I wish to bring to the attention of Members an error in Schedule 1 to the Appropriation Bill 2007. The total figure mentioned in column 3 of line 8 of page 9 of the Bill should be €45,148,322,000 — that is, the same figure specified in section 1(1) of the Bill.
Appropriation Bill 2007: Second Stage.
I welcome the opportunity to address the Seanad on the Appropriation Bill 2007. I propose to outline briefly the purpose of the Bill, to mention its provisions, to highlight the significant reforms introduced to the budgetary and expenditure process this year and to run through some of the outputs from the amounts appropriated in 2007.
The main purpose of the Appropriation Bill 2007 is to give statutory effect to the departmental Estimates for supply services, both current and capital, including all the Supplementary Estimates which have been approved by the Dáil since the last Appropriation Act. This year's Appropriation Bill takes account of the transfer of marine functions from the former Department of Communications, Marine and Natural Resources to the new Department of Agriculture, Fisheries and Food. The Bill makes provision for net voted public expenditure in 2007 of over €45.1 billion, consisting of current expenditure of €37.3 billion and capital expenditure of €7.8 billion. Some €29.3 billion, or 66% of the total provision for current spending, has been allocated to the priority areas of health, social welfare and education. In addition to providing for the 2007 Estimates, the Bill provides in section 2 for the carryover into 2008 of unspent voted capital amounting to over €126 million under the multi-annual capital envelopes. A technical provision is included in section 3 of this legislation, in line with established practice, to allow for the deferment of the end of year deadline for the Financial Resolutions which were passed on budget night. The Seanad is also being asked, in line with established practice, to approve an early signature motion to facilitate a request to the President to sign the Bill earlier than she normally would. This request is being made to allow the Comptroller and Auditor General to clear the end of year issues from the Exchequer.
Section 1 appropriates for 2007 the net sum of almost €45.1 billion to the various services listed in Schedule 1. The 2007 sum includes Supplementary Estimates of almost €323 million, which have been approved by the Dáil in respect of 13 Votes. The latest indications are that overall spending for 2007 will be within budget. The projected outturn on net current spending for this year is €37.1 billion, and that of capital spending is €7.7 billion. These are broadly on target. The actual end-of-year Exchequer outturn will be published in the end-of-year Exchequer statement on 3 January. As is normal, this section of the Bill also seeks approval for the use of departmental receipts of more than €4.2 billion as appropriations-in-aid for the services listed in Schedule 1.
Turning to section 2, under the multi-annual capital envelopes up to 10% of voted Exchequer capital may be carried over to the following year. There will be a capital carry-over of some €126 million from 2007 into 2008, or 1.7% of net voted capital for 2007. This is the lowest capital carry-over since the introduction of the facility in 2004, which provides evidence that Departments have increased their capacity to deliver significant capital projects within the targeted timeframe. The corresponding capital carry-over from 2006 to 2007 was €159 million, or 2.4% of net voted capital.
In accordance with the provisions of section 91 of the Finance Act 2004, which provides a legal basis for capital carry-over, section 2 of this Bill provides for the carry-over by Vote. The relevant Votes are listed in Schedule 2. The €126 million of capital carry-over cannot be spent in 2008 until the Dáil approves an order early in the new year specifying the capital subheads in each of the Votes concerned against which the money will be spent as a first charge. The availability of the carry-over facility means that this money does not have to be surrendered at the end of the year and that it is available for spending on priority capital programmes within the Votes concerned in 2008.
Article 17 of the Constitution requires that the financial resolutions of each year must be enacted into law by the end of that year. However, the end-of-year deadline can be deferred if an Act to that effect is passed before the end of that year. As is normal, section 3 of the Bill makes provision for this deferment to be invoked. The inclusion of this provision in the Appropriation Bill will maintain the usual statutory deadlines for passing budget measures into law. Identical provisions have been included since the 1997 Appropriation Act. The Seanad is also being asked to approve an early signature motion. This is sought each year in order to ensure that the necessary legislative authority is in place for the final end-of-year issues from the Exchequer.
I will give a brief review of economic and expenditure developments in 2007. In regard to the general economic situation, the Minister for Finance noted in his Budget Statement speech an easing of the pattern of strong growth, although it continues at a rate that is the envy of many other countries. For 2007 as a whole, GDP growth of around 4.75% is expected. We estimate that an additional 72,000 jobs will have been created this year and that unemployment will still be among the lowest in the EU. In terms of public expenditure, 2007 has seen the roll-out of significant reforms in financial processes. Some of these were announced by the Minister for Finance in his 2006 budget, including the publication of the pre-budget outlook in October of each year and of annual output statements by Departments in conjunction with their annual Estimates.
The pre-budget outlook, which was published for the first time in 2006, has made an important contribution to informing the public and the Oireachtas of the background that underlies the annual budgetary and expenditure process. The annual output statements specify the public service outputs that the public should expect to see delivered from the moneys that are voted to Departments by the Dáil each year. These output statements were prepared for the first time earlier this year, and I look forward to the 2008 round of statements, which will include a report on the actual performances of the Departments compared to the output targets set for 2007.
The latest step in the ongoing budgetary and expenditure reform process was announced by the Minister on 13 September last. This involved the introduction of pre-budget Estimates on an existing-level-of-service basis in the pre-budget outlook and the presentation of a unified budget. The pre-budget Estimates make clear to the Oireachtas and to the public at large the estimated cost of providing in 2008 the level of public services that were provided in 2007. In the unified budget delivered earlier this month, full details were provided on the areas in which additional spending is proposed. This transparent approach is in accordance with the proposal from the Committee of Public Accounts in its October 2005 report on Estimates reform that a clear distinction be instituted between pre-budget and post-budget allocations.
The unified budget has assisted the Government in managing public finances in a more transparent and effective manner. All of the key decisions on both the spending and revenue sides of the budget were made together and announced on the same day. This is altogether a more coherent approach to budgetary policy-making. I am pleased to state that these major reforms have been achieved and are delivering a more constructive and relevant examination of the way in which the nation's finances are run.
I will give a brief outline of some of the outputs and outcomes achieved for the expenditure we are appropriating today. The Minister's introduction of annual output statements, as I set out earlier, should lead to a greater linkage between the outputs and the net expenditure of €45.1 billion included in this Bill. There have been many achievements in priority areas such as social welfare, health, and education. Last year the Minister for Finance announced the largest ever welfare budget package, with an increase of over €1.4 billion. This historically high package delivered on the Government commitment to bring State pensions to €200 per week, with the contributory pension increasing to over €209, and with substantial across-the-board increases providing very tangible benefits to more than 1.5 million men, women and children, including pensioners, low-income and welfare families, carers, those with disabilities, and dependant relatives. In the budget the Tánaiste announced further improvements on these fronts.
In the area of health, waiting times for most common procedures have been reduced to between two and five months, aided by the work of the National Treatment Purchase Fund, which has arranged treatment for more than 90,000 patients. Another improved outcome is that the number of persons holding a medical card increased by almost 60,000 in 2007. At the end of November the total number of medical card holders was 1.28 million.
Education is key to promoting our future competitiveness and building a modern knowledge economy. The staffing schedule at primary and post-primary level has been reduced by a further one point during 2007. There are greater numbers of places available in third level education than at any time previously. The number of full-time places available in 2007 was brought up to almost 139,000.
This year saw the initial roll-out of the ambitious programme for social and economic investment set out in the national development plan. As I mentioned earlier, the relatively low level of capital carry-over being sought is testament to the fact that our capital programme is proceeding apace. Indeed, 2008 will see a further increase of €836 million in gross capital investment, bringing the total to over €8.6 billion, or greater than 5% of GNP. This sustained commitment to investment in our economic capacity is essential to lay the foundation for continued economic growth, competitiveness and prosperity into the medium term.
The Bill before the House is necessary to appropriate the public moneys that have been granted by the Dáil for spending on public services in 2007, of which I have given a number of examples. Under the Central Fund (Permanent Provisions) Act 1965 the enactment of the Bill also provides for essential continuity by allowing for interim expenditure to be incurred on existing services in 2008 until such time as the 2008 Estimates are voted on by the Dáil. I commend the Bill to the House.
I do not want to kill the Christmas cheer but whoever is working in the department of spin is doing a good job in getting out the message that everything is perfect. The Minister of State referred to unified budgets and the announcement of spending and revenue, which is no harm. He stated also that the latest indication was that overall spending for 2007 will be within budget. That is an interesting point because in the past three years the Minister got the figures wrong with regard to revenue. At the time of the first budget of the Minister for Finance, Deputy Cowen, the Exchequer surplus was €1 billion, it was €2 billion at the time of his second budget and last year it was €3 billion. The Minister of State stated he will break even in terms of the figures but the days of budget surpluses are well and truly over. In fact, we are heading backwards to the days of massive Exchequer deficits. It is estimated that next year the Exchequer deficit could be up to €4 billion but if the ESRI is correct today, the Minister's figures are even more off target in terms of the €4 billion deficit. It appears the revenue will catch him next year, therefore, it is just as well he is getting the spending right.
The position is not as clear as set out by the Minister of State in his contribution. He stated there will be a capital carryover of €126 million from 2007 to 2008 but the Health Service Executive has an overrun on its budget of up to €450 million. Money continues to move around, in terms of day to day and capital spending, to balance the books at the end of the year. Budget control is still not happening in the public sector and the Minister must address that. The Minister of State painted a rosy picture but in reality that is not the position, especially in regard to the health services where the HSE is experiencing serious problems trying to maintain its budgets. The Minister will have serious problems maintaining his budgets also. His poor management of the public finances in recent years will be exposed when the Exchequer returns decrease dramatically in future years because the building boom that was such a cash pot for the Minister has dried up. The poor management will be exposed in regard to benchmarking payments and the pay awards.
Regarding the pay awards, Ministers intended to pay themselves substantial amounts of money. In that regard, the members of the Review Body on Higher Remuneration in the Public Sector were invited to come before the Joint Committee on Finance and the Public Service but they replied that it was not appropriate for them to do so. I ask the Minister to ask the Taoiseach and the Minister for Finance to contact the members of the review body and instruct them to present themselves to the committee and not decline the invitation offered to them for what at best can be described as spurious reasons. They do not want to explain to the committee the reason they recommended such outlandish awards, not just to Ministers but to the Judiciary and other senior public servants.
Was that request made after the report was published?
It was made after the report was written. They decided it was beneath them to present themselves to committee. I ask the Minister of State to get back to them and get them to change their mind in that regard.
I do not know from where the Minister got this information but he stated that as regards health, waiting times for common procedures have been reduced to between two and five months.
In many cases.
In no cases, or perhaps in emergencies. If one needs an appendix operation it will be done within two to five months but normal procedures will not be done within two to five months. One cannot even get an outpatient appointment to see a consultant within two to five months. For an ear, nose and throat or orthopaedic appointment, the waiting time remains two to five years. What the Minister said is misleading; it is a lie.
The Minister for Health and Children, Deputy Harney, came into the House yesterday and spoke about co-location. The problem with co-location, and this arises from a failure to reform, is that half the patients are paying twice for health care. They pay their taxes for the public sector and they pay premiums for private health insurance. The other half of the population who do not have private health insurance are paying for poor access to the health services. They will get good health care but poor access. Misleading comments to the effect that the waiting times are two to five months only increases the ire of people. That is why the Government is getting such abuse from the public because they know the truth is that the waiting time is anything from 12 to 24 months for common procedures. I ask the Minister of State to correct the record in that regard when responding. I wish the Minister of State and everybody here in the House a happy Christmas.
I welcome the Minister of State to the House. The debate on the Appropriation Bill gives us an opportunity to consider what we sought in the budget and in many cases it has delivered on target. Our economy is still in an expansionary trend but the difference is that it is expanding at a lower rate. The economy is fairly strong. We have had economic growth of 4.75% in 2007. It is expected to be at 3% in 2008, that is, a cumulative 3%. We are still advancing as an economy and those of us who sought increases in the budget for those less well off are more then pleased with it. In that regard I commend the Appropriation Bill. There was a €900 million increase in the spend on social welfare. The total package is now just short of €17 billion and there have been real increases all round. There was a €14 increase in contributory pensions. Payment to qualified adults will increase by up to €27. There has been a €190 million improvement in child income support. The respite care grant has increased and personal rates increased by €12 per week. The fuel season is to be extended by one week and the widowed parents grant increases from €2,000 to €6,000. Those increases are being made in a time of decreasing growth.
The budget was a positive one. Even in terms of the small amount of borrowing, the wish list included a request that the borrowing would be for productive purposes and in that regard it was fully met by the Minister who, at a time of changes in the economy, when the construction industry is slowing down, rightly included a significant spend on the capital side, including the national development plan, which is essential for our infrastructure.
Regarding the part of the Bill that affects so many people, social welfare, retired and older people have benefited significantly. Carers, children, people of working age and people with disabilities have benefited also. We have also seen grants towards the improvement of services, all of which will come on stream in January and April. From a social welfare perspective the budget met exactly what was necessary and appropriate.
The rate of increase in public expenditure had to moderate to take account of the resources available yet the Minister still provided €53 billion, which is a net increase of over €1.7 billion. More than €8.6 billion has been provided for investment on the capital side and investment in a sustainable future is the Government's priority.
The importance of the national development plan, and the amount of expenditure in that plan, is particularly appropriate at a time when there has been a change in the economy and the construction industry, for which the Minister made very good provision in terms of the decrease in the rate of tax on the purchase of a house. He also increased the allowances. He had the capacity to do that and it has been used effectively in the past. In other words, if the construction industry continues to decelerate the Minister could give relief at the top marginal rate on all the moneys borrowed, which would be a significant help. I am glad to note the Minister has taken appropriate action in that regard. Governments in the past have reacted to economic slowdowns by stalling capital investments. This budget has scored by spending €8.6 billion on capital projects. The prospects in 2008 are more modest than what we have become accustomed to, reflecting both international trends and domestic developments. Gross domestic product will increase by 3% in real terms, 24,000 new jobs will be created, inflation will ease and the harmonised index of consumer prices will average 2.4%. This latter figure must be considered in light of the significant increases in social welfare. Social welfare recipients will have a real increase again next year.
The economic outlook, while reasonably impressive, means it is more important than ever we retain our flexibility, act responsibly and continue to raise productivity. By doing so, it will protect and enhance our competitiveness and employment levels. Responsible management of the public finances has been the prime driver of our economic success. The national debt stands at 25% of GDP, one of the smallest in the developed world. With the national debt so low, it is appropriate for the Minister for Finance to borrow 0.9% of GDP to fund capital projects. This productive expenditure will more than repay the amount borrowed.
Growth in total spending is at 8.6% which will maintain the provision of services and invest in the future. Other figures indicative of this are gross capital spending growth of 8.2% and capital spending growth of 12%. A general deficit of 9.9% of GDP is fully consistent with EU obligations.
The World Bank ranks Ireland eighth out of 178 economies worldwide for ease of doing business, the top 5% of world economies. In its recently published report on global competitiveness ranking, the World Economic Forum positioned Ireland 22 out of 131 countries, the top 20% of competitive economies.
These figures underline our solid reputation as a flexible, competitive and technologically orientated economy in which it is worthwhile to invest. What holds for foreign investors is equally true for the environment in which indigenous firms will grow. This is an unambiguously competitive advantage for our economy.
Nevertheless, the broad enterprise sector, exporters in particular, is facing some immediate challenges, for the most part driven by external events in currency, financial and commodities markets. The external value of the euro, flexibility and availability of credit and the unique and unprecedented cost of oil energy are important costs components over which companies in Ireland have no control.
We look forward to the future, having taken account of the current economic situation. It could easily change. That the world economic slowdown is having an effect on the price of oil will assist our economy. Ireland has positioned itself very well to withstand the turbulence in these markets. Our financial markets are in good health and have not involved themselves in the unrestricted and unregulated lending that has gone on in other countries, which was imprudent at the least. The budget was prudent and thoughtful. The figures and sums outlined in the Appropriation Bill are appropriate for the economy at this time.