Is this a reversion to a policy of financial prudence on the Minister's part? He only recently raided the capital services redemption account to bolster the appearance of his budgets. Now we seem to be saying we will provide an annuity into a capital service redemption account. What is the view of the Minister for Finance on capital service redemption accounts?
Finance Bill 2004: Committee Stage (Resumed).
There is no change in the procedure. This is a standard provision introduced in the Finance Act 1950, which established the capital service redemption account. The capital service redemption account was established on foot of a decision by the then Government that borrowings for Voted capital services should be amortised over a period of 30 years, so that they would involve no permanent addition to the public debt. Each year a new annuity is calculated which is designed to provide an annual sum which, when accumulated over 30 years, will amortise the expected borrowing in respect of the expenditure on Voted capital services for that year. The Finance Bill gives statutory effect to this annuity.
Section 169 provides for an annuity of €80,533,677 to be charged to the central fund in 2004 and for the following 29 years to cover the projected borrowing for Voted capital services for this year.
It has been the practice to adjust the annuity in the following year's Finance Bill to take account of the actual outturn for the borrowing requirement in respect of Voted capital services in the previous year. The Finance Act 2003 provides for an annuity of €29,663,454. In the event, no borrowing was required for Voted capital services and so the annuity in respect of last year's Voted capital services is being reduced to zero.
Is this not the same account the Minister raided when he was in temporary financial difficulties and wanted to put a good gloss on the financial reporting in the election year of 2002?
Did he not shift substantial money from this account to cover the Exchequer deficit?
No. Long before my time the capital services redemption account had been sometimes used to hold over debt improvements. Savings on the debt go into the capital service redemption account and are used in the following year. That is all that was ever done, in my time or previous to me.
Therefore, this money that we are voting will be intact. It is to act as a mock depreciation charge.
Where will it be funded?
It is an accounting exercise. It goes in an out and does not have any effect on the EBR or the GDP.
If it is only an accounting exercise the Minister is making no genuine provision for the depreciation of assets. If we approve a project a depreciation charge should be made somewhere in the accounts.
There is. That is why the Government, in 1950, decided to have this account set up.
The Minister is an accountant and I am not. However, would it not be prudent for the State to make a depreciation charge when a new asset is put in, which would show in the accounts? This money would then be available for replacement and other capital works. If this sort of account is to be created it should——
Some years ago the Committee of Public Accounts debated the continuing need for the capital service redemption account and we concluded that it should be kept. At the time, there was a view that there was no need to keep it because it had outlived its usefulness. I can send Deputy Bruton the notes on this issue. It has nothing to do with putting money away for a rainy day.
Maybe the Minster would do that. It seems very like the account that was raided for €600,000,000. I thought the same name was used.
The Deputy is correct. Sometimes one can hold over the debt savings for one year and bring them into the following year. It is that to which the Deputy refers. There is not a particular fund like, for instance, the social insurance fund. I took a surplus from the social insurance fund into the Exchequer. I have used the capital service redemption account occasionally — as was done previously — if there were additional savings, and used them the following year against the debt.
What is in this account at the moment?
Nothing. The details of the accountare published as part of the Finance accounts. It has been down almost to zero for the past two years.
The Bills Office advises me of a clerical error in subsection 91(9)(d), which requires a Report Stage amendment. The word “paragraph” needs to be replaced by the word “subparagraph”. I will bring forward a Report Stage amendment to this effect.
I move amendment No. 118:
In page 144, line 29, after "established" to insert "in the State or".
I move amendment No. 119:
In page 151, line 16, after "card," to insert "in".
I thank the Minister, his officials and Deputies for participating in the debate on Tuesday, Wednesday and today.