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Dáil Éireann debate -
Thursday, 13 Apr 2017

Vol. 947 No. 2

Priority Questions

Sale of State Assets

Dara Calleary


1. Deputy Dara Calleary asked the Minister for Public Expenditure and Reform the details of the discussions and correspondence between EUROSTAT and his Department in relation to the use of proceeds from the sale of Bord Gáis; and if he will make a statement on the matter. [19013/17]

This is a follow-up question to a parliamentary question I put to the Minister, Deputy Simon Coveney. The Government had the ability to spend €400 million from the sale of Bord Gáis on housing and it was not able to spend it. I want to know why.

In the context of planning for the use of the proceeds arising from the State assets disposal programme, which included the sale of Bord Gáis Energy, my Department consulted with the Central Statistics Office, via the Department of Finance, in regard to the statistical treatment of the proceeds and their impact on the general Government balance. My Department did not have direct discussions or correspondence with EUROSTAT on the issue as it was a matter for the Department of Finance.

The position in this regard is that, under EUROSTAT rules, the amount of any dividends received from a State company, including proceeds from asset disposals, which can improve the general Government balance is limited by reference to the entrepreneurial income of the relevant company in the previous year. In order to comply with the fiscal rules of the Stability and Growth Pact, the scope for the Government to use such dividends for additional expenditure on a general Government balance-neutral basis is limited to the amount by which the dividends paid actually improve the general Government balance. This has meant that in order to take maximum advantage of the asset disposal proceeds, they cannot all be availed of at once but must be remitted to the Exchequer over a number of years.

It is for this reason that Ervia has, to date, remitted €350 million to the State by way of special dividend since the sale of Bord Gáis Energy was completed, that is, €150 million in 2014, €100 million in 2015 and €100 million in 2016. A further special dividend of €100 million is expected in this year. It is proposed that the remainder of the proceeds will be paid to the Government on a phased basis, as required by Government, and in a manner that is consistent with protecting Ervia's investment grade credit rating while also maximising the general Government balance impact of the payments.

What I am trying to get a sense of is where this money is being spent. In budget 2015 the then Government announced that €400 million of the proceeds of the sale of Bord Gáis Energy was to be made available to establish an off-balance sheet financial vehicle to provide financing to approved housing bodies. In the words of the Minister, Deputy Coveney, "However, despite a high level of engagement with a wide range of potential providers and financiers of social housing, no new model of provision and-or financing of social housing on an off-balance sheet basis could be identified." That included consultation with the Department of Public Expenditure and Reform, as per the Minister, Deputy Coveney's answer.

The Government had €400 million on the table and despite all the best brains of the Department of Public Expenditure and Reform, the Department of Finance and the Department of Housing, Planning, Community and Local Government, and despite all the spin about the Government commitment to housing, the Government could not spend it, although there are people on our streets and children in emergency accommodation. What is this money being spent on? The Minister referred to all the money the Government is getting back from Ervia. What precisely is it being spent on and can people see where the disposal of State assets is going?

The broad answer to that question is that, over the last number of years, €1.5 billion has been received by the State that is the proceeds of State assets and the disposal of State assets. It has been used at different points. For example, in June 2013, €150 million was made available for investment in schools and roads projects. An amount of those disposal gains has been ring-fenced for the national children's hospital. A further €200 million was allocated in May 2014 for investment in a range of capital projects across the country.

In regard to what has happened to the €400 million that has accrued from the sale of Bord Gáis Energy, that funding is available to Government but we have to use it in a way that is consistent with EUROSTAT rules, which we are working to do. More broadly, what we have been able to do is allocate over €5 billion to public housing in a conventional manner from the Exchequer to respond to the exact need the Deputy has identified.

I have just left a budgetary oversight committee meeting with the Minister, Deputy Noonan, who was describing the French housing model that is being used to get over the EUROSTAT rules, yet we have thrown back €400 million. What is actually being spent on housing of the money from Bord Gáis Energy is €10 million per annum. To spend €10 million is very different from spending €400 million and it exposes the spin of this Government in regard to housing. The money was there - the cash was on the table - yet the Government could not work out how to spend it. At the same time, Ministers can go around quoting examples from other EU countries which are spending money on housing in a way that is consistent with the EUROSTAT rules.

What is going to happen in regard to AIB? If AIB is sold, what will happen following the disposal of that asset and where will that money go? What is the Department of Public Expenditure and Reform doing to ensure this Bord Gáis Energy money actually gets spent on housing?

I will deal first with the Deputy's description of spin in regard to the investment in public housing. There is no spin about the fact €5 billion has been made available for public housing investment.

The Government cannot spend it.

The €5 billion is being invested and I have proof of this. I look at the progress being made in Dominick Street where a public housing project, long heralded and much needed, is now going ahead. I look at O'Devaney Gardens, a project that, when it collapsed over ten years ago, was emblematic of the beginning of the collapse of our economy. Later this year we will see the sod turned for the first phase of that project.

With regard to Deputy Calleary's concluding point on the prospects for AIB, as he will be aware, and I have answered questions on this in the House before and am happy to do so again, under the EU rules that gain will be a redefinition of an asset on the balance sheet, so it will go from being a share that the Exchequer holds to being a value that we receive via a payment which we are required to use to reduce the value of our debt.

Freedom of Information

David Cullinane


2. Deputy David Cullinane asked the Minister for Public Expenditure and Reform the guidelines issued by his Department relating to decisions regarding commercial sensitivity; the methods his Department uses to balance the public need to know with the need for commercial sensitivity; and if he will make a statement on the matter. [19030/17]

I want to inform the Ceann Comhairle that I must attend the Committee of Public Accounts and it is for that reason that I will have to leave shortly. The question asks the Minister to inform the House of the guidelines which are issued by his Department relating to decisions regarding commercial sensitivity and the methods his Department uses to balance the public need to know with the need for commercial sensitivity.

Section 36 of the Freedom of Information Act 2014 sets out an exemption provision under which an FOI request can be refused where the requested information includes commercially sensitive information of a third party. This provision requires that decision makers should consider, before reaching a final determination, whether "the public interest would, on balance, be better served by granting than by refusing to grant the FOI request". The Deputy may also wish to have regard to section 35 of the 2014 Act, which provides for an exemption from release where information has been provided in confidence to an FOI body by a third party. This exemption is often of relevance where commercial arrangements exist between public bodies and third parties and is again subject to a public interest test. These exemption provisions were designed to protect the legitimate interests of third parties, in particular commercial interests, without placing a disproportionate restriction on the right of access to information.

The FOI central policy unit in my Department provides advice and guidance for FOI bodies and the general public on the appropriate procedures for processing requests. The unit has published a number of guidance notes and manuals. Of particular relevance are FOI central policy unit notice No. 4 relating to information obtained in confidence by an FOI body, notice No. 5 relating to FOI and public procurement, notice No. 8 relating to third party consultation and manual Part 2, chapter 10, on commercially sensitive information. All of these notes and parts of manuals are available on my Department's website. Ultimately, it is the role of the Information Commissioner and the courts to reach authoritative determinations on the interpretation of the Freedom of Information Act 2014.

I thank the Minister for the response. The problem is that while the theory of commercial sensitivity is to strike a balance between the public's need to know and private commercial objectives, it is not always achieved in practice. In fact, we do not have that balance. An example in the Minister's area, on which I have been doing some work in the Committee on Budget Scrutiny and the Committee of Public Accounts, concerns public private partnerships. Under the public spending code issued by the Department of Public Expenditure and Reform, it is the responsibility of the project sponsor to ensure post-project reviews take place. Very often, they do not. When they do, we cannot get access to them. They are not made public because we are told there are commercial sensitivities. In reality, that is not good practice because we need to be able to evaluate properly whether there was good value for money and whether the taxpayer got good value for money. The problem is that, at times, commercial sensitivity is actually used as a cloak or excuse to prevent proper scrutiny and the development of policy.

I appreciate where the Deputy is coming from. I was a member of the Committee of Public Accounts for a number of years. The issue in regard to the qualification of public private partnerships and the difficulty in getting information on them is one with which I am familiar. The reason, as I have alluded to, has two elements. The first is that where a semi-State commercial body which is subject to FOI legislation, as the Deputy knows, is competing with a private body which is not subject to it, the former can be at a competitive disadvantage. That is because there is a higher degree of disclosure. That is the reason for the caveat.

Let me consider the second caveat. Given that it is the State that is initiating public private partnerships, in order for it to be able to get best value, it can be and is of help to it to make sure the terms on which we conclude agreements are not available to competitors or other companies with which we might have to deal. If the Deputy has a specific project or group of projects in mind, as I am sure he does, I will be happy to respond to him if he mentions them.

I have discussed this issue with officials in the Minister's Department in respect of public private partnerships. It was based on a genuine desire to ensure we had proper scrutiny, not only in having a look-back but also in the planning of public private partnerships. The arrangement has been used as an excuse at times not to allow us to get under the bonnet of some of the public private partnerships that have taken place. That is unfortunate because the more information we have, the more scrutiny we have. The more we evaluate projects such as this, the better it is for all of us. It was in that vein that the questions were put. I have no difficulty in corresponding with the Minister on any of these issues.

I accept the principles the Deputy is raising. When I was commenting on the initial formulation of metro north many years ago, I raised similar points, stating it was very difficult to understand some aspects of the then project because every time one tried to gain access to some information, one was told it was commercially sensitive, to the extent that, at one point, it was actually difficult to ascertain how much the project was going to cost. I am very eager to ensure that, where possible, all information for which Deputies are looking will be made available under the FOI legislation. I spoke on this point at a conference recently. I pointed to the breadth of organisations that were subject to FOI legislation and the support we had for the office of the commissioner in making adjudications on the matter. There is a balance sought in making these decisions. It is a balance that, when maintained, is in the commercial interests of the State.

Public Service Pay Commission

Dara Calleary


3. Deputy Dara Calleary asked the Minister for Public Expenditure and Reform the status of the progress of the Public Service Pay Commission; if its report will take account of the fiscal space published; if it will have consideration for new entrants; and if he will make a statement on the matter. [19014/17]

The work of the Public Service Pay Commission should be coming to an end and it will probably precipitate talks. I want to get a sense of the timeline and the work under way in the Minister's Department on those talks and the commission.

As the Deputy is aware, A Programme for a Partnership Government committed the Government to establish a public service pay commission to examine pay levels across the public service. In line with this commitment, the Government agreed in principle in July last year to establish an independent advisory body to examine public service remuneration. This is always a complex matter involving, as it does, the State as employer, public service employees and, most important in many cases, the interests and needs of the public who support the funding of public services through taxation.

The terms of reference of the commission were finalised after an open consultation process. This work is well under way. While the terms of reference provided that the commission would be advisory in nature, we asked for a report initially in quarter 2 of this year. With regard to the work the commission is doing, for its initial report it was asked to provide inputs on how the unwinding of the financial emergency measures in the public interest legislation should proceed, having regard to the evolution of pay trends; a comparison of pay rates; international rates, where possible; and the state of the national finances. In line with its current mandate, the commission will have regard to the national finances. I also understand it has received submissions from a range of interested parties on various aspects of public service employment, including the issue of new entrants which the Deputy and his party have raised on a number of occasions.

The Government will continue to maintain the ability to negotiate directly with employees on pay. The commission's role will be to provide evidence that can provide a framework for the analysis of pay matters to provide the foundation for the approaching discussions. In answer to the Deputy's point, we did ask the commission to report in quarter 2, which means April, May or June. I understand the work is proceeding and that the commission will meet that deadline.

Quarter 2 is long. I am trying to get a sense of the timing. Does the Minister expect to receive the report early in quarter 2? Does he have any sense of the month in which it can be expected based on the engagement of his officials? We have to have the public service pay talks completed ahead of the budget. Does the Minister envisage them taking place throughout the summer?

On new entrants, as the Minister knows, teachers will gather next week across the island for their various conferences. What message can we, as public representatives, give to new entrant teachers or new entrants in any grade of the public service or Civil Service on their status? I know that inputs have been made and that we have been strong on this issue. Will the new entrants' role be reflected in the Public Service Pay Commission's report and the talks to come?

On the timing, I expect the commission to report in or before May. Therefore, I do not expect the report to be issued towards the end of quarter 2. The discussions will be very difficult, as will all of the proceedings for the next year. The Deputy has made reference to where we stand from a resource point of view for next year. The answer is that, once the commitments the Government has made on increased levels of social welfare and funding our tax reform plans for next year are honoured, the net amount of currently unallocated resources, assuming current rates of growth continue, is around €500 million.

That is a significant amount of money, but given the competing demands for additional spending, additional services and additional changes in our tax structure, it is an amount of money on which careful choices will have to be made.

In answer to Deputy Calleary's direct point on new entrants, as the Deputy will be aware, progress was made in dealing with this area under the Haddington Road agreement where changes were made there. We will look to make the particular changes in that area as part of an agreement with the INTO and TUI.

The draft version of the stability programme update published yesterday contains positive figures for growth in the economy. What is the Minister's view on the impact of those growth figures on that €550 million figure? The Minister for Finance, Deputy Noonan, has just told the Committee on Budgetary Oversight of which I am a member that he will not be in a position to look at that properly and publish a figure until June but that he may be in a position to "modestly" increase it if these growth figures continue. Has the Minister any thoughts on this?

That is exactly my understanding of the timing in relation to it, that the Minister, Deputy Noonan, and the Department of Finance may make a revision on the figures that I have just shared with Deputy Calleary in June. That will be purely a determination for Deputy Noonan's Department.

In terms of any likely change, Deputy Calleary is correct to state that the growth figures for this year are higher than anticipated. We saw growth last year of approximately 5%. We should see growth this year of approximately 4.5% and we are expecting a growth rate next year of 3% to 3.5%. The key factor in it all, as the Deputy will be aware, is that as we are currently participating in the excessive deficit procedure of exiting from a bailout programme and under the fiscal rules, we must deliver the medium-term objective of having a balanced budget next year. When we deliver that, the position then changes significantly for subsequent years and that is the key factor in terms of the availability of resources for next year. I emphasise that those resources will be very scarce against the array of demands placed against them.

Brexit Issues

Mattie McGrath


4. Deputy Mattie McGrath asked the Minister for Public Expenditure and Reform the measures his Department is putting in place in response to and in anticipation of the challenges posed by Brexit; and if he will make a statement on the matter. [19113/17]

I rise today with a sense of significant concern deepening throughout the country about the efforts of the Government to achieve a soft landing and the best we can out of Brexit and, indeed, the devastating impact a future Border would have on the nation.

Brexit issues in my Department are co-ordinated centrally by the Department's Brexit/EU/North-South unit. The unit oversees Brexit work across the Department and acts as the contact point with the Department of the Taoiseach and other Departments. It is represented on the interdepartmental group on Brexit and related groups, and supports me in my work as a member of the Cabinet Committee on Brexit. Brexit issues are also addressed by staff in relevant areas across the Department.

Clearly, Brexit will pose significant challenges right across the economy. The Government is committed to addressing these challenges, to mitigating the impacts and to maximising the available opportunities.

In the short term, the Minister for Finance and I were able to deliver a budget for 2017 setting out our approach to Brexit and to building a national response. For the third year in succession, it has been possible to increase resources for public services and infrastructure. Expenditure for this year will be €58.1 billion, an increase of 3% on a year ago. Resources have been allocated towards areas that may be significantly impacted by Brexit, in particular, enterprises dealing with the impact of Brexit and our regional and rural communities.

In the longer term, the design of this year's spending review reflects the changed economic and fiscal context, including Brexit. Of course, while moderate and sustainable expenditure growth is planned over the medium term, increasing and competing public service demands will make the management of this expenditure challenging.

The capital plan sets out a €42 billion framework to meet our needs. We have a review of the plan under way at present that we aim to conclude in the second half of the year.

My Department is also responsible for EU funding programmes, such as INTERREG and PEACE. We have made progress on finalising their deployment up to 2020 and aim to deliver successor models for the period after that through our negotiation with the European Union.

Certainly, it is fine that expenditure has been increased by 3%, but have we the right personnel in these Departments with the experience - although it is difficult to have experience of this - with the vision, with the stamina and with the capacity for robust engagement with our European colleagues? Today, reports from the head of Dairygold suggest that, unless the EU plans to combat customs tariffs at the Border, rural Ireland will be devastated. We make similar statements about post offices and in many areas, and it is so, but this will be a further blow. A hard Border at the North crossing points cannot happen.

The European banking sector is in deep need of reform. That has not happened. Is the ECB still clinging onto the old model that has failed? I am concerned that we may not have the right personnel with the vision and the enthusiasm to fight hard enough to ensure that we are not severely affected.

We have the right personnel and the right vision in relation to this. To back up that assertion, I point to the fact that our national interest in the Border in relation to the movement of people has now been recognised in the draft negotiation mandate that has been provided by the European Council and has also been recognised in a mandate that was drafted by the European Parliament. Not only the needs, in particular, of Border communities which the Deputy referred to, but the broader imperative of ensuring we do not return to a hard Border are recognised and laid out in each of those mandates. The negotiation letter that was issued from the British Prime Minister, Mrs. May, also made reference to these issues and the value of the relationship with Ireland. That did not happen by magic. It happened by persistent and hard work from the individuals whom the Deputy is understandably raising with me here today. We have much work to do - we have years of effort in relation to this - but those interests have been clearly recognised.

I certainly hope so. The proof of the pudding will be in the eating.

I represent County Tipperary, a proud but rural county. We have issues right across the sectors, from beef to lamb, pork, corn, mushrooms and many other areas all of which involve exports, and dairy produce as well where Dairygold is concerned, and we have a lot of foreign direct investment as well. We want to protect it for all of the country's sake. I want to see tangible proof that we are stepping up to the plate and that we are engaging robustly with a Europe where we have been the good boys of the class.

We have been an exceptionally proud and engaging member state and now the belief in many circles - the latest today from Dairygold and other co-ops - is that we are not robust enough in our battle to ensure that we will not be fatally wounded rather than damaged in our export markets, especially on the Border issue. We cannot see a hard Border across the Six Counties at the crossings we are used to, in Aughnacloy, in South Armagh and all the places, such as Pettigo. We must maintain our trade and no barriers. We were delighted to get rid of them because they caused considerable problems, including smuggling.

The proof of the pudding will be in the eating, and I hope it is.

It is good to hear Deputy Mattie McGrath make reference to the positive role of the European Union and the positive role that it has played, through the Single Market, in providing export markets-----

I said we were good boys in the past.

-----to the companies to which he referred. That Single Market and the support that those companies have received from Irish agencies has been crucial in allowing companies to grow and to the significant development that has taken place in the country over the past 40 to 50 years.

The Deputy makes the point in relation to the Border. I repeat the point I made to him a moment ago. That Border, the risks of the Border, the needs of the common travel area and freedom of movement of people have been recognised in the negotiation mandates that have issued from the European Union. In particular, Mr. Michel Barnier, who will be the lead negotiator on behalf of the Commission and the broader European Union, has stated that he wants these issues in relation to Ireland dealt with in the first module of the negotiations that will be taking place.

That is happening because of the work of the Irish Government and our ambassadors. Alongside this, the Minister of State, Deputy Murphy, is leading Government efforts to attract new foreign direct investment to Ireland in sectors such as financial services and put in a bid to host important European agencies here in Ireland, as indeed is the Minister, Deputy Harris.

Capital Expenditure Programme

Catherine Martin


5. Deputy Catherine Martin asked the Minister for Public Expenditure and Reform the way the fiscal and policy context section of the capital development plan incorporates environmental sustainability in addition to fiscal sustainability as an underlying policy goal; and if he will make a statement on the matter. [19114/17]

This question relates to the capital plan 2016-21 and its use of the word "sustainability". It is often the case that despite the prolific use of the word "sustainability" throughout the document and particularly in the fiscal and policy context section, it seems to primarily and solely incorporate what could be termed fiscal sustainability rather than a wider definition which might include concepts such as environmental sustainability. Will the Minister outline for the House what role he believes environmental sustainability plays in the provision of capital expenditure as an underlying base concept and not just a discrete section of the capital plan?

The fiscal and policy context section of the capital plan, Building on Recovery, sets out the objectives of State investment in infrastructure. It emphasises the Government's commitment, through the capital plan, of supporting strong and sustainable economic growth and raising welfare and living standards for all. Promoting environmental sustainability is, of course, integral to achieving and maintaining sustainable economic growth.

The incorporation of environmental sustainability as a key encompassing policy goal in the capital plan is demonstrated throughout the plan document and through progress made in the implementation of key elements of the plan itself, as well as through other important policy and legislative developments focused on environmental sustainability.

It is important to stress, however, that there is a detailed governance framework already embedded in the allocation of capital resources through which significant investment decisions must be aligned with all Government policy, including environmental policy. For example, when the plan sets out the budget management framework, it explicitly states that all Departments are responsible for ensuring projects meet appropriate regulatory requirements, including environmental impact assessments.

In addition, when outlining the drivers of long-term public investment requirements, the plan highlights environmental concerns such as developments in climate change and the need to meet EU emissions targets that require intervention in the areas of energy efficiency and renewable energy, as well as the need for investments in flood protection. Moreover, the area of environment and climate is allocated 7% of available capital resources in the plan, which amounts to €870 million over the course of the plan.

While I appreciate that the capital plan features a number of measures to tackle climate change and deal with environmental sustainability, regrettably, environment is still considered a "selected driver" of long-term public investment requirements. The importance of climate change within the Government's capital plan is currently considered as only requiring intervention in respect of energy efficiency, renewable energy and flood prevention, despite the fact that both the Climate Change Advisory Council set up under the Climate Action and Low Carbon Development Act 2015 and the Environmental Protection Agency, EPA, have advised that what is needed is "a major societal and economic transformation".

The Environmental Protection Agency today delivered the catastrophic news that we will fail to meet our 20% cut in greenhouse gas emissions by 2020 and that we are completely off target for our low-carbon transition by 2050 set out in the climate change Act. While this is first and foremost an environmental disaster, it also has the potential to be an economic one which would have a major impact on our fiscal sustainability. How is the Minister's Department preparing for the possibility of up to more than €5 billion in fines if we do not hit our emissions targets, a possibility which seems all the more real after today's news? Failure to meet these targets will have a serious impact on the economy and must be accounted for in the public purse. Where will the Minister find this money?

I am making clear in all the engagement I have with other Government Departments that a vital consideration in any decisions we make is the contribution that public investment can make towards delivering our climate objectives. I have referred to this in the criteria that have been published to other Departments that indicate the way in which we will evaluate their proposals, and I continue to make this point in Cabinet sub-committees and Cabinet itself. This will be a very important element in decisions we make and is one of the reasons I believe investment in public transport, for example, is so important. Unless we provide fast, high-capacity public transport investment, the challenge the Deputy has described, with which I agree, will not be met by Ireland and our challenges will be even bigger. The kinds of considerations to which she refers form a very big part of how we will analyse any proposals to spend additional funding in the country in capital areas.

With respect, the report today from the EPA would suggest there is a huge gulf between the Government's words and the Government's action when it comes to climate change. It appears to me that the Government has reached a crossroads. It can accept the fact that, without a major turnaround in policy, we will not meet our emissions targets, which needless to say, for the sake of our children and grandchildren, is a road which should never be travelled, but in which case, for prudent fiscal responsibility and sustainability, the Minister's Department needs to provide a comprehensive plan as to how he will account for the money for significant fines imposed on the State for not meeting these targets. Alternatively, the Government needs a paradigm shift in how it thinks about sustainability. Environmental sustainability must not be confined only to the Department of the Minister, Deputy Naughten. Our public expenditure needs to be on sustainable infrastructure, for example, on the six cycleways proposed for Dublin instead of 1,500 km of roads, as IBEC has proposed. We are on a continuous upward trajectory on emissions, when we really need to be going in the opposite direction. Which will it be? Will we hit our targets or will we not? Does the Minister have an expenditure plan for either scenario?

I hope the considerations the Deputy has outlined, which I agree with, will be maintained across the coming period when many demands will be placed upon the Government for expenditure in different areas. As I referred to earlier when answering questions from Deputy Calleary, if one considers where we will be next year, while we do have resources available to make new investment choices, there are a huge number of demands in that regard. We face demands regarding the future development of our public pay bill, the position of taxation in our country and investment in education, which the Deputy correctly raised. The need to invest in our environment is another of those demands and it is one I want to meet. It is not just the prerogative of the Green Party to make sure we have an environment in the future that is good, safe and clean for those who will come after us, but also it is an agenda to which I am also committed. We have put support in place for that through prudent programmes such as the renewable heat initiative, incentives for the use of electric cars and investment in public transport. These are the kinds of choices with which I want to continue in the coming years.