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Dáil Éireann debate -
Thursday, 1 Oct 2015

Vol. 891 No. 2

Priority Questions

Budget Targets

Seán Fleming


1. Deputy Sean Fleming asked the Minister for Public Expenditure and Reform the way in which European Union and national expenditure rules will impact on budget 2016, and the public finances generally; if he expects any amendment to how these rules will be applied in practice; if he will confirm that Ireland will stay within budgetary provisions in 2015 and in 2016; and if he will make a statement on the matter. [33645/15]

I wish to ask the Minister for Public Expenditure and Reform the way in which European Union and national expenditure rules will impact on budget 2016 and the public finances generally, if he expects any amendment to how these rules will be applied in practice and if he will confirm that Ireland will stay within budgetary provisions in 2015 and 2016.

Wide-ranging reforms to the budgetary architecture have been implemented by this Government with a view to supporting the efficient use of public funds to deliver effective services for our people. The medium-term expenditure framework and periodic comprehensive reviews of expenditure have provided the opportunity to move discussions about expenditure decisions away from consideration of short-term issues to a broader strategic debate about key challenges facing public expenditure and public services.

The reforms introduced at national level operate within the broader context of the EU level reforms to the Stability and Growth Pact, SGP. For 2015, with Ireland in the corrective arm of the SGP, the key budgetary fiscal target is to bring the general Government deficit below 3% of GDP as required under the excessive deficit procedure. As outlined in the spring economic statement, Ireland is on track to exit the corrective arm at the end of 2015 with a general Government deficit of 2.3%. This is well below the 2.9% that we set as our target. Thereafter, Ireland will become subject to the preventive arm of the SGP with budget 2016 being framed within that context. The new fiscal rules under the preventive arm will serve as a tool to help us responsibly manage our recovery. With future increases in public expenditure linked to potential economic growth, all areas of current and capital expenditure need to be managed to ensure that public expenditure is sustainable and delivers the maximum benefit.

Ireland's entry into the preventive arm of the SGP in 2016 afforded the opportunity for the spring economic statement to set out the parameters of next year's budget. Fiscal space of the order of €1.2 billion to €1.5 billion is available for budget 2016, with this amount split evenly between expenditure and tax measures. In this context, the material published at budget time will reflect an estimated expenditure outturn for this year, taking account of any additional expenditure planned for the year.

I thank the Minister for his reply.

I just want to ask one or two specific questions. We understand what the Minister is saying about the move from the corrective arm to the preventive arm. With regard to the target, we are expected to be at 2.3% this year. The Minister did not tell us what level of reduction will be required for 2016. I think we have to make a reduction of the order of 0.6%. The Minister mentioned that the increase in public expenditure will be linked to the potential growth in the economy. I do not think that is the full picture. I suggest it would be more accurate to say that expenditure will be linked to the average potential growth in the economy over a ten-year horizon. This ten-year horizon was mentioned in replies to previous parliamentary questions, but the Minister studiously avoided any reference to it in the reply to this question. Was that an oversight or has there been a change in policy? Is the Minister trying to unlink himself from the previous ten-year horizon? I think people would be concerned if there was a move away from it. The Minister might tell us whether the costs of the Lansdowne Road agreement will be included in those figures.

I think I need to explain this because the new rules are quite complex. The two measures that will underpin whether we meet the rules - the judgment criteria - next year are the expenditure benchmark and the annual structured adjustment. Under the expenditure benchmark, public expenditure can only grow at rates determined by the potential growth of the economy, less a convergence margin if the member state is not at its medium-term objective. We have set our medium-term objective of a structurally balanced budget and we expect to reach it by about 2018. In the interim, we have to make progress towards that at a rate greater than 0.5% of GDP. The ten-year horizon referred to by the Deputy has been renegotiated. It is now a three-year horizon, which suits Ireland better. Obviously, we did not want to be trapped within a horizon that covered the depression years. A horizon of growth potential for the economy that looks at what happened last year and this year will be much more favourable to us in terms of giving us fiscal space.

The Minister might tell the House when the ten-year rule was changed to become a three-year rule. This change has fundamental implications for the forthcoming budget because a ten-year horizon would cover many years in which negative growth figures were recorded.

That is the point.

We have had significant and strong growth from a relatively low base in the past couple of years. This percentage increase based on a three-year horizon is phenomenal. One would hope that the Government does not intend to use that short-term figure excessively to increase expenditure at an enormous rate and thereby add fuel to an economy that is growing. The Minister might tell us when this change was completed. Can he give some indication of the percentage increase in expenditure that the Government will facilitate in the budget that is to be announced in this House less than two weeks from now?

We sought a three-year horizon in our negotiations because an annualised horizon would not have been very helpful to us. A three-year horizon was negotiated by my colleague, the Minister for Finance, at ECOFIN and agreed there. I will have to check the exact date for the Deputy. We set out the space we will have for next year in the spring economic statement and we are sticking to that. The space will be of the order of €1.5 billion, which is at the upper end of what we set out in April. The adjustment will be divided equally between expenditure and taxation. Expenditure over the outturn figure for 2015 will be of the order of €750 million.

Capital Expenditure Programme

Michael Colreavy


2. Deputy Michael Colreavy asked the Minister for Public Expenditure and Reform when the capital review will be published, given that it was announced in the spring statement that it would be published in June 2015; and if he will make a statement on the matter. [33643/15]

I am deputising for Deputy McDonald, who is attending today's meeting of the Committee of Public Accounts. I will try to fill her shoes. Our first priority question, which asks when the capital plan will be published, has been overtaken somewhat by events. It is not surprising that Deputy McDonald tabled this question because it had been expected that the plan would be published in June, but the Government kept moving the date back. The Deputy hoped that by tabling this question, the publication of the plan might be accelerated. I would like to ask the Minister a couple of questions about the plan. We welcome some parts of it, especially some of the projects mentioned in it. I would like to be parochial and mention the Cloonamahon Road, which is a death trap. It is great that this project is included in the plan because the work on that road will save lives. To what extent are the commitments or promises made in this plan predicated on economic well-being and EU instructions?

I suppose the Deputy could claim that the question tabled by his colleague was the catalyst for making sure all of this was done. If he makes such a claim, I will not deny it publicly. As he is aware, I launched the public capital investment programme, Building on Recovery, earlier this week. It sets out the Government's commitment to a €27 billion six-year capital plan. This investment will increase the State's infrastructure, support economic recovery and jobs and support sustainable communities throughout the country. When we include investment from the wider semi-State sector and from public private partnerships, as outlined in the plan, it is clear that total State-led investment will amount to €42 billion over the period covered by the plan. The capital investment plan has been carefully designed to meet the needs of a growing economy, to improve the delivery of services to communities and to maximise the benefit of support by providing Exchequer investment throughout the country.  It builds on the recovery and addresses emerging pressures, especially on transport networks. It supports the regions, provides social infrastructure to enhance quality of life and is responsive to environmental challenges.

  The provision of jobs has been the Government's top priority from day one. This €27 billion plan will sustain 45,000 jobs. I will give a rough outline of the distribution of the money. Some €4 billion will be spent in education, €4 billion will be spent in the area of the environment, €3 billion will be spent in health, €3 billion will be spent in promoting enterprise and jobs, €1.25 billion will be spent in agriculture and €1 billion will be spent in justice. In order to grow businesses, we are also allocating a special envelope to support transport, amounting to €10 billion over seven years to fund public transport and roads. My colleague, the Minister for Transport, Tourism and Sport, Deputy Donohoe, has outlined the flagship project, which is the new metro scheme for Dublin.  However, I emphasise that this is a national scheme. I know the Deputy will be particularly interested in rural broadband, the rural development programme, the new village renewal programme and all the other supports that are laid out. I will be very happy to go through them in detail if he wishes.

I would certainly welcome many of the projects that are listed in the plan. I have worked out that over the six-year period covered by this plan, Ireland will continue to have one of the lowest levels of capital spending of any country in Europe. This overall figure includes public private partnerships. I would argue that such partnerships are a very inefficient way of doing business because it costs more to borrow the money and investors and shareholders have to be paid out of it. I think it is far better to provide for public investment in public services because a return can be got from it. The Minister has not answered my question about the extent to which this is predicated on the economy doing well. Could this Government or any future Government decide not to proceed with certain projects in this plan if the economy is not doing as well as expected? Is it anticipated or possible that the EU could direct us to have less ambitious capital plans - if one wants to use the word "ambitious" in this context - that differ from those announced in the report?

The total sum involved in the plan is €42 billion, of which €27 billion will be directly allocated by the State from Exchequer funding. Semi-States such as the ESB will spend money on energy development. Ervia and Irish Water will spend €4 billion. Just €500 million of the €42 billion in question will involve additional public private partnerships. I am mindful of what the Deputy has said about such partnerships. I agree that we must get value for money and I have set up a new regime to ensure that we do get it. We are vigorous in ensuring that is the case. When we had no money at all following the collapse of the economy, we were seeking any resources we could get. For example, we sought funding from the European Investment Bank. Public private partnerships were an option at that time, but they will be less of an option into the future. It is clear in the plan that I have set an annual cap of 10% on the total capital expenditure to be used to pay back all public private partnerships. I refer to the unitary payments we have agreed, including the site preparation payments, etc. There is a cap on what we will use for these purposes. I will answer the Deputy's final question when I come back in.

I still have not received an answer to my question about what the Government's plan is predicated on. A friend of mine from Sligo rang me the night the plan was published.

He stated it was an awful pity that an election is not held every year because the economy seems to improve in the run-in to elections. In any case, it may be that he was being slightly cynical.

The Fianna Fáil Party may not agree.

May I assume, given the link made between the proposed capital projects and the creation of 45,000 jobs, that contracts valued at more than €1 million will include a social clause, meaning the Government will seek to have people who are unemployed taken off the live register to work on them? From where does the figure of 45,000 jobs come? Will these jobs be in Ireland for Irish people paying Irish taxes and will the companies involved pay taxes here?

Since all the projects will be in Ireland, the workers must be physically in this country to do the work. On the figure of 45,000 jobs, there is a rule of thumb for determining the number of jobs to be created per €1 million investment. The 45,000 figure refers only to the direct investment of €27 billion by the State rather than total investment which will be a much larger figure.

The Deputy asked whether the plan could be threatened in future. If a different Government were in place and it did not have the level of stability and focus on jobs that this Government had in recent years, if it failed to deliver the growth rates we have delivered or if that growth were threatened, we could be faced with what we had to deal with in 2011 when the capital plan was eviscerated because the income of the State and its capacity to fund the plan collapsed. I hope that will not happen.

Government Expenditure

Seán Fleming


3. Deputy Sean Fleming asked the Minister for Public Expenditure and Reform if he will provide a projection of the Supplementary Estimates in respect of overall Government expenditure that will be required in 2015, notwithstanding that the final confirmation of supplementary expenditure is not yet available; if these details will be provided in advance of budget 2016; the way in which the supplementary estimates will affect the baseline of expenditure for 2016; and if he will make a statement on the matter. [33646/15]

I ask the Minister to provide a projection of the Supplementary Estimates in respect of the overall Government expenditure that will be required this year. While I accept that the full details are not available at this stage, I ask him to provide an estimate given that indicative figures are already available in some Departments. If he does not have figures available today, will he have figures in advance of the 2016 Budget Statement in two weeks' time indicating the effect the Supplementary Estimates will have on expenditure requirements in 2016? Will he provide an assurance that he will give an indicative figure for the Supplementary Estimates before budget day?

Under the reformed budgetary timetable, the Estimates for expenditure by Departments are outlined every October in the budget and set out in detail in the Revised Estimates Volume published before the end of the year. Under the new budgetary cycle, the Estimates are voted on by the Dáil in the first few months of the year and Departments are expected to live within the voted expenditure. On occasion, however, as the Deputy will be aware, the Estimate for a Department needs to be increased or changed during the course of the year. This occurs for a number of reasons, including policy reasons, for example, when the Government decides it is appropriate to allocate additional funding to certain areas. A second reason could be an overrun in expenditure, which occurs occasionally, for example, in a demand-led area where Estimates are not always exactly accurate. Timing events may also occur, which change the timing of certain receipts or payments, particularly payments from the European Union or appropriations-in-aid that may come later or earlier than expected. Such changes in timing may also alter the voted moneys. Technical adjustments also occur when Departments move money within their Estimates for technical reasons. Such changes must be voted on by the Dáil. As the Deputy will be aware, sometimes the House votes to shift rather than increase money provided for in an Estimate. These are the reasons Supplementary Estimates are introduced.

As outlined in the spring economic statement, Ireland is on course to exit the excessive deficit procedure this year. In this context, the Government is prepared to allocate an appropriate level of additional expenditure in 2015 to enhance delivery of key public services. More details of the 2015 outturn position will be issued at budget time, as requested by the Deputy. Under the Government's fiscal strategy and compliant with the fiscal rules, the budget on 13 October will set out the 2016 level of expenditure, which will be €750 million above the outturn figure.

To summarise the Minister's response, the House will be given a close estimate of the final outturn of expenditure on budget day. This will include possible Supplementary Estimates, although the figure will not be precise.

That is correct.

If the budget for 2016 is based on the outturn for 2015, the Minister must have a reasonable indication of the 2015 outturn figure. It is possible that no Supplementary Estimates will be introduced. Does this mean the budget will be based on figures in respect of the outturn of expenditure in 2015? If so, will this figure be held back from the Dáil or will this information be shared with members of the public whose money the Government is spending?

The Minister referred to the possibility of €750 million being made available for additional expenditure in the coming year and indicated he wants to live within that figure. However, given that the Supplementary Estimates for 2014 amounted to €1.2 billion, the public is entitled to conclude that the additional expenditure provided for on budget day is only small change when compared to the additional expenditure that will be announced by the end of the year. The Government is diminishing the role of the budget by introducing Supplementary Estimates that are larger than the expenditure increases provided for in the budget.

The Deputy asked two questions and I will answer them separately. I will provide the figure we have already allocated to indicate the shape of the additional expenditure I have sanctioned to date. As he will be aware, an additional provision has been made for health in respect of delayed discharges, the fair deal scheme and the winter and waiting lists initiatives. These were set out in the spring economic statement and amounted in total to an additional allocation of €100 million. I also allocated an additional €50 million, also set out in the spring economic statement, to cover a summer capital works programme in the Department of Education and Skills. Supplementary Estimates will be required for that allocation and for the Department of Transport, Tourism and Sport, to which I allocated an additional €100 million before the summer to deliver additional rolling stock for Irish Rail, replace and expand the bus fleet and carry out maintenance work on non-national roads. A number of technical adjustments will also be required. The additional allocation in these three areas alone will amount to €250 million.

The reason we are providing for additional expenditure is that we have the capacity to do so. If the economy was not growing at such a rate and income to the State was not robust, we would not be able to allocate these additional sums. I do not believe the Deputy would decry the additional expenditure I have allocated. Certainly his party would not do so given the Private Members' motions and so forth it has introduced. We have increased spending because we are able to do so.

If the expenditure is for good purposes, this side of the House will not argue against it. However, as my party's spokesperson on public expenditure, my objective today is to discuss the budgetary process with the Minister. He confirmed that a minimum of €250 million in Supplementary Estimates will be required for the three items of expenditure to which he referred. Further Supplementary Estimates will be required because the Department of Health has exceeded its expenditure allocation. The Minister also stated that he will spend additional money if economic circumstances allow because he will have it. In the budget, the Government will provide an expenditure plan on paper in the full knowledge that if it has more money next year, it will spend it. A full assessment of the forthcoming budget would, therefore, require finding out how much additional revenue the Government expects to receive next year. I presume Supplementary Estimates will be introduced this year and next year. If the Government has more revenue next year, it will spend it and it does not propose to announce this expenditure on budget day.

No, that is not the case. The Deputy is fully aware of the new rules under the Stability and Growth Pact. We are exiting the corrective arm of the pact. Our legal objective this year was to have a deficit below 3% of gross domestic product. As long as we maintain a deficit below 3% of GDP under the corrective arm, we could adjust expenditure within that context. However, that will change next year when we enter the preventative arm, where we will have to work in legally agreed steps towards are achieving our medium-term objective, MTR. As such, there will not be scope for Supplementary Estimates next year. We have the capacity to address issues in the course of this year. In many ways, the budgetary analysis will have to be robust to ensure everybody lives within their budgetary allocation for next year.

Public Sector Staff Recruitment

Michael Colreavy


4. Deputy Michael Colreavy asked the Minister for Public Expenditure and Reform his views on the recruitment process and competitions conducted by the Public Appointments Service; and if he will make a statement on the matter. [33644/15]

This question relates to the Public Appointments Service. Specifically, I propose to ask questions about a recent recruitment competition for assistant principal officers in the Department.

My understanding is that a competition was held for the assistant principal officer grade and there was a change in the recruitment process. While change is not necessarily a bad thing, part of the process involved candidates sitting an online test. I imagine this was part of an assessment prior to short-listing those candidates.

The remit of the Public Appointments Service, PAS, includes conducting a wide range of campaigns for key roles across the Civil Service and broader public service. Its recruitment mandate encompasses a large volume of entry level competitions, including clerical officer and Garda Síochána trainee recruitment as well as administrative, professional and specialist posts at all levels, including hospital consultant and senior management positions across the Civil Service, public service, regulatory bodies and some State agencies. PAS, therefore, plays a pivotal role in ensuring that the human resource and workforce needs of the public service are met by qualified, high calibre and committed candidates. PAS operates within a strict legal and regulatory framework to safeguard the core principles of Civil Service employment which have played such an important role since the foundation of the State.

The easing of the moratorium on recruitment to the public service in late 2014 has resulted in a significant increase in activity for PAS, particularly in the large volume competitions. To the end of August this year, PAS has completed 313 recruitment campaigns, handled over 45,000 applications and assigned over 3,640 people to positions in the public service. In terms of the scale of individual competitions that PAS have successfully run, it is worth acknowledging that the Garda Síochána campaign in December 2013 attracted nearly 25,000 applications while 28,000 people applied to the clerical officer competition in 2014. In order to effectively manage the significantly increased workload of recent years, PAS has implemented significant changes and process improvements in its methods of operation while continuing to adhere to its strong values of independence, fairness, transparency and the making of appointments on merit. In operational terms, all applications for positions in the public service are handled online via the bespoke website The initial testing stages of recruitment processes are also completed online allowing candidates the benefit of competing for positions from wherever they are in the world. Many interview processes are now conducted in a paperless fashion.

Finally, I ask the Deputy to note that PAS also took on responsibility for the new State boards assessment process following the reforms introduced by Government in 2014.

I understand two British companies were recruited - Saville Consulting for the verbal and numerical analysis tests and CEB for the situational judgment questionnaire. Are there not Irish companies which could have done this? My second question relates to the fact that it is a little bit like "phone a friend". I could be sitting in a room anywhere with my laptop and have a friend do the test for me. I would not even have to phone that friend. The third issue is that when some of those who did the electronic questionnaire sought a response as to where they performed well and where they did not perform quite so well, no information was forthcoming. Anybody who is anxious to get a job and goes through this process will be keen to know where he or she can improve whether it is an interview or electronic assessment. People have good grounds for complaints as to the lack of feedback regarding their participation in the process.

PAS is one of the success stories of Irish public administration. It is very well regarded not only by the Irish public but by international comparisons. It has robust online procedures which meet the best international practices. If the Deputy has any individual concerns about them, I would be happy to hear from him. PAS itself would also be delighted, I am sure, to meet with the Deputy to go through its processes. In terms of the volume of work, where one has 28,000 applications for a clerical officer position or 25,000 for a Garda Síochána recruitment campaign, one must have an initial sifting procedure in place. As is now normal, that is done online. The Deputy is correct that it must be done in a very robust way and I am assured and am confident that it is.

Can the Minister refer to the lack of feedback from the company? It is unfair on a person who does an interview or fills in a questionnaire that there is no response or indication as to which areas they have done well in and which areas they have not. An interview should be a two-way conversation. It is one thing asking people who are desperate for work to give information but it is unfair that there is no feedback. As caring potential employers, we have a responsibility to let people know where they have performed well and where they have not. Will the Minister take that on board?

I will. I will also ask the chief executive of PAS to contact the Deputy directly to go through that, see what concerns he has and how they may be addressed.