I welcome the Minister of State at the Department of Public Expenditure and Reform, Deputy Ossian Smyth.
Appropriation Bill 2020: Second Stage
I thank the Leas-Chathaoirleach and Senators for having me here today.
The Appropriation Bill 2020 is an essential element of financial housekeeping that must be concluded by both Houses of the Oireachtas before the end of this year. The Bill serves two primary purposes. First, the Appropriation Bill is necessary to authorise in law all of the expenditure that has been undertaken in 2020 on the basis of the Estimates that have been voted on by the Dáil during the year. Section 1 and Schedule 1 set out the amounts to be appropriated for supply services. These relate to the amounts included in the Revised Estimates for 2020 voted by the Dáil earlier this year, and the Supplementary Estimates voted by the Dáil earlier this month. In aggregate, these Estimates amount to nearly €69.7 billion. Undoubtedly, this is a significant investment and reflects, when including expenditure on the Social Insurance Fund and the national training fund, approximately €16.75 billion in additional Covid-19 related expenditure supports provided this year. Without an investment on this scale, the Government would not have been in a position to introduce a series of critically important expenditure measures that were required to support our economy, enterprises and households from the unprecedented shock of Covid-19, and to provide the necessary funding to our health service to respond to the pandemic.
A further key purpose of the Appropriation Bill 2020 is to provide a legal basis for spending to continue into 2021. The passage of the Appropriation Bill allows, in the period before the 2021 Estimates are approved, continued funding of social welfare payments from the social protection Vote, Exchequer pay and pensions and other voted expenditure. If the Bill was not enacted before the end of December there would be no authority to spend any voted moneys in 2021 from the start of January until approval of the 2021 Estimates, since this authority for 2021, as contained in the Central Fund (Permanent Provisions) Act 1965, is based on the amounts provided for in the Appropriation Act 2020.
Under the rolling multiannual capital envelopes introduced in budget 2004, Departments may carry over, from the current year to the following year, unspent capital up to a maximum of 10% of voted capital. The multiannual system is designed to improve the efficiency and effectiveness of the management by Departments and agencies of capital programmes and projects. It recognises the difficulties inherent in the planning and profiling of capital expenditure and acknowledges that capital projects may be subject to delays. The carryover facility allows for a portion of unspent moneys, which would have been lost to the capital programmes and projects concerned under the annual system of allocating capital, to be made available for spending on programme priorities in the subsequent year.
The Appropriation Act determines definitively the capital amounts that may be carried over to the following year. The aggregate amount of proposed capital carryover from 2020 into 2021 is €748.5 million, which represents 7.5% of the total Exchequer capital programme of more than €9.8 billion for 2020. This figure is considerably higher than last year's carryover figure of €215.4 million, which amounted to 2.9% of the 2019 capital allocation. This increase reflects both the increase in the core capital allocation from 2019 to 2020 of approximately €1 billion, as well as the impact of Covid-19, both in terms of additional capital allocations to certain Departments and delays to other capital projects as a result of public health measures and restrictions.
The proposed amounts to be carried over by Vote are set out in Schedule 2 to the Bill. The 2021 Revised Estimates Volume sets out detailed financial and key performance information for Departments and offices. Part III of the Estimates includes, for each Vote availing of the capital carryover facility, a table listing the amounts to be deferred by subhead. In line with last year, section 3 of the Appropriation Bill includes a specific provision to allow for an advance from the Central Fund to the Paymaster General's supply account, with this advance then being repaid to the Central Fund in January. The amount included this year is up to €280 million. The need for this provision arises as certain Exchequer liabilities and social welfare payments are due for payment by electronic funds transfer on 1 January and 4 January 2021. With the banking system closed on 1 January, funding will need to be in place in departmental bank accounts before the end of this year to meet those liabilities on a timely basis. In addition, An Post needs to be pre-funded before the end of 2020 in order to physically transfer cash to its network of post offices throughout the State.
These Exchequer pay, pension and social welfare payments form part of the supply services for 2021, and these costs will come under moneys voted in 2021 in respect of which the usual processes and mechanisms for voted moneys will apply. The signed Act is required by the Comptroller and Auditor General for clearance of the end-year issues from the Exchequer. Under Article 25.2.1o of the Constitution the President may not sign a Bill earlier than the fifth day after the date on which the Bill is presented to him. However, there is provision in Article 25.2.2o of the Constitution whereby, at the request of the Government and with the prior concurrence of Seanad Éireann, the President may sign a Bill on a date earlier than the fifth day mentioned. In view of the urgency of this Bill, the provision in Article 25.2.2o is sought, and a motion to this effect is placed before the Seanad.
Such an earlier signature motion has also been sought in relation to the Appropriation Bill in previous years.
The Appropriation Bill is an essential element of housekeeping which those of us in both Houses of the Oireachtas are required to undertake. The passing of the Bill will authorise in law all of the expenditure that has been undertaken in 2020 on the basis of the Estimates voted on by the Dáil during the year. The passage of the Bill, which is of fundamental importance to those who depend on our essential public services, will also ensure that payments funded from voted expenditure in 2020 can continue to be funded in 2021 in the period before the Dáil approves the 2021 Estimates. I commend the Bill to the House.
I welcome this Bill. I do not think anyone has a problem with it. It has been an exceptional year with levels of expenditure that we have probably never seen before, and which we will hopefully never need to see again, around Covid-19.
Following the news last night about hospitality, I take this opportunity to ask for certainty about what is happening in the coming week or ten days. We just need that. I spoke earlier on the Order of Business about the effect it is having on the families who are engaged in the sector. I spoke to my brother this morning. He said we would be better off being told that we will be closed until March or April because the in-out, open-closed, half-closed, half-open, half-partially open approach is playing havoc with everyone involved. I appreciate the level of supports that have been given to us so far to keep us alive and so that we can open. It was difficult to get staff to come back to work for what was going to be a period of 20 or 30 days, but we found out last night that it could be curtailed to a ten-day period. It is worrying. I ask the Minister of State to take back to the Government a message that it should make a clear decision for us and give us plenty of notice. The uncertainty is very difficult and emotionally draining for the families in business and all the staff, whom we coaxed to come back to work for 20 days and now we are going to have to tell them it is for just ten days.
I fully support the Bill, which was needed. The supports were put there.
I omitted to point out that Senators have five minutes each. I do not think that presents a challenge.
I welcome the publication of the Appropriation Bill. It is the signal for the end of the legislative term and the fiscal year. It covers the spend on all Departments and State agencies for the next year from the offices of the President and the Taoiseach to our newest Department, the Department of Further and Higher Education, Research, Innovation and Science. I also acknowledge the Department of Community and Rural Development, where I had the privilege to serve with the former Minister, Deputy Ring, and the Department of Children, Equality, Disability, Integration and Youth. We should never be afraid to establish new Departments to cover very important areas. They give a focus.
The Minister, Deputy Humphreys, covers two Departments - the Department of Social Protection and the Department of Rural and Community Development. It is important to recognise that. Key supports for health, business and social welfare play an important role every year, but they were very much in focus this year because of the pandemic. The Department of Health has been on the front line protecting our health. The Department of Enterprise, Trade and Employment has provided so much support to people and businesses over the last year to maintain the key link between businesses and workers. Obviously, the Department of Social Protection has administered the pandemic unemployment payment, the temporary wage subsidy scheme and all the supports that were enacted over the last year. The Department of Housing, Local Government and Heritage is responsible for rates, which are so important for businesses in what has been a very challenging year. No one could have imagined that 2020 would end up like this. This time last year, we were looking forward to growth in the economy. We had full employment and balanced books. The challenges of Covid have changed all that. The supports put in place by the Government are accounted for in this Bill for the year ahead.
The Department of Housing, Local Government and Heritage is important. As a Senator who is elected by councillors, as well as Members of the Oireachtas, I will focus on local authorities. My county of Galway has had difficulties with the funding model in place for 20 years over successive Governments. I do not think the model is fair for a county of its size which has numerous challenges, including offshore islands, a long coastline and a large geographical area. It receives proportionately less money per head than many neighbouring counties. It does not have the same rates base as some neighbouring counties because the city of Galway is a separate local authority. This presents challenges. The Department wanted to amalgamate, which I support, but a decision was made not to proceed. As a result, Galway county is still left behind. We are told that the Department will wait for the review of the local property tax to look at the whole funding model. The officials were not fully sure how the original funding model came up. A mix of 600 different criteria for each county was used in the formula which decided how counties would be funded. The officials were not sure precisely how this was arrived at. The historical bias is still there and is particularly prevalent in Galway County Council's funding. It has knock-on effects in the delivery of services and the annual debate over whether rates are increased and so on. No one wants to do that but it can be necessary.
I acknowledge the very important work done by the Minister of State with responsibility for local government, Deputy Peter Burke, on councillors' pay. He has presented proposals on their pay and conditions which are with the Minister for Public Expenditure and Reform. Councillors do very important work for everyone and deserve to be better recognised than the present system where their pay and conditions have not changed since 2004. I hope the Minister of State brings that back to the Minister, Deputy Michael McGrath, as an issue that needs to be dealt with very soon.
Sinn Féin will support the Bill. The purpose of the Appropriation Bill is to give statutory authority for the amounts voted by the Dáil during the year as required by the Constitution. The Appropriation Bill must be enacted by the Oireachtas in December. Otherwise, there will be no authority to spend any voted moneys from the start of 2021. The amount of €69.7 billion in respect of net voted expenditure in the Bill includes the original Estimate, Further Revised Estimates and Supplementary Estimates presented to the Dáil. The final Supplementary Estimates were voted by the Dáil on 9 December.
I will not spend too much time speaking on this Bill because we all agree it has to be passed today, but I wish to raise one issue which the Minister of State should bring back. It relates to the tax reliefs that are contained in the current rules. Social Justice Ireland published an interesting piece which showed in 2016, 10% of our total tax revenue was made up of tax reliefs. Taking the figure of €70 billion for this year, if the 10% holds true, and it probably does, that is approximately €7 billion in tax reliefs. I find it shocking that there is never any information on the budgetary process about the costs of tax relief by time for each past year. They are not published.
Neither is the estimated cost of tax reliefs for the year ahead. This is an important issue. We all know of tax reliefs that are unfair, in that they benefit the very well-off. I could point to pensions. Middle-income earners benefit from tax reliefs in this regard, but higher earners benefit disproportionately more. There were changes to the real estate investment fund, REIF, system in respect of real estate investment trusts, REITs, in 2019 because the Minister, Deputy Donohoe, stated that there was aggressive behaviour to avoid tax among Irish real estate funds. Those changes were welcome. Afterwards, however, The Irish Times wrote that well-paid accountants and advisers were already working on finding the next tax ploy. We all know that these things are happening.
These reliefs are fundamentally regressive in nature. Even Departments have acknowledged that. They lead to those at the bottom subsidising the investments and savings of those at the top. This issue requires much more analysis from the Government. We are in a state where the super rich get tax breaks all the time while those on the minimum wage see a 10 cent per hour pay rise, student nurses work for free and workers across the State have no statutory right to sick pay. This is such a gross injustice. Bearing in mind the €7 billion in tax reliefs, it should not take a great deal of radical Government thinking to ensure a greater degree of equity. Loopholes and well-paid accountants are not available to low-paid workers. We need to rethink our economy and build the tax system around the basic principle of fairness that benefits those with the least through those who can pay most. The PAYE system is progressive, but the surrounding tax architecture is anything but.
That is all I have to say. We will support the Bill.
I welcome the Minister of State to the House and congratulate him on his elevation. I will begin on a discordant note, although the responsible Minister is not present. I wish to raise two issues. We all support the Appropriation Bill, which is an important parliamentary fixture, as Senator Kyne stated. It is normally taken on the last sitting day of the legislative calendar and gives the Government the approval to spend and embark upon the Estimates process in Departments. Every Department is listed in the Schedule. We are spending €70 billion or thereabouts. Senator Gavan, whom I disagree with, raised issues about tax reliefs and so on. We set up the Committee on Budgetary Oversight, which is something about which we agree. However, it is important to consider how we can debate these measures without shoehorning that debate into the last day. I do not blame the Minister of State, but if we are serious about parliamentary reform, this is an area where we as parliamentarians can play a role, not just in scrutinising, but in debating. On the Order of Business, Senator Kyne, Senator Casey and others spoke about the hospitality sector, supports for local government and so on. That is why this is important.
It is regrettable that the Bill does not make any mention of councillors' pay and conditions. We are allocating moneys, and rightly so, to members of An Garda Síochána, the Defence Forces, the Departments and all sectors in terms of salaries, expenses and "retired pay, pensions, compensation, allowances and gratuities payable". However, no decision has been made by the Government on councillors' pay and conditions. We have had the Moorhead report under the former Minister of State, Deputy Phelan. The Minister of State, Deputy Peter Burke, has sent a submission to the Department of Public Expenditure and Reform. It is time that the Government made up its mind. If it is for local government and our councillors, that means paying them properly, fairly and justly irrespective of who they are and their political ideologies. They work hard and deserve to be treated fairly. Money has rightly been given back to people as part of the unwinding of the FEMPI legislation, but for some reason it seems that there is obfuscation and procrastination on this matter by the Government, in particular the Minister for Public Expenditure and Reform, Deputy Michael McGrath. I appeal to the Minister of State to ask the Department to sign the statutory instrument and pay the public representatives of our country at local authority level a just and fair level of remuneration for their work. That is what we have to do. This has to stop. It is codology of the highest order that we are on the last sitting day of the Houses of the Oireachtas in 2020 yet there has been no Government decision on councillors' pay and conditions. I appeal to the Minister of State as a former local authority member to continue representing and advocating for these people who do a great amount of work that we can see every day.
Almost €70 billion in Government spending is an extraordinary amount and deserves to be discussed in more than just one shoehorned debate. In the context of next year's financial outlook, the Minister, Deputy Michael McGrath, stated that he could not rule out some tax increases. I call for a debate rather than kite flying in the Houses. Critically, the ordinary citizen cannot pay much more. As Senator Casey eloquently stated on the Order of Business, there are hard-pressed people in the hospitality sector who have lost businesses and jobs and who have no incomes other than the pandemic unemployment payment, PUP. They are facing into an uncertain 2021. The Minister of State knows well where I am coming from in this regard. As a Government, let us not fly kites in public about tax increases. People are justifiably concerned and they deserve better than Ministers saying that we might have to increase taxes. They cannot take much more.
I agree with Senator Buttimer on a number of issues. For example, I agree with his point that the sheer scale of the budget merits further discussion and longer sessions. I join the Senator in congratulating the Minister of State on his appointment and, in the context of what I am about to say next, I recognise the Minister of State's background in local government.
It is a disgrace that, in the weeks before Christmas, the Government did not announce an increase in councillors' pay. It was a ludicrous form of cowardice and was wrong on many levels. For years, councillors have been in a difficult situation. I know a number for whom carrying on is proving difficult. Doing much of their other work is not possible and other opportunities to earn are displaced. The job of a councillor, including being out and about physically, requires a great deal of expenditure, but the remuneration they get is far below that level. The Moorhead report was an objective study led by a legal individual. It established in objective terms that there was a strong case for councillors to get their pay. On foot of that study, the Minister of State sent a memo that was negotiated with all of the councillors' interest groups and would give councillors the dignity of a certain level of income.
It would not put them in a great position but it would put them in a position that they could do their job. The Minister of State, Deputy Peter Burke, did that with great efficiency and sent it up the line. It should be implemented. Senator Buttimer referred to the input of the former Minister, Deputy John Paul Phelan, in this matter, which merits acknowledgment.
There is an injustice. As the Minister of State will know from his own background in local government, there is now a whole proliferation of meetings which did not exist when I entered local government. There are municipal areas with meetings after meetings. Councillors have to respond to the public, interest groups, attend public meetings and travel away from home. It is a difficult situation to be in. I could cite individual cases of councillors who are in difficult positions because of this but it would not be appropriate for me to do so. The Moorhead report established that in proper objective terms, stating there is a gaping need in this area. This matter needs prompt action. It is a disgrace. Councillors should have assurance of this issue before Christmas.
I thank Senators for their comments and for supporting the Bill. I also thank Senators on all sides for the acknowledgement of the great expenditure that went into protecting people and businesses this year. The pandemic unemployment payment was a significant innovation and rapidly delivered by the Department of Social Protection. Impressively, most people got this payment online. For businesses, there was the tax relief at source, the employment wage subsidy scheme and the Covid restrictions support scheme. There were full rebates of rates for the year, along with restart grants and trading online vouchers.
Even with all of that, however, it has still been difficult for people in the hospitality sector. It is incredibly difficult for somebody to have a business reopen and then shut down again, to be given hope and then have it dashed. Some pubs in Dublin which never served food have never reopened because they did not have a chance all year long. That has been incredibly difficult for those people, no matter how much support they were given. The frequency with which they have been opened and shut down has created anxiety. I will bring those sentiments to the attention of Ministers.
The Cabinet will be meeting throughout the Christmas break and over the new year as we are still in a critical period. The vaccine roll-out project, one of the most important projects in the history of the State, is taking place and will have to be got right. Dealing with daily data which shows how the disease is spreading must also be responded to by the Government. All the way through Christmas, the Cabinet will be working on that.
I have been working on the base funding of local authorities - Galway was mentioned - and it is being reviewed. I take the point that it has always been discussed in the context of local property tax but it can be considered separately as well. Whatever is done, it would be difficult to produce a funding model that satisfies everybody and that every local authority feels it has been fairly treated. It is a challenge and it is not a simple thing to do. It is difficult to divine what the logic was at the start. I am working on that and I know there have been detailed proposals as to how it could be reworked. If the Senator wants to come to my office, I am happy to engage on that.
Our programme for Government includes a commitment to the full implementation of the Moorhead report which involves a dramatic difference in the way councillors are paid. All major public expenditure decisions that involve pay always come back to the Department of Public Expenditure and Reform because they involve multi-year commitments, not just something within one year's budget. They have to be approved. I am happy to find out what stage that is at and report back to the Seanad. Many Members are concerned about the pay and conditions of councillors. We know the endpoint is the full implementation of the Moorhead report.
I was a councillor for a number of years and served as cathaoirleach of my local council. I have first-hand experience of the difficulties and the challenges councillors have nowadays, particularly this year when they cannot even meet easily. One function of a local authority is that it is the agency designated for emergencies. During severe weather emergencies, it is the local authority which grits the streets for example. It is the local authorities which stood up during the pandemic to provide emergency services to older people, to bring food to their homes and to organise volunteer groups. I am grateful to them for all of that, particularly the chief executive of my own council. I am still in contact with my local authority. I was meant to meet its chief executive, Philomena Poole, who is very competent, this morning but I am here. I will report to the House as how we are getting on with the Moorhead report.
Tax reliefs were mentioned by Senator Gavan. My Department is keen to eliminate as many tax reliefs as possible. They are expensive and grow like weeds. They are sometimes introduced to facilitate legislative or strategic change. A decade ago, there was a major pruning back of tax reliefs. If there are any which the Senator would like to see abolished, he should feel free to ask me and we would be very happy to consider them.
It is our policy to bring in a statutory right to sick pay. Ireland is one of the developed countries which does not have such a statutory right. At the start of the pandemic, it was brought into focus that many people did not have a right to sick pay. It is dangerous for the population if those on low wages are obliged to go to work at a time when disease is spreading. That is why the rules were changed to allow for people to claim pay on an accelerated basis where they felt they had symptoms of corona virus. We need to extend that into a general statutory right for sick pay for all workers. That is something we are working on.
When is it proposed to take Committee Stage?
Is that agreed? Agreed.