SELECT COMMITTEE ON FINANCE AND THE PUBLIC SERVICE debate -
Wednesday, 18 Jun 2003

Vol. 1 No. 16

Estimates for Public Services 2003 (Revised).

Vote 1 - President’s Establishment.

Vote 2 - Houses of the Oireachtas and the European Parliament.

Vote 5 - Office of the Comptroller and Auditor General.

Vote 6 - Office of the Minister for Finance.

Vote 7 - Superannuation and Retired Allowances.

Vote 8 - Office of the Appeal Commissioners.

Vote 9 - Office of the Revenue Commissioners.

Vote 11 - State Laboratory.

Vote 12 - Secret Service.

Vote 15 - Valuation Office.

Vote 16 - Civil Service Commission.

Vote 17 - Office of the Ombudsman.

Chairman

The purpose to today's meeting is to consider the Revised Estimates for 2003 falling within the remit of the Department of Finance, the Department of the Taoiseach and the Office of Public Works. A proposed timetable was circulated to members. It allows for an opening statement by the Minister and the Opposition spokespersons, followed by an open discussion on the individual Votes by way of a question and answer session. Is that agreed? Agreed. I ask members for co-operation in adhering to the timetable as we must conclude not later than 1 p.m. because we are dealing with the Estimates for the Taoiseach's Office and Office of Public Works in the afternoon.

On behalf of the select committee, I welcome the Minister for Finance, Deputy McCreevy, and his officials to today's meeting. Before inviting the Minister to make his statement I wish to make one observation as Chairman of the select committee. I find it unusual that we are discussing the Estimates for 2003 half way through the year when half the money is spent and the other half is already committed. In terms of Dáil procedure I would ask that in future the Estimates be debated in a more timely manner. The pre-budget Estimates are published in November. Ideally there should be a discussion in the committee. In February 2003 the final Estimates were published. I will be proposing that we have our debate on the Estimates after they are published rather than waiting for three or four months. I invite the Minister to make his opening statement.

Minister for Finance (Mr. McCreevy)

My purpose in appearing before the select committee today is to introduce the year 2003 Estimates for the Finance Group of Votes, excluding Vote 10, the Office of Public Works, which will be taken later today by my colleague, the Minister of State, Deputy Parlon, who has responsibility for the Office of Public Works.

The Finance group of Votes for 2003, comprising 12 Votes which are being considered today, amount to a total of almost €750 million. Amongst the larger Votes included in the Finance group are the Office of the Revenue Commissioners, amounting to €309 million; superannuation and retired allowances at €203 million; the Department of Finance at €114 million and the Houses of the Oireachtas and the European Parliament at €81 million. The Office of the Appeal Commissioners, which is a new Vote introduced in this year's Revised Estimates, amounts to €561,000. The members of the select committee have been provided by my Department with background briefing on the Estimates which are presented today for approval.

Before dealing with the Estimates for the individual Votes I wish to make a few brief general comments about the economic backdrop to the Estimates. Our economic achievements in recent years have been quite significant. In the decade up to 2001 the Irish economy achieved one of the best economic performances in the world. Taking the more recent years 1997-2001 as a whole, the economy grew, in GDP terms, by an annual average of just under 10%. The number of people at work has increased by close to 300,000 during the past five years. Unemployment today remains at historically low levels. Long-term unemployment has also fallen from 5.6% in 1997 to 1.4% in the first quarter of 2003. The general Government debt-GDP ratio stood at 65% in 1997. At 34% in 2002, it was the second lowest in the European Union. As in other developed countries, the slower economic growth has affected the public finances. However, a marginal surplus on the Exchequer balance was still recorded for 2002. A general Government deficit of 0.8% is forecast for 2003.

Economic growth has flourished. However, the rates of growth are now moderating. Our budget day GDP growth forecast for 2003 is 3.5% and 4.1% for 2004. The most recent economic data indicate that the domestic economy was growing more slowly than had been predicted at budget time last December. The economy will have entered 2003 with little momentum and the risk to our budget day forecasts are therefore on the downside. My Department will publish updated forecasts for 2003 later in the summer.

The Irish economy remains one of the most open in the world. In this context the international outlook is vital and it remains characterised by uncertainty, in particular regarding the timing of the global pick-up. Also, competition for internationally traded goods is very keen and our inflation is still relatively high compared to our EU partners.

The challenge, given the current circumstances, is to pursue the correct policies and, in particular, to safeguard Ireland's competitiveness to ensure we will be well placed to take advantage of the international recovery when it occurs, for the benefit of all our people. We need to consolidate the significant economic gains we have made over recent years and to focus more than ever on value for money. It is against that backdrop that the Estimates must be seen. It is one which places a premium on a prudent budgetary strategy that ensures the ongoing sustainability of the public finances. In that context, it is appropriate that the rate of increase in overall spending cannot continue at the rates that we have witnessed in recent years.

The 2003 Revised Estimates for Public Services published on 27 February 2003 reflect changes in voted expenditure announced by me in the budget, together with some adjustments to voted expenditure which arose thereafter. Total net voted spending in 2003 will be €30.8 billion, an increase of nearly 7% on the projected outturn for 2002. Total gross voted expenditure in 2003 will be €38.2 billion, an increase of almost 7%. This, of course, includes additional spending from the social insurance fund and the national training fund and gives a fuller picture of the level of Government investment in services and infrastructure.

This Government is committed to spending such public resources as can be made available to provide for the welfare of our people and to improve the productive capacity of the economy. We have shown that commitment in the past. In the period 1997 to 2003 gross spending on services more than doubled from €19 billion to over €38 billion. Of this, total spending on capital investment has grown from €2 billion in 1997 to over €5.5 billion in this year's Estimates. This is evidence of this Government's and the previous Government's commitment to prioritising investment in key areas for the future benefit of all our people.

I now turn to two of the principal Votes, and a new one, in the Finance group of Estimates, starting with the Vote for my own Department, Vote 6 - Office of the Minister for Finance. The Estimate for my Department for 2003 amounts to €114 million, a net increase of €17 million over the 2002 outturn. Within this Estimate, the following are the major programme expenditures in my Department for 2003. A provision of €6.6 million is made in subhead M for the Change Management Fund; this is a central resource to assist all Departments to carry through the Strategic Management Initiative which is the basis for the reform of the public service. A total of €16.6 million is provided to meet expenditure on EU co-funded programmes, including subhead N.1 - Peace Programme, subhead N.2 - North-South Interreg, subhead O - Ireland/Wales and Transnational Interreg, subhead J.I - Structural Funds Technical Assistance and Other Costs, subhead J.2 - Technical Assistance Costs of Regional Assemblies,

In addition to these co-funded programmes, €1.48 million is provided in subhead N.3 for the Special ELI Programmes Body. Some €11.86 million is provided to support the transition of the Irish public service to an information society. This includes €7.78 million under subhead P in respect of information society expenditure. This subhead provides a central mechanism to support the Civil Service-wide e-government requirements and also to respond to opportunities under the Government's new Action Plan for the Information Society. For 2003, a total of €43.2 million has been distributed across a number of Departments primarily for e-government and e-business projects.

A further €4.08 million is provided under subhead R, e-procurement initiative, to provide for a range of electronic procurement projects and initiatives at national and local level. A total of €12 million is being provided under subhead E, Ordnance Survey Ireland - grant-in-aid. Ordnance Survey Ireland was established as a body corporate under the Ordnance Survey Ireland Act 2001, with effect from 4 March 2002.

A total of €7.6 million is included in subhead L for payments to the promoters of certain charitable lotteries - national lottery funded. The scheme is a focused initiative which is intended to address the circumstances of those private charitable lotteries which have products in the marketplace in direct competition with the national lottery.

Vote 8 deals with the Office of the Appeal Commissioners. The net Estimate for the Office of the Appeal Commissioners, which hears appeals by taxpayers against decisions of the Revenue Commissioners concerning tax and duties, is €561,000. The bulk of the Estimate, almost €417,000, is for pay and allowances. This is a new Vote. Funding for this office was previously included in Vote 9 - Office of the Revenue Commissioners.

Vote 9 is the Office of the Revenue Commissioners. The net Estimate for the Office of the Revenue Commissioners at €308.6 million is up €33.4 million - or 12% - on the 2002 outturn. The bulk of the Estimate, almost €250 million, is for pay and allowances for some 6,460 staff.

Through the implementation of a new organisational structure, Revenue aims to improve efficiency and effectiveness both in tackling all forms of non-compliance and in delivering a quality service to compliant customers. This change programme was first signalled in Revenue's annual report for 1999 when the broad shape of the new structure was outlined. The need for this structural change was endorsed by the Department of Finance review of Revenue which followed the Public Accounts Committee inquiry into DIRT. Since then, project teams within Revenue have been working to design in detail the role, functions and structure of the divisions that make up the new structure. The programme of organisational change is designed to further strengthen Revenue's ability to fairly and efficiently collect taxes and duties. An amount of €1.4 million has been provided in the Estimates to enable this project to be brought to a successful conclusion.

The Revenue Commissioners agree that the interests of the organisation would be best served if the departmental taxes and general service grading structures were integrated on general service lines, as it will assist to enhance the benefits of the new restructured organisation; consolidate improvements made in recent years by allowing maximum flexibility in the deployment of staff; reinforce better service to the public; and improve the focus in tackling evasion. In March 2003, I was very pleased to approve proceeding with the substantive integration of most grades. The estimated cost in 2003 is €8.5 million.

The 2003 Estimate also provides for the Revenue on-line service known as ROS. Since it commenced in September 2000, ROS has provided Revenue's customers with a safe, secure and confidential medium of interacting electronically with Revenue. ROS enables business users, including the self-employed and third party agents, to transact business with Revenue on-line including filing returns, calculating and paying liabilities and accessing their tax details 24 hours a day, seven days a week. The amount specifically provided for this in the Estimate for 2003 is €4.6 million.

That concludes my opening remarks. I thank the committee for its attention and I commend the Estimates to the committee. I will endeavour to supply any further information that members may require.

Mr. P. McGrath

I thank the Minister for his opening remarks and for joining us today. I would go along with what the Chairman said about the time at which we are debating these Estimates. He rightly pointed out that we are now well into the month of June and we are discussing Estimates that are half spent or half full, depending on one's point of view. It is too late in the year to be examining the Estimates and a mechanism must be found whereby we can have real and meaningful input into the discussion of the Estimates. Whatever way we can co-operate with you on that, Chairman, we will be happy to do so and I know the Minister will want to co-operate as well.

The Minister painted a very rosy picture of what has happened to the finances of the country over the past while, but what he neglected to tell us was that during his stewardship, particularly over the past two years, he has accounted for increased public spending of 40%. That is an unprecedented increase in expenditure over a very short period and it has not been matched by the actual Revenue take. That is recklessness to the greatest extent because not only has he spent that amount of money, which is questionable or possibly should not have been spent in that way, but he has not presided over the spending of the money to ensure we got best value for money.

For example, even though spending on the health sector has increased dramatically over the period of the Minister's stewardship - I could be pushing an open door on this one because I know the Minister has very strong views on it - unfortunately, the services do not appear to have improved in the interim. Beds are being closed in hospitals throughout the country because the money is not available to keep them open. In my own hospital in Mullingar, the increase in allocation for this year is 0.07% over what it was last year because of wage costs and so on. I expect there will be bed closures in that hospital because of the failure to allocate additional funding to it. That is a matter for which the Minister has a responsibility. He has given the money to his colleague to spend it in the health sector but he has not put the riders on it and said they must get value for money. That is an area in which the Minister has failed.

The Minister has thrown money at various sectors, partly to garner votes. For example, we discussed the special savings incentive scheme on Committee Stage of the enabling legislation. My estimate of the uptake of the scheme - the Minister commented on this previously - was far more accurate than the Minister's. Who would look a gift horse in the mouth? Who would not take up an offer of 25%? The actual cost to the Exchequer will be €2.5 billion to €3 billion, a huge amount of money. It is taxpayers' money but something has got to suffer and we will be borrowing because of that.

It was a good idea to invest in the pension fund, which receives €1.2 billion of Exchequer funds each year, but unfortunately approximately €800,000 to €900,000 of that has been lost because of investments and the downturn on the stock market. Surely it would be better value to invest the money in infrastructural development, for which this country is crying out. The projects being provided currently are recklessly over cost. I understand current infrastructural developments are costing in excess of 60% more than the target cost. Recently somebody told me that the original estimated cost for the Luas project in this city was €6 million. Part of this project has now been completed and the negotiating cost in relation to that €6 million project is now €30 million. The project initially won at €6 million has cost a great deal more. It will probably come in a little less than €30 million but a multiple of €6 million has already been paid over to the contractor, and the final negotiating figure is €30 million. It is ridiculous that the project should come in at such a high cost. What controls has the Minister in place to ensure that practice stops? Why are there are such huge cost overruns?

The other day there was an article in one of the newspapers which referred to the cost of providing sports stadia, and a comparison was made with Portugal. Portugal can build stadia for over €100 million as compared to almost €1 billion here. The marvellous stadium in Cardiff was produced at a cost of £170 million sterling, which is approximately €250 million. Why can we not do the same here? Has the Minister been able to identify the problem? Will he indicate three or four items that contribute to those projects being so much more expensive here than in other European countries? It is not a question of wage costs being higher; they are not. Material costs should not be any higher. There is no reason cement, stone, sand, gravel and steel should be any more expensive here.

This is the legacy with which we must deal. The Minister's failure to keep control of expenditure means we did not gain sufficiently from the boom period and the money we had to invest in these projects has not produced the anticipated results. The Minster is a sensible and down to earth man. However, some of the things that have happened within his remit are lamentable. For example, the worthwhile road project between Kilcock and Kinnegad will shortly commence. While I disagree with the proposal to toll it, the road will be completed in approximately three years. A fine dual carriageway will run from Kilcock to Kinnegad and a couple of miles west of Kinnegad. From there, a small and appalling stretch of roadway will stretch from Kinnegad to Rochfortbridge, on which there have been a number of accidents. Last week, on a one mile stretch of the road at Clonfad, there were four road traffic accidents. Recently, there was a fatality near the same area. Despite this, no plans have been advanced to upgrade, with the result that traffic coming at speed from Kinnegad will be suddenly funnelled into this disastrous stretch of roadway. A number of years will elapse before it is upgraded. It means the upgrade of the Kilcock to Kinnegad roadway will be a waste of money. There should be wider thinking in terms of extending projects.

The next stretch of upgrade on this national road will run from Kinnegad to Athlone, with the first phase running from Kinnegad to Kilbeggan. While the Minister does not have the resources to provide for the complete project, there is a need to take a sensible approach. The road from Rochfortbridge to Kilbeggan is not too bad. It is reasonably wide and there will not be the same level of accidents and fatalities. However, the stretch of road from Kinnegad to Rochfortbridge is deadly. As overlord, the Minister should have an input into decisions made in this area. He should question the decisions taken by the NRA and instruct it not to authorise projects that will create bottlenecks and attendant dangers.

Will the Minister indicate what has been done to address escalation in insurance costs? Before the general election, the Government indicated it would do something about the matter. Unfortunately, premia continue to escalate. At a previous meeting of the committee, I gave the example of a relatively small company located in my area which provides a great deal of employment. Its insurance costs increased from approximately £45,000 per annum, to £85,000 to £145,000. Following the introduction of the euro premiums further increased. It is difficult to see how such a small company can survive when the cost of its overheads increases so dramatically.

Inflation is high here by comparison with the rate in the euro zone. Some 60% of inflation costs are directly attributable to action or inaction by the Government. For example, the 69% increase in third level registration fees, the 13% increase in bus fares and the increases in rail fares, motor tax, health insurance, dental services and electricity, water and service charges contribute to inflation and wipe away the good achieved during the boom years when we had the opportunity to wisely invest taxpayers' money, to which the Minister regularly refers. A Member of the House, recently speaking on local radio, acknowledged the cutbacks in certain areas but said the question of borrowing was not to be considered as it was a thing of the past. I was amazed that a Member of the House would not be aware that this year, the country is borrowing €1.9 billion. Is talk about not borrowing deceiving the public? It surprises me that a Member would not be up to date on these matters and be able to indicate his or her position to the public in a clear and comprehensive manner.

Given the recent currency fluctuations involving the euro, sterling and the dollar, why have there not been corresponding reductions in the price of cars? The decline in the value of the dollar against the euro means that American cars purchased here should be cheaper, yet there has been no change. Who is responsible for ensuring prices change? Does the Minister have a role? Most cars are imported from Britain. I am sure the Japanese are based on a dollar price.

Chairman

I ask the Deputy to conclude.

Mr. P. McGrath

Perhaps the Minister will indicate why the cost of cars has not changed despite the recent currency fluctuations. The public deserves to have the savings passed on. What action will he take to address this?

Caoimhghín Ó Caoláin

I apologise for my late attendance, but I was obliged to remain in the Chamber. These proceedings are a farce. This committee is charged by the Dáil with scrutinising the Estimates for Departments that come under its remit. They were first published last November. The budget was agreed seven months ago and we are now asked to consider the Estimates almost into the second half of this year, when presumably half of the moneys we are supposedly scrutinising have already been spent. We have made clear that this procedure is a travesty and does a disservice to democracy. It requires to be revisited. I hope this is the last occasion on which we deal with everything retrospectively and that this committee will have a more substantial input into the passage of these measures in future. I hope that applies in the current year.

What we are going through is part of a pattern of downgrading the role of the Oireachtas and treating Deputies, especially Opposition Deputies, as rubber stamps. Another example is the Government's health plan and the associated reports published today. These have been leaked steadily over recent months and, last night, un-elected health board executives were briefed. It was the turn of Government backbenchers first thing this morning, and the media will receive the report this afternoon - those who have not already had sight of it. It is then that the elected Members of the Dáil and the Seanad will receive the report. That is treating both the Houses of the Oireachtas and their committees with contempt. I proffer it as an example because of its contemÍporary nature.

Today's procedures in committee also expose the outdated budgetary procedures in this State. We have inherited an annual budget system that was designed and is maintained as part of the Exchequer system in the neighbouring island. It may be the Minister for Finance's big day out, but the budget day affair has become an annual circus. It should be dispensed with and replaced with multi-annual budgeting and longer-term planning with flexibility to meet the needs which will arise during the projected period of both the plans and the budgets.

We must recognise that the system has suited the Fianna Fáil-Progressive Democrats Government very well. It is no surprise that I express the view that short-term-"ism" is very useful when it comes to winning general elections, as we saw last year in the period from the budget up to the general election on 17 May. The words of the Minister, Deputy McCreevy, of just more than a year ago are now etched into political history. I remind the Minister again that, on 13 May 2002, four days before the general election, he said: "I can confirm that there are no significant overruns . . . and no cutbacks whatsoever are being planned, secretly or otherwise . . . ". It should be the Minister's epitaph. We are expected to believe that, after the general election, the real state of public finances suddenly struck the Minister and his Department like a bolt from the blue. Even with the passage of all this time, my recall is not entirely misty. We are supposed to accept that proposals for €900 million in public spending cutbacks were being prepared in the Minister's office without his knowledge. The infamous Department of Finance memo proposing the €900 million cuts was dated June 2002, the month following the general election, and must have been at an advanced stage of preparation, if not complete, before the general election and certainly when the Minister, Deputy McCreevy, made his famous assertion, or faux pas as it would be viewed in other circles.

I have repeatedly said to the Minister in the Chamber and at committee that the policies he has implemented over the past six years have widened the gap between the most well-to-do in society and those who struggle to make ends meet. He has contradicted that view and will probably do so again today, but there is ample evidence to support that sad reflection on the reality of the outworking of the measures he has introduced over the past six years.

This is truly a tragedy because the previous Government in particular, that is, this Government in its first five years in office, had two enormous advantages over all previous Administrations in the history of this State. It was in office at a time of exceptional prosperity resulting in budget surpluses for four successive years. That was truly an unprecedented situation in which the Government found itself. As well as this, despite the Government's slim Dáil majority, it was able to plan for five budgets in a row. Its position was firm and solidly in place, such was the support from those with whom the former Chief Whip did business.

Those advantages were scandalously squandered by the Government and especially by the Minister. Not only did he and his colleagues fail to tackle the structural inequalities which warp the economy and damage society, they worsened them and widened the gap between rich and poor. In the budget for 2000, three times more was spent on tax reduction than on social welfare increases. In the budget for 2001, there was a further reduction of 2% in the top rate of tax. Yet again, those who needed them least benefited most from those tax cuts. It was estimated that the gap in disposable income between a person earning £40,000 a year at that time and a person who was unemployed widened by £159 a week. That gap has widened further since.

After four Fianna Fáil-Progressive Democrats budgets, the Economic and Social Research Institute had to state in July 2001——

Chairman

There is a vote in the Dáil. Perhaps the Deputy might conclude.

Caoimhghín Ó Caoláin

I will conclude. We still have a moment. I refer to the ESRI's statement in July 2001. I have referred it to the Minister before, but he is immune to these matters. Nonetheless, I am obliged as an Opposition Deputy to continue my efforts to try to break through the defensive wall he has around him. The ESRI stated that the high rate of relative income poverty was a serious structural problem that needed to be tackled while the resources were available. Now we see a situation where perhaps the resources unfortunately might not be available. There has been accelerating economic growth since 1997, but a quarter of our children and a fifth of our adults are in households with less than half the average income. We now know that, over the past five budgets, the richest 10% in the population received 25% of the benefits of tax cuts while the poorest 20% received a mere 5%.

The Minister has now told us that the boom is over, and already the disadvantaged are paying the price. We have seen cuts in health, education and especially services for people with disabilities, which is regrettable. Community employment schemes, among a range of services, have been devastated.

I pledge again my opposition and that of my party to the cutbacks being imposed by the Government and, as I have in the past, will continue to oppose them vigorously both inside and outside the House.

Sitting suspended at 11.50 a.m. and resumed at 12.06 p.m.

Chairman

Does the Minister wish to make any observation before we go into the detail of the Vote?

Mr. McCreevy

I will make a few general observations. We have had economic debates in the House on a number of occasions, including one somewhat economic last night. The Opposition's general criticism is twofold. It says we are spending too much and in the next breath, because of the demands in particular areas, it says we are spending too little. I do not know how it can reconcile the two criticisms.

Deputy Paul McGrath is right. We increased public spending substantially over the previous five years in office. However, at the same time we reduced our debt. The GDP ratio is the second lowest in the European Union. In 2002, as in all of the other years I was Minister for Finance, we achieved a budgetary surplus. We have put considerable amounts of money into the health sector. Later this afternoon the Government will announce the proposed organisational changes relating to the sector.

It is always a difficulty for the Minister for Finance to balance realism and pessimism. My approach to economics has always been based on realism. We deal with things as they are and not as we would wish them to be. There have been many mistakes in Irish economic policy over a 50 to 60 year period but also many successes. A tendency in dealing with economics in this political climate has been to deal with things too late, to hope something will go away or that it will not turn out badly, and to take actions too late in terms of the public finances. Before becoming Minister for Finance I often railed at that type of approach. The actions I have taken in the past have shown that while I have dealt with the reality, if things change I change with them and deal with the changed situation.

Public spending was increased drastically in the previous five years because we had the resources to do so. We had the resources to increase public spending and reduce taxation. As I asked last night, what area of public spending should I not have increased? Should I not have increased old age pensions, money to the health service, money to the education sector or payment rates for social welfare? All of those things are done and at the same time we reduced the tax burden on the people.

A recent OECD report shows that Ireland has the lowest tax burden or social insurance take out of any OECD country. One no longer hears the criticism, often heard in my early years as Minister for Finance, that we favour only the higher paid. The fact is that we have done more to lower rates than any other country in the OECD. Even with the slower economic growth, we have increased public spending this year by about 7%. No other country in Europe is in a position to increase its spending by 7%. Most of my colleagues in Europe are implementing massive reductions in public spending. Between tax change increases and expenditure reductions, Minister Eichel will be taking €21 billion out of the German economy, and he will still be outside the 3% deficit limit. In its new stability pact produced recently due to the elections, the Netherlands, which is in a fairly healthy financial state and is not in the same difficulty as Germany, will experience substantial actual cuts. We have increased public spending this year by 7%.

If the Irish economy goes back to what would be deemed to be its trend growth rate, the increases in public spending in the longer term will be much less than what they were in previous years. If the economy grows by, say, 4% per annum in GNP terms and we have an inflation rate of, say, 2%, which is the EU criteria for getting inflation at that level throughout Europe, spending could only increase by approximately 6%. These are the new realities and we should learn from the mistakes of the past. I will not go over all these issues again; we have discussed them on many occasions.

Deputy McGrath raised specific points regarding the special savings investment accounts. He will have noticed recently a survey carried out by the Revenue Commissioners on the figures up to 31 December 2002, which outline the full position. A lot of people had joined up to 31 December 2001 with the majority joining before the deadline of 30 April 2002. Off the top of my head, the number of people still in the special investment savings scheme is approximately 1,140,000. The income spread of those in the SSIA scheme is more or less the spread of income throughout the population. Most of those in the scheme earn less than €20,000 per annum. That was pointed out in the survey and one of the newspapers ran the story last Monday week. Some people continue to write that the scheme only favours the better off but Deputy Rabbitte is right. When people saw a good deal, they went for it and ordinary people have gone for it. Ordinary people are putting aside their own money and the State is putting a small amount of money to it. The average cost to the State is approximately €44 million per month, in other words, €525 million to €530 million per annum.

Mr. P. McGrath

It is €3 billion for the duration of the scheme.

Mr. McCreevy

People have got into the habit of saving again and 75% of what is going into the scheme will be their own money. Individuals who are in a better financial position have decided to save an amount of money and I believed then, as I do now, that that is a good thing.

Deputy McGrath raised the question of infrastructure and asked why the costs here appear to be higher than those in any other EU country. There are a number of reasons for that, and inflation is only part of it. There is the question of competition, planning difficulties, the compensation culture and massive fees that are paid to everybody in the Irish structure. The Deputy might have read a report recently in which the chairman of the metro project, Mr. White, came before a particular committee and gave a tentative breakdown of the cost of building a metro system. About one third of the costs would be construction costs and delay means more money. We have an inordinate system of delay. We have a very lengthy planning process. We have a very lengthy legal process with which people are not satisfied, and all time lost increases the costs. My colleagues, the Minister for Transport, Deputy Brennan, and the Minister for the Environment, Heritage and Local Government, Deputy Cullen, had discussions recently on bringing forward a critical infrastructures Bill to try to speed up these matters.

Deputy Paul McGrath raised the question of the cost of a stadium. Interestingly, with all the hullabaloo about a national stadium, everyone forgot one main point. The actual cost of building the stadium in Dublin is more or less the same as building it anywhere else in Europe. There is not much of a difference. All the other figures add up but some of the headlines relate to other costs, and the people writing them added in nearly every other cost. The actual construction cost of building the stadium is more or less the same as it would be in Cardiff.

I do not want to comment on the specific difficulties regarding motorways but I accept Deputy McGrath's point about the motorway to which he referred, the Kilcock-Kinnegad road. I became Minister for Finance around the time the Kildare bypass was announced and I made strong representations as to why we were going to bypass Kildare only to have people end up in the middle of a bog, and then get through Monasterevin. I encouraged the National Roads Authority to bring forward what I call the Monasterevin, known as the Heath bypass, which, when it is finished, will bring people right through to the bypass at Portlaoise, which is the sensible approach. The Monasterevan bypass construction work has already commenced and there will not be that much of a delay. However, the behaviour of engineers sometimes astounds me——

Mr. P. McGrath

Perhaps the Minister could get his good offices to——

Mr. McCreevy

The Kildare bypass will open some time next year. We will still end up in the middle of the bog having to get through Monasterevan. About two years later the Monasterevan bypass will open but we might have been further down the road if we had not encouraged them not to have the ridiculous situation about which the Deputy spoke.

The Deputy raised a question about insurance costs. Is he aware that the Minister, DeputyHarney, has taken particular actions in that regard and I hope they will bear fruit? I accept that insurance costs have had a negative effect on businesses but hopefully the actions of the Ministers for Enterprise, Trade and Employment, Justice, Equality and Law Reform and Transport will bear fruit.

We will be borrowing €1.869 billion in 2003, given the assumptions we made at budget time. Hopefully, we will be able to meet those particular targets but there is a degree of weakness in the budgetary receipts for the first five months of the year. I will have to make a call on that later on.

It is not the role of my Department to deal with the price of cars or anything else. In any event, the market is the area to criticise in that regard.

Mr. P. McGrath

Many of the Minister's colleagues were talking about interest rates last week. It is not specifically his role to tell the banks to reduce them but surely a definitive statement from the Minister to the effect that he notes the currency changes and he is disappointed that the car companies are not reducing the price of cars accordingly would help. Is it not appropriate that the Minister should intervene because it is the consumer who is suffering?

Mr. McCreevy

I am sure the car companies will tell me that the biggest element in the price of cars here is State taxes.

Mr. P. McGrath

So what? If the base cost of a car is reduced, which should happen as a result of currency changes, everything else will be reduced. Is it that the Minister does not want to lose the extra tax he will get?

Mr. McCreevy

I would not say that.

Deputy Ó Caoláin raised the question of the Estimates process. It is a matter for the committee to decide its own processes. When the Abridged Estimates Volume is announced in November, the Dáil has a debate on the Estimates at that stage. When the Revised Estimates Volume is completed, it goes to the committee. For the past two years I succeeded in having the Revised Estimates Volume out by the end of February, so there is no reason it cannot be taken after that. I hope we will be able to do the same next year but it is a matter for the committee to order its own business in that regard.

Deputy Ó Caoláin also raised the question of multiannual budgeting, as announced last December and January. I hope to be in a position to have in place later this year a multiannual capital budgeting framework which will allow the partners to plan their capital programme for a number of years in advance. I read into the Dáil record last night the two paragraphs from the letter I wrote to Deputy Noonan on 30 May 2002. Some months ago Deputy Paul McGrath nearly did so himself. I took the opportunity to read the paragraph referred to by Deputy Ó Caoláin and the succeeding paragraph in which I pointed out that never in the history of the State had every programme come in exactly as planned. I stated that would be the case in 2003 also.

There were no overall cutbacks in 2002. There was a 14% increase in voted spending in 2002 over 2001. The memo regarding the €900 million to which Deputy Ó Caoláin refers pertains to the budgetary process for the year 2003. As I pointed out, there was an increase of 7% in 2003 over 2002 after the budget. The memo to which the Deputy refers was released under the Freedom of Information Act to the national newspapers and it addressed the manner in which we plan to return to the existing levels of service.

As previously, I reject totally the accusation that I widened the gap between rich and poor. Deputy Ó Caoláin, when quoting the ESRI, certainly did not quote from its most recent, post-budget 2002 study. Its author said that of all budgets over the past 20 years, the past two have done most to narrow that gap. They were described as the most socially progressive budgets in the period outlined. The article was published in that well known newspaper which supports me all the time, The Irish Times.

Caoimhghín Ó Caoláin

The Minister has not corrected the further gap he created in the preceding budgets from 1997.

Mr. McCreevy

The ESRI article pointed out that I had narrowed the gap when compared to the pre-1997 budgets of my predecessors and stated that I was more socially progressive, which astounded friends and foe alike.

Chairman

We will suspend now for the Dáil division after which we will return immediately. At that point, the last speakers will confine their comments to the Votes we have to clear before1 p.m.

Sitting suspended at 12.25 p.m. and resumed at 12.40 p.m.

Chairman

We will confine our comments specifically to the Estimates for discussion. We have agreed already that we will conclude at 1 p.m. The first item is the Vote for the Houses of the Oireachtas and European Parliament, the second is the Vote for the Office of the Minister for Finance and the third is the Vote for the Office of the Revenue Commissioners and the Office of the Appeal Commissioners, and we will then take the remaining Votes together.

Caoimhghín Ó Caoláin

Regarding Vote No. 2 and payments in respect of secretarial assistants for non-office-holding Members of the Houses of the Oireachtas, we addressed this in the course of last week's deliberations on the Houses of the Oireachtas Commission Bill. I note the figures for the Dáil show a provisional outturn for 2002 of €8,774,000, yet the estimate for 2003 is down to €7,802,000, a decrease of 11%. We have raised the issue of the exceedingly low pay provided for secretarial assistants and cross party concern was expressed about this matter at this committee last week. The figures before me suggest this position is being maintained. I would like a full explanation of the reason for the 11% decrease.

Mr. P. McGrath

I note there is a 50% increase in funding for televising the proceedings of the Dáil under subhead D, pertaining to other services. Is there a reason for this? My second question relates to legal fees of €1.4 million associated with the Houses, subhead I. Has there been a dramatic change this year? There were no costs submitted under that heading last year. I note there are additional costs for ISDN rental under subhead M. I presume that relates to our constituency offices. While we have ISDN Internet access, for some reason the speed of our computers seems to be worsening and they can be particularly slow at certain times. Are the additional costs being incurred in upgrading this system? What can we do to improve the performance of the computers in our constituency offices?

Mr. Finneran

My question relates to other services - subhead F1, namely, allowances to, or in respect of, former members of the Oireachtas. I note there is a decrease of 80%. I am sure there is a simple explanation and perhaps the Minister could outline it.

Mr. McCreevy

Deputy Ó Caoláin raised a question on subhead K1. Expenditure in 2002 was higher due to post-election liabilities. For example, redundancy payments had to be made to secretarial assistants whose Member retired or lost his or her seat. The figure in this year's Vote is the correct one and is based on wage rates, including pay increases and so on.

Caoimhghín Ó Caoláin

I accept the Minister's explanation and thank him for it. I appeal to the Minister to use the opportunity of reflecting the views of all members of this committee regarding the low pay currently provided to secretarial assistants in the Houses. I would like the Minister to note this appeal and address it as a matter of urgency.

Mr. McCreevy

This matter has been referred to the LRC by one of the political parties. As much as my heart would like to do one thing, my head tells me to let these matters take their course within the LRC and other fora. There are many areas in the public services that cause grief to Ministers. The area of secretarial assistants in Leinster House causes more grief than most and has done so for a long time. Any changes made here are zealously scrutinised by other civil servants within the Houses of the Oireachtas and in other places. It is not a simple matter to address. Moving people on to certain scales is something of a "no-no".

A question was also asked about subhead M1 regarding telephones. The Estimate for 2003 provides for the full year cost of allowances payable. For example, in 2002 the allowance ceased in the period of the dissolution of Dáil Éireann. All provisions in this subhead and in subhead M2 have to be made for anticipated expenses for the Members' mobile telephones direct purchase and reimbursement scheme.

Subhead D relates to the televising of proceedings in Dáil Éireann, Seanad Éireann and other services. An amount for specialised maintenance of petaSite archiving, a specialised installation that digitally stores the archive or broadcast materials, has been included in 2003. Production charges for televising of the sittings of the Houses and committees is expected to increase as the number of sittings increases in comparison to 2002.

Regarding subhead I5, where the estimate for 2003 is €1.4 million, this was considered the appropriate amount in view of the amounts notified which are due for payment in 2003. Subhead A5 includes IT projects, such as remote access systems.

Deputy Finneran asked about allowances to or in respect of former members of the Oireachtas. The subhead provides for the payment of pensions on an ex gratia basis to the widows of pre-1960 members of the Oireachtas who are not covered by the present Member’s scheme - there are now no surviving claimants - and the remaining post-electoral costs regarding severance pay for former members.

Ms Burton

We had a discussion on the Houses of the Oireachtas Commission Bill in which Deputy Parlon gave an indicative figure of €40 million over three years. I reiterate our concern at the lack of resourcing, particularly regarding research services for Opposition Members. While I do not wish to restate the case, Deputy McCreevy as Minister, has a significant staff available to him. The members of this committee are largely doing the work of the committee without research assistance. I note that the Minister provided for an increase which will go to the commission. However, I am anxious that the Minister indicates that it will make provision for improved secretarial payments, as well as additional staffing, particularly in regard to research for the Opposition in order that there is some equality with the Government in the context of all parties doing their work properly.

Mr. McCreevy

The Committee Stage of the Houses of the Oireachtas Commission Bill was taken by the Minister of State at the Department of Finance, Deputy Parlon, last week and he will take Report Stage tonight or tomorrow. The figure in the original Bill, published by me, is the indicative one. However, the figure which I brought forward on Committee Stage is the indicative one. It is the figure I have decided to allocate to the Houses of the Oireachtas for the next three years, after which point it can be reviewed. As Deputies will know, the Houses of the Oireachtas Commission Bill provides a sum of money for three years. It will be fixed and may be reviewed after three years along with other aspects of the Bill if problems arise which we do not know about. It gives power to the Oireachtas commission to regulate the affairs of the Oireachtas. I dealt with the negotiations regarding substantive amendments to the Bill and decided upon a figure having had consultations with the Office of the Ceann Comhairle. It is not as much as the office wants, but is considerably in excess of the existing level of services figure. It is more than €40 million more than the existing figure.

It will be a matter for the commission to decide how it will allocate its money. However, the question of pay levels will be determined by the Minister for Finance. I assure Deputy Burton that there is no area which gives more trouble to the Minister for Finance than any changes to secretarial assistants' pay, particularly to secretarial assistants who are regarded as non-established civil servants from political parties. The Deputy can discuss this with her former party leader. Nothing is watched more closely by the permanent civil servants in the Houses of the Oireachtas and the unions on their behalf. It has proved a troublesome area for successive Ministers for Finance. Therefore, I learned early on in my career as Minister that this is an area best left to the existing industrial relations machinery.

There is a particular problem at the moment, which the Fine Gael Party has referred to the Labour Relations Commission, and it can be dealt with in that context. I assure Deputy Burton that, although it seems a small thing, if one did something dramatic there would be unintended consequences. It is a problem which is not easy to solve, despite its looking like it is. My predecessor and I would like to address some of the problems which have been raised by this committee. However, given the current climate of industrial relations and the relativity which is watched between other civil servants working in the same building, it is something which must be monitored closely. I will put the issue no stronger than that.

Ms Burton

I thank the Minister for his reply. He has been understanding, as was his predecessor, in regard to the needs of modern parliament. In the context of the Deloitte & Touche report in regard to services and facilities to Members, I wish to reiterate that increased research facilities for the Opposition parties are critical. One issue is the pay and conditions of the secretarial assistants, about whom we had a discussion at the last committee meeting. Everyone agrees that it needs to be examined, especially given the additional funding which the Minister is making available over the three year period. While it may be a decision for the commission, the Labour party has stressed that it wishes to see additional resources put into research facilities for Members. I would not particularly like to see any great increase in travel allowances for Members if it was to be at the expense of research facilities. I know the Minister will tell me that it is for the commission to decide. However, I wish to make the point.

Mr. McCreevy

Although I did not take the Committee Stage of the Bill because I was abroad last week, I spent a considerable amount of time on its preparation. I have also spent time proposing some of the amendments and negotiating with the Ceann Comhairle's office in regard to money. I agree with much of what Deputy Burton and others have said regarding improved facilities for Oireachtas Members and I would like to think that I have played my part in doing just that.

Deputy Paul McGrath told the House some months ago that a former colleague said he hoped I was returned as Minister for Finance because of the care I took of Oireachtas Members. I have given extra money to the commission. One of the beauties of the changes in introducing the Oireachtas commission is that, rather than people parading themselves to my office for additional money for travel, committees, typewriters, PCs and so on, Oireachtas Members will be able to decide these matters themselves. They can decide whether they want to go on exotic trips all over the world and have fewer ushers and typewriters or more paper or keep the lights turned on or off. The commission will comprise 11 people, the majority of whom will be Members of the Oireachtas, and it will make those decisions. It will no longer be a matter for the Minister for Finance. The budget is set for three years and if the commission wishes to spend it all in one year, it may do so, but the Minister for Finance will not give it any money and we would have to close down the Dáil for the following two years.

Mr. P. McGrath

The Government may well wish to do just that.

Mr. McCreevy

It will be the Members' job to make those great decisions themselves and I have framed the Bill in that context.

Caoimhghín Ó Caoláin

I refer to subheads N1 and N2, relating to the Peace II programme and INTERREG IIIA. I advise the Minister that at a meeting on 26 March of the Peace II monitoring committee held in Belfast, it was signalled that there was a serious possibility that we would lose up to €80 million out of the funding provided by the Peace II programme because people, groups and communities are unable to meet the stringent criteria which have been applied. This is out of an overall must-spend of €225 million by 31 December this year. The reason for the possibility of losing this money is down to the N+2 rule, which requires moneys, committed by the EU, to be spent within two years of their being committed. The implementing bodies, North and South, should have taken a more proactive approach to mainstreaming information in relation to Peace II and developed a more participative and interactive outreach strategy with target communities.

I am not only talking about communities in the North but, particularly, in the Border corridor, where we are failing to see real progress. In the current political dispensation on the island, the people in Border counties, who have been very important in creating that new climate, have failed to see any delivery on their hopes and expectations. This is a worrying situation that directly affects the local strategic partnerships in the Six Counties and the task forces set up under the county councils in the Twenty-six Counties. I appeal to the Minister to make the necessary intervention to ensure we are not faced with the tragedy of losing between €30 million and €80 million due to our inability to reach the prescribed thresholds.

Mr. McCreevy

The N+2 rule stipulates that under EU regulations, moneys allocated for spending in any given year must be drawn down and spent within two years otherwise the funding is lost to the programme. This rule is intended to give an incentive to managing authorities to implement the programmes efficiently and avoid the huge build-ups of unused credits which were a significant feature of EU budgets in the past.

Regarding the N+2 rule in the South, the first target for compliance with this regulation is 31 December 2003, by which time the programme will be required to achieve expenditure of €44 million in the South. Due to the late implementation of the programme during 2001 and 2002, expenditure must be increased in 2003 to avoid potential loss of funds. Progress towards achieving expenditure targets will be closely monitored by my Department.

All funds allocated to implementing bodies under the Peace II programme in the Border counties have been or are in the process of being allocated to projects. To date, good progress has been made in committing funds to projects. No loss of funds is envisaged in the South for a failure to allocate money to these projects. There may be some difficulties related to expenditure in the North.

Caoimhghín Ó Caoláin

There is extreme concern in the North but I can only give the position in relation to the €25 million for the six southern Border counties that has been earmarked for 2000-04. To date, Monaghan County Council has only received €1.6 million of its share of the €25 million allocated, which could be estimated at €5 million. Will we see an allocation of €3.4 million between now and 2004, the concluding year of the programme, more than double what has already been drawn? From my knowledge of the situation, I cannot agree with the Minister's point that we will not see a failure to draw down funding before the conclusion of the programme. There is reason for concern in the six southern Border counties and that is also reflected in indirect free aid, where there are mirroring concerns.

Mr. McCreevy

I will have the matter checked again and will bear in mind what the Deputy has said.

Caoimhghín Ó Caoláin

I appreciate the Minister's answer.