a long-term economic depression. It will ensure that the severe suffering that ordinary workers, or vulnerable unemployed people, are enduring will continue. These measures will make it much more difficult, if not completely preclude governments from taking the sort of measures necessary to get us back on the path to growth, economic recovery and a resolution of the most pressing crisis this country and Europe are facing, which is unemployment.

The rationale behind these measures is based on a false premise, which I heard articulated by some of the earlier speakers. They said the reason we are in the current mess is because public spending got out of control. Anybody who fairly and objectively examines the circumstances that led up to the economic crash, however, will conclude that we are not in the current mess because public expenditure got out of control. Quite the opposite - it was because the markets got out of control.

In addition, there was a systematic drive over a period dating back to the late, unlamented Margaret Thatcher's ascension to power in Britain, wherein a consensus developed that we had to row back the State and public enterprise in favour of letting loose market forces. The consequences of that were devastating. Most obviously in this country it was the insanity of the property bubble, together with completely unregulated financial and housing sectors. Something as basic as housing was left in the hands of greedy, profit-driven developers whose main interest had nothing to do with a rational housing policy or providing people with affordable accommodation.

Some people claimed it was just about trying to cash in on a market and things got out of control, and it had nothing to do with public spending. However, if we had more public spending on social housing during that period we would not have had the bubble, or at least not to the extent that it occurred, and neither would we have had the devastating crash that followed. We needed to have more public spending on the provision of housing, which is a key area.

I would argue that we are likely to see more property bubbles and crashes without further public spending on social housing. It still seems that despite everything that happened, the Government's policy is to let the market and the banks sort out the housing crisis. Those are the same people who created the bubble in the first place. This is obviously long-standing Fine Gael ideology but I find it extraordinary that the Labour Party has bought into this. The Minister has managed to twist the argument from being about how to deal with the current economic crisis to one about policing and monitoring public expenditure. I do not believe for one moment that was the cause of the crisis or that it is the solution.

That argument involves forgetting about the people in the European Commission and others who will be monitoring and co-ordinating our economy. Do these people seriously deserve our respect and trust when it comes to managing budgets and having a strategy to serve the best interests of the economy and, more importantly, the citizens? I do not think they have earned that trust; quite the contrary. The European Central Bank, the European Commission and the rest are up to their necks in responsibility and culpability for what happened. They allowed the dogs - that is, the financiers and corporate interests - off the leash to indulge in riotous market forces that caused the crisis in the first place. I find the idea of embracing a plan for budgetary discipline, which is monitored by these kinds of people, to be deeply worrying.

Debate adjourned.

Dáil Éireann debate - Wednesday, 15 May 2013

Ministers and Secretaries (Amendment) Bill 2012: Second Stage

Dáil Éireann debate -
Wednesday, 15 May 2013