I welcome the Minister for Public Expenditure and Reform, Deputy Brendan Howlin, and his officials. The purpose of the meeting is to consider the Ministers and Secretaries (Amendment) Bill 2012. The Bill was referred to the select sub-committee by Dáil Éireann on 20 June. Is it agreed to conclude consideration of the Bill today, if possible? Agreed.
Ministers and Secretaries (Amendment) Bill 2012: Committee Stage
Amendments Nos. 1 to 13, inclusive, are related and may be discussed together.
Will the Chairman clarify whether any amendment has been ruled out of order?
No, everything is valid.
We were caught before and it is nice to know before we begin.
I move amendment No. 1:
In page 3, line 22, after "approval" to insert "and includes service of the national debt".
The same principle is involved in amendments Nos. 1 to 13, inclusive, but I tabled them separately in case one was out of order, as I did not want them all to be affected. With regard to the amendments, I made the point on Second Stage and the Minister of State, Deputy Sean Sherlock, responded and we know what his response was. I will not labour the point, except to state I understand there is expenditure of approximately €50 billion each year, of which approximately €40 billion goes through the Departments' Estimates process and is voted expenditure, which is right. However, there is no reason all of the taxpayers' money spent each year should not go through the Estimates procedure.
I have listed a number of items and taken the headings from the 2013 Estimates for receipt and expenditure. I understand payments for the Judiciary and constitutional officeholders should not be voted on by Members of the Oireachtas each year, if there is meant to be a separation of powers and independence. I would not like payments such as the salary of the President to become a bone of contention in the Oireachtas. Most of the other payments are ones which need to be made each year, but various pieces of legislation have been drafted during the years to exclude certain items from the Estimates procedure. It is still taxpayers' money which must be paid, but because it is not included in the annual Estimates procedure, by and large, it escapes annual scrutiny. I am not saying there is no mechanism in place, but some of these items are caught in wider debates on various departmental Estimates such as contributions to the European Union. I am sure the Common Agriculture Policy is discussed, but the total contribution to the European Union of €1.444 billion - we may be a net contributor rather than a recipient - is not debated.
We do not have a debate each year on how much we should be paying. Separate legislation is drafted for each of these items and exclusions, meaning tomorrow morning we can introduce new legislation and the Minister or the Government can decide it does not want to wrangle about this every year during the Estimates process. By putting it in legislation that it is to be paid from the Central Fund, the matter would never arise in the annual Estimates. That can happen and it has happened a few times recently.
With the figure for the Houses of the Oireachtas Commission, the Minister may point to legislation but my argument is that the legislation should be changed. I am not happy with the thinking behind the legislation. There is no reason for not having a debate about the Houses of the Oireachtas Commission or payments to political parties under the Electoral Acts in the Estimates procedure each year. They relate to current expenditure but on the capital expenditure side there is the likes of Exchequer contribution to the insurance compensation fund and payments for the European Stability Mechanism, although there may have been a debate on the share capital of the ESM and other miscellaneous items. Such matters are being excluded, although there is an argument that a review mechanism comes up each year.
The biggest issue is the service to the national debt, and we will pay €8.111 billion to that debt this year, according to the document I referred to a moment ago from the Department of Finance. That does not get discussed in the annual Estimates process. One might argue that the interest on national debt must be paid but any payments by the National Treasury Management Agency, NTMA - which is included in this - and those coming through the Central Fund do not come through annual Estimates. The NTMA should be told what the Estimate is and the interest to be paid during the next calendar year. It should also know what borrowing exists, any deficits and what must be drawn down. If we come to the last month of the year and an Estimate of €8 billion turns out to be €8.3 billion, there should be a Supplementary Estimate. That might put greater discipline on the NTMA to stick to the figure voted by the Oireachtas in the annual Estimates rather than not having any proper scrutiny. One might argue that all these bodies are subject to Comptroller and Auditor General reports and issues can be subject to the scrutiny of the Committee of Public Accounts but that is not as rigorous as the annual Estimates debate.
There is an idea that interest on the national debt must be paid, and this relates to the reason I am against a Central Fund. Like a household in financial difficulties, we are a country in financial difficulty. This is like saying a family has a set amount of money for the year but it must pay a mortgage, regardless of whether that family can afford it. The money is taken from the top before other household expenses are even discussed. It means what is spent on the mortgage - akin to our national debt - cannot even be discussed in an annual debate. We are being remiss in allowing such a process, and I call on the Minister to reconsider taking all these items from the Central Fund.
The Minister might mention the contribution to the EU and that the figure is decided at a European level. The relevant Department should be able to budget, knowing that most of these EU budgets are five and seven year plans. We should know what we are budgeting to pay for next year and that should be discussed as part of the Estimates. If the figure is over or under the budget, it can be dealt with accordingly. The figure is decided by somebody else from outside Ireland, at an EU level, and this is similar to the process of setting what is to be paid to bondholders or towards interest on the national debt. There is nothing wrong with somebody going to their bank when their annual mortgage payments for the year will be €20,000 but they can only afford to pay €15,000. Despite having a figure, it is well within the ability of the NTMA to reschedule payments to come in line with the voted Estimates of the Dáil. The NTMA reschedules and renegotiates every day of the week in order to get a better deal, so to say we should not be allowed to discuss an interest payment when it is due is unacceptable.
I have listed the full gamut of items of expenditure from the Central Fund. It is wrong that the Oireachtas can discuss 80% of taxpayers' expenditure each year and is precluded from discussing the rest in the annual Estimates process. Under this system, there is nothing to stop legislation being passed tomorrow - such as a Health Service Executive (amendment) Bill - that will allow payments from the Central Fund for the HSE, meaning there would be no discussion of the funding with the annual Estimates. The process must be changed.
I am well aware of Deputy Fleming's view on the matter and he has articulated it comprehensively and well on Second Stage. He understands the position I will present as well.
Following the establishment of my Department of Public Expenditure and Reform in 2011, I was given responsibility to oversee public sector policy and the management of overall departmental expenditure. That is the remit of my Department. With regard to this Bill, there are responsibilities that I now hold which were previously vested in an integrated Department of Finance, including the management of the annual Estimates and general sanctioning powers relating to public expenditure. The Minister for Finance, under the Ministers and Secretaries Bill enacted in 2011, retained responsibility for non-voted expenditure that Deputy Fleming now instances. They are not my responsibility but rather that of the Minister for Finance, who also controls broader fiscal policies.
Non-voted expenditure represents expenditure - as correctly noted by the Deputy - which is voted by the Oireachtas under specific statute law to be paid from the Central Fund without annual reference in the Estimates. These items are a permanent charge on the State, representing services payable out of the Central Fund by the continuing authority of law. They are not, therefore, part of the normal Estimates process, either in negotiation with line Departments or in anything else.
Central Fund activity is regulated and reported through the monthly Exchequer statement. Additionally, the Department of Finance publishes detailed annual accounts of the Central Fund for the previous year, known as the finance accounts, and these are prepared under section 4 of the Comptroller and Auditor General (Amendment) Act 1993. They contain detailed analysis and classifications of receipts, issues of the Central Fund and details of the national debt, which as the Deputy correctly noted is the largest component of non-voted expenditure. These reports must be laid before Dáil Éireann not later than 30 September each year. In addition, planned Central Fund expenditure is set out for the following year as part of the stability programme update and as part of the budget documentation.
The Bill before us does not deal with debt servicing or any other charges coming from the Central Fund and I do not propose to change the Bill to encompass those. I do not intend to change the long-standing practice on non-voted expenditure. Such practices are in accordance with the Constitution, and as I noted earlier, the expenditure does not come within my purview as it is under the direct control of the Minister for Finance.
I will deal specifically with some of the points made by Deputy Fleming. The largest item of non-voted expenditure is the servicing of the national debt, and any initiative to move debt repayment away from the current Central Fund payment scheme and into an annual debated Vote would have implications for the NTMA in raising money to fund the debt. Currently, offering circulars issued by the NTMA contain the following term: "The principal and interest of the bond which is issued under the National Treasury Management Agency Act 1990 and other statutes will be charged on the Central Fund". When we borrow money we give a commitment that we will pay on the agreed terms in an unconditional and irrevocable way, and that is why we get money at affordable rates. I hope that will happen in future. I am advised by the people who raise the money that any move away from such a process or conditionality would have implications for us.
The second-largest item of expenditure under the Central Fund is the EU budget, which arises because of a treaty obligation, voted on by the people of Ireland by way of referenda. It is not that we can debate an Estimate before amending or rejecting it. We have signed up solemnly to those treaty obligations.
For all those reasons, it is not my view that we should introduce the new discipline I am talking about here on a multi-annual Estimates basis. It is an innovative, new and reforming measure, but I do not think it can extend to the Central Fund. It is not my area of responsibility and, in addition, I do not think it would be appropriate for the reasons I have given.
I apologise for being late. I thank the Minister for the time I was given by his officials on this matter. We had an incredibly useful meeting as we tried to deconstruct all the changes being made.
I thought the Deputy was reconstructing.
I was trying to understand it all. It has become very complex. I just wanted to express my thanks for that very useful meeting.
On Deputy Fleming's point - I will speak on the section in a moment - I agree that conditional repayment of debt would be risk-adjusted. It would cost more, but that does not mean we should not do it. We should accept that if we allow the Dáil to vote on it, a cost would be associated with it. Deputy Fleming would probably agree with me in that regard. That does not mean it is the wrong thing to do. Many of the useful democratic checks and balances that take place in here probably have a cost associated with them. There is an issue here, however. My understanding - the Minister can correct me if I am wrong - is that the Dáil does not get a say in how much is borrowed. I know that over the long term, one borrows for the gap. Obviously, the National Treasury Management Agency makes decisions on borrowing all the time. The Dáil is constitutionally responsible for all spending. As I have said, the Minister can correct me if I am wrong. My understanding is that the Dáil basically-----
In the context of the annual budget, there are two presentations now, one of which is the presentation on the expenditure side. The Minister for Finance makes the overarching presentation, which covers the taxation side, on the same day. The total financial parameters, including the State's borrowing requirement, are part of the budgetary arithmetic that is formally voted on and accepted. On the day, a number of Financial Resolutions are voted on. Then there is a residual financial resolution - the overarching one, which encompasses the level of borrowing and everything else.
Will the Minister - I do not know if it will be the Minister, Deputy Howlin, or the Minister, Deputy Noonan - come to the House to say it is our intention in 2014 to borrow €15 billion, for example, and will the Dáil vote on that?
It is in the budgetary arithmetic, yes.
There is a number.
I thank the Minister.
I would like to make a couple of brief observations. I could labour this point forever. The Minister referred to the EU treaty obligations. I call that what I expect to be told. That figure - the figure we paid last year and the figure we are paying next year - is not in the EU treaty. It is a calculated figure based on the principles in the treaty.
The Departments should be able to give an estimate. If it is part of the budgetary arithmetic, as the Minister has suggested, why not put it into the voted expenditure? The point I am making is that its being an EU treaty obligation does not mean it cannot be in the voted expenditure. Do other countries have a separate central fund? Perhaps the Minister does not know the answer to that question. The voted expenditure in the Dáil is 80% of Government expenditure. The other 20% of it goes through a non-voted mechanism. Are other parliaments side-stepped to the same extent as the Irish Parliament? Does the Minister have any knowledge of that? If he does not, it is okay. I can ask somebody to find that out for me. It is kind of strange. The amount of non-voted expenditure that is paid out of the Central Fund without any reference to the Dáil each year, which is approximately 20% at present, could be as low as 10% if we are not paying the national debt, while it could be as high as 35% in another period, depending on levels of debt and EU commitments. There is something wrong if up to a third of total taxpayer expenditure can be voted through in that manner under this mechanism. It did not happen this year or last year, but it could easily happen. If the Minister knows what the practice is in other countries, that is well and good. If not, we will find it out separately.
I will conclude by speaking about the Department of Finance. Obviously, I did not get the advantage of the briefing that Deputy Donnelly received.
The Deputy is welcome to it.
I appreciate that. I understood from the legislation that the Department of Finance would continue to be responsible for the Central Fund.
People had hoped the Minister would have control over all Government expenditure. I know what the position is with regard to all voted Government expenditure. There is nothing to stop the Minister for Health from introducing legislation tomorrow morning to say that the HSE budget of €14 billion per annum will be paid from the Central Fund.
I could stop it.
Fair enough. The Minister gets the point. If legislation can be introduced to take items out of the system of voted expenditure, there is something wrong.
It has to fit into the pattern of things that are proper.
The Minister mentioned the practice. I do not understand why the amendment relating to election postal charges cannot be accepted. Such charges do not constitute a calculated commitment. A figure is provided for letters to be sent to addresses during a referendum, election or by-election campaign. The figure varies each year. There is no reason that cannot be estimated, provision made for it and a debate held on it. I could go through several other examples. Amendment No. 5 refers to payments to political parties. People should know what next year's contribution to the EU budget will be before this year is out. The figure in question is based on GNP, a percentage of VAT and everything else.
There is no problem getting any of that information.
Yes, I agree. Given that the figures can be obtained, it would be better if they were put through as voted expenditure. It would be more transparent, open and regular than the current method, which sidesteps the national Parliament. I have made my point well at this stage.
The amount of borrowing also includes the interest cost on borrowing. How much of the approximately €200 billion is on floating rates?
The Deputy should put that question to the Minister for Finance.
I will write that down. It is important. If it is 4%, for example-----
It has nothing to do with the Bill, unfortunately.
Yes, I know. It is a question of whether it has to be voted on, or which drawer it goes into.
Deputy, we are-----
The second thing is-----
I remind the Deputy to confine his remarks to the amendments, the section and the Bill. I am not going to allow a general conversation on Government arithmetic, budgeting and finance.
We are talking about two sides of the same coin.
No, we are talking about one side of the coin this afternoon.
Yes. Bond rates are rising at the moment, which means borrowing will become more difficult.
I will move on if the Deputy does not stay relevant.
Some €1 trillion is pencilled in across the eurozone and the American system for falls in bank balance sheets.
Thank you very much, Deputy. I will allow the Minister to make a final response.
I always bring the bad news to the committee.
All the figures instanced by the Deputy are published in the White Paper on Receipts and Expenditure that is laid before the House just before the budget. It might be useful to have a debate on that.
Can we have a debate on it?
I would have no problem with that. We would have to do it earlier this year.
I move amendment No. 2:
In page 3, line 22, after "approval" to insert "and includes contribution to the EU Budget".
I move amendment No. 3:
In page 3, line 22, after "approval" to insert the following:
"and includes payments to PSE Kinsale Energy Limited".
I move amendment No. 4:
In page 3, line 22, after "approval" to insert the following:
"and includes salaries and pensions for the judiciary and holders of constitutional office and pensions and allowances for certain members or former members of the Oireachtas".
I move amendment No. 5:
In page 3, line 22, after “approval” to insert the following:
"and includes payments to political parties under the Electoral Acts".
I move amendment No. 6:
In page 3, line 22, after "approval” to insert the following:
"and includes subscription to International Development Association".
I move amendment No. 7:
In page 3, line 22, after "approval” to insert the following:
"and includes election postal charges (Posts and Telegraphs Act 1983)".
I move amendment No. 8:
In page 3, line 22, after "approval" to insert "and includes the Oireachtas Commission".
I move amendment No. 9:
In page 3, line 22, after "approval" to insert the following:
"and includes ERDF and Cohesion Fund repayments and EFOGA".
I move amendment No. 10:
In page 3, line 22, after "approval" to insert the following:
"and includes financial advances to the credit union sector".
I move amendment No. 11:
In page 3, line 22, after "approval" to insert the following:
"and includes exchequer contributions to the Insurance Compensation Fund".
I move amendment No. 12:
In page 3, line 22, after “approval” to insert the following:
“and includes promissory note payments to certain banking institutions”.
I move amendment No. 13:
In page 3, line 22, after “approval” to insert “and includes payment of ESM capital obligation”.
Amendments Nos. 14 and 17 are related and will be discussed together.
I move amendment No. 14:
In page 3, line 34, after “Government” to insert “, to include all cabinet members,”.
The Minister will recall that the most recent budget was the subject of considerable criticism from Government ranks. I have in mind specific criticism made by the Minister for Social Protection, Deputy Joan Burton, who expressed the view that Ministers from what she described as some of the big spending Departments had been excluded from budgetary discussions and decisions. This sentiment was echoed by the Minister for Agriculture, Food and the Marine, Deputy Simon Coveney, who made the following comment: "I do not like the fact that I was not more involved in the build-up to some of the decisions". His words were a further indication that there had been an unsatisfactory level of engagement, at least at some stages of the budgetary process.
The Economic Management Council, which consists of four men, of which the Minister is one, occupies the central position in discussions on all matters economic, not least budgetary decisions. This is a bad state of affairs. I say this as someone on the outside who is looking into Cabinet. As the Minister will be aware, I am a supporter of the concept of multi-annual frameworks and budgeting because they make sense and I acknowledge that this legislation constitutes a good and solid step forward in this regard. However, it would not be good practice if a small number of Cabinet members were able to make the call on key budgetary decisions to which the principle of collective Cabinet responsibility applies. If such an approach has taken hold, it should be weeded out.
Having said that, amendments Nos. 14 and 17 simply propose to insert after the word "Government" on line 34 of page 3 the words "to include all cabinet members". When making decisions in the areas of education, health or social protection, line Ministers, who are responsible for delivering on their respective budgets, must be part and parcel of the decision making process. This requirement should be stated in legislation.
The Government is defined in the Constitution, which sets out its role and the principles under which it operates. All government decisions are taken on a collective basis and are the responsibility of every member of the Government. To introduce a provision stating that the Government includes all Cabinet Ministers would be tautological.
On the specific point made by the Deputy, I assure her that every member of the Cabinet was actively involved in all budgets produced since the formation of the Government. Moreover, every individual issue was formally tabled at Cabinet, all decisions have been taken on a collective basis and responsibility for decisions lies with every member of Cabinet.
The concept of collective Cabinet responsibility, which I fully understand, is not at issue here, nor is the status of the decisions taken at Cabinet. The issue is the process by which decisions are arrived at. As the Minister is aware, some of his Cabinet colleagues have been publicly critical of this process. I cited statements made by the Ministers for Social Protection and Agriculture, Food and the Marine, from the Labour Party and Fine Gael Party, respectively, in which they indicated they were on the margins at certain stages when key budgetary decisions were being made. It does not make sense that line Ministers are required to observe the discipline of budgetary ceilings when it is not made explicitly clear that they are centrally involved in the process of arriving at decisions, drawing up frameworks or setting limits. I do not view this amendment as a tautology but as an important clarification which gives firmer definition to the fact that the Government collectively means all Cabinet Ministers. I would have specifically referred to the big spending Departments in the amendment but for the need to ensure that Ministers in smaller spending Departments are also part and parcel of the process at arriving at collective and binding Cabinet decisions.
I reiterate my earlier point. While there is a very open debate on these matters in Cabinet, I am not in a position to give the Deputy chapter and verse because to do so would be unconstitutional. However, I can give her the assurance she seeks. The process is that my Department will write to each line Minister, as we have done already in the context of this year's budget, and the Departments will then propose measures for general consideration. In welding the entire budget together, there is a collective discussion at Cabinet at which priorities may be changed or new and separate priorities set. This is done on a collective basis with every member of the Government involved.
The Minister for Social Protection, Deputy Joan Burton, was very clear. She accused the four members of the Economic Management Council of excluding big spending Government Departments from key budgetary discussions. She made this statement on the record, not in a hushed tone or in private, and the Minister for Agriculture, Food and the Marine, Deputy Coveney, expressed a similar concern. This is an issue in terms of the process of decision making, although I have no doubt both Ministers are well able to stand their ground and fight their corners. The issue is not one of individual personalities, however. In light of the decision to establish the Economic Management Council, a sort of inner sanctum of Cabinet and Government, it is important that the legislation state that all Cabinet Ministers are involved in the decision making process.
Amendments Nos. 15, 18, 19 and 21 are related and may be discussed together by agreement.
I move amendment No. 15:
In page 4, line 5, after “year” to insert the following:
“with due regard for equality and human rights obligations”.
The Minister will recall that the programme for Government includes the following commitment: "We will require all public bodies to take due note of equality and human rights in carrying out their functions". I support this commitment and I am pleased the Government entered into it. However, I also want it to be delivered and if the Government is serious about doing so, it must be written into the legislation and become part and parcel of good practice when setting out expenditure frameworks and targets. Each of the amendments proposes to insert the same formula, namely, the words "with due regard for equality and human rights obligations".
I am aware of the Deputy's interest in the issue of equality budgeting. The policy issues raised in the amendments are different from the subject matter of the Bill. At its core, the Bill concerns technical rules for limiting a budget that is drawn up on a multi-annual basis. The introduction in preparations of ministerial ceilings of assessments that would be required in relation to equality would introduce a subjective element to a technical process. Providing in legislation for such subjective matters would create significant difficulties. While the proposed amendments are not appropriate for inclusion in this Bill, considerations of equality form an important component of all budgetary discussions. The Deputy correctly cited the programme of Government commitment in that regard.
Cabinet procedures require that in the context of proposals put to Government, it should be clearly indicated in writing whether those proposals will have an impact on - among other things - gender equality, on persons experiencing or at risk of poverty or social exclusion or on those with disabilities. Any and all of these considerations are taken into account when the Government makes decisions, particularly in respect of budgetary matters.
Each budget day, the Government publishes illustrative cases showing the effect of major changes on, for example, certain social welfare payments. In addition, I introduced the whole-of-year budgeting process in 2011 in order to facilitate a wider discussion on equality and resource allocation. Announced as part of the comprehensive expenditure review - we published an expenditure report for the period 2012 to 2014 - this reform enhances the role and policy relevance of the Oireachtas, particularly with regard to the role of committees in ex-ante consideration of resource allocation in priority areas. I am of the view that it provides a forum by means of which the Oireachtas and its committees and Government Departments can assess and discuss the equality implications of any proposals in advance of final Estimates being agreed.
I take issue with the Minister's statement to the effect that equality and human rights obligations are somehow subjective. I do not believe that to be the case.
The views of the Deputy's party on human rights and those of that which I represent would have been quite different for many years. They are, therefore, subjective in that context.
The human rights standards which apply in this State are largely, thought not exclusively, internationally underwritten and well understood and defined. I accept that they may, however, be honoured more in the breach in this jurisdiction. There is nothing subjective in respect of these issues.
The difficulty which has arisen in respect of any number of budgetary decisions is that they have not taken cognisance of equality impacts. I will provide an example. The Minister for Education and Skills, Deputy Quinn, thought it was a good idea, and made a policy decision, to take the scalpel to DEIS schools. In fairness, he subsequently rowed back on his decision because what was being done was manifestly unfair. The analysis carried out in respect of lone parents clearly indicates how disproportionately they and their families have been affected over a number of budgets. We do not have a rigorous assessment of equality impacts and outcomes in respect of budgetary decisions. Such an assessment simply does not exist. I did not table these amendments because they would facilitate the completion of the framework for equality budgeting - for which I am an advocate and which I support - I did so because this Administration cannot legitimately exclude itself or the critical process relating to the budget, which involves decisions on spending in crucial areas which affect people's lives, from the commitment it gave in its programme for Government in respect of requiring all public bodies to take due note of equality and human rights in carrying out their functions. Such an approach does not make any sense and, in those circumstances, I do not accept the Minister's response. I can only infer from his general demeanour that he is somewhat defensive about this matter.
No, I am not defensive. The Deputy is well aware that since we entered office there has been an obligation on us to try to work towards balancing the books. We are in our third year in office and we are still borrowing €1 billion per month. The people who loan us the money to spend in order to maintain the social infrastructure we regard as essential have attached conditions in respect of that money. In that regard, we must work towards reducing expenditure. The Deputy is correct that we are making subjective choices within the parameters which obtain. As a member of the Opposition, the Deputy will always focus - it is perfectly understandable and legitimate that she would do so - on referring not to the things we protect, but those which we cannot protect to the extent we would like. None of us wants to reduce spending in any area where such a reduction would have an adverse impact on the elderly, those who depend on health services, those in the disability sector, children, etc. We would prefer not to be obliged to touch any of these areas and, by and large, we have been very successful in protecting them.
One of the areas which has recently been the cause of some debate is that which relates to special education and to those in integrated education who have special needs. At the height of the boom in 2007, when Mary Harney and others were saying that we were awash with money, the State was spending €840 million on special needs education. Now we are spending €1.3 billion on it. We have maintained this level of expenditure because this is an important area. We have made a subjective choice in respect of the matter. We have also not reduced the number of special needs assistants. That number was ring-fenced during the latter days of the previous Fianna Fáil Government. It is very difficult to retain special needs assistants because they are expensive. However, that is the choice we have made.
These choices are subjective. One could make a policy decision which might, for example, impact adversely on the elderly. It could be stated that we should exclude the elderly from being touched at all. In the most recent budget, however, we reduced the threshold relating to the maintenance of medical cards for the over 70s. It was still a high figure but we did not grant automatic entitlement in respect of such cards because we were of the view that reducing the threshold was a fairer approach to take in the struggle to work towards a balanced budget. Human rights, equality and fairness must comprise the prism through which we view all budgetary decisions. However, it is not appropriate to make provision in that regard in this legislation.
I do not accept that. It is not good enough to refer to a prism of which equality is one of the facets and then state that this will not be underwritten in the legislative framework relating to making the type of decisions to which the Minister refers. This makes a nonsense of the commitment in the programme for Government to take due note of equality and human rights. These are the benchmarks and standards which those in government set for themselves and I am of the view that they are the right ones. It is a case then of their talking the talk, but ultimately not making a difference by including the commitment to which I refer in the legislative framework. If all decisions are viewed through a prism of equality and human rights, then the Minister should have no difficulty in this being stated within the legislation. He initially indicated that equality and human rights are subjective in nature when it is clear they are not. In his most recent response, he conceded that the policy decisions the Government takes are subjective to some degree. I see the logic in that because they involve judgment calls. I am not challenging him in that regard. However, equality and human rights are not subjective in nature. They are measurable and they represent the standards which should apply in the decisions we make in respect of expenditure. In that context, the amendments I have tabled should have a place in the legislation.
Amendments Nos. 16 and 20 are related and may be discussed together.
I move amendment No. 16:
In page 4, lines 21 and 22, to delete "as soon as may be" and substitute "immediately".
These amendments are quite straightforward. They are designed to ensure that there will not be a space within the legislation which might give rise to an undue delay or time lag in respect of the reporting of key budgetary decisions.
I think once a decision is made, people understand that the Government and the Cabinet make the decisions, that they are the officeholders and that is as it should be. However, I do not see any reason that those decisions, once made, cannot immediately be reported to the Oireachtas, to the Dáil. The Minister may say that the phrase "as soon as may be" indicates a requirement and some level of urgency. That may be how it is through the Minister's prism but for others the phrase, "as soon as may be" allows plenty of scope and wriggle room to delay the passing on of decisions for whatever political reason.
The form of words "as soon as may be" is standard and in my view it is appropriate. It is not always possible to proceed immediately in circumstances, for example, where the Dáil is not sitting for some period after the decision is made. The normal practice of inserting the phrase, "as soon as may be" is understood to imply as much expedition as is possible and practicable.
Whatever the standard language, this is a new piece of legislation and a new framework signalling a new way of doing things. The word, "immediately" gives a sense of urgency which, the phrase, "as soon as may be", frankly lacks.
It cannot be done immediately if the Dáil is not sitting immediately. Does that mean the law is being breached? There has to be some level of practicality about enactments of this kind.
Could you put a cap on it? Through the Chair-----
The Deputy should make his comments through the Chair. The Deputy should ask to speak through the Chair before he makes a comment and not make a comment and then ask to speak through the Chair.
I am verbally dyslexic.
That is as may be.
Through the Chair, could the Minister put a cap on it, a backstop date? He could say, "immediately but in any event, not later than".
I think the phrase, "as soon as may be" is understood to be as soon as it is practicable to do it.
Is the Minister indicating that he is looking at this?
No. The phrase, "as soon as may be" is perfectly understood to be as soon as practicable.
Through the Chair, that is what parents often said to children when they were asking for more pocket money, "as soon as may be".
I do not know what parents do in south Dublin.
I move amendment No. 17:
In page 4, line 26, after “Government” to insert “, to include all cabinet members,”.
I move amendment No. 18:
In page 4, line 32, after “concerned” to insert the following:
“with due regard for equality and human rights obligations”.
I move amendment No. 19:
In page 4, line 40, after “concerned” to insert the following:
“with due regard for equality and human rights obligations”.
Amendment put and declared lost.
I move amendment No. 20:
In page 4, line 43, to delete “as soon as may be” and substitute “immediately”.
I move amendment No. 21:
In page 5, between lines 12 and 13, to insert the following:
“(c) equality and human rights obligations.”.”.
I have some questions on the section. I support the aim of the Bill which is to move from a single year to a three-year period. I ask the Minister to provide some assurances and explanations. As we move from one year to three-year ceilings, are the ceilings for years two and three binding on the following years? Does the Minister know what I mean?
For example, we say this year, for the years 2014, 2015 and 2016, the departmental ceilings are this. Then we are back here next year looking at 2015 but the Government has already set ceilings for 2015. Can these then be moved or are they locked in by legislation?
We are thinking ourselves into a European semester as well and we must have regard to the new European budgetary requirements. It will be possible for us to alter limits by formal Government decision subsequently. It will be a snapshot in time, in tandem with the obligations to maintain the fiscal disciplines set under the European treaties.
This is referred to in subsection (7), page four of the Bill:
(7) Subject to the Government expenditure ceiling or revised Government expenditure ceiling, as the case may be, where the Government have made a decision under subsection (6) or this subsection, they may, upon a proposal of the Minister, make a further decision revising any Ministerial expenditure ceiling for any one or more of the financial years concerned.
I thank the Chairman. Therefore, am I correct in thinking that there is nothing legally binding on the Government? This is essentially a statutory framework - which I agree with - for a multi-year statement of intent on expenditure ceilings which the Government can review.
That is all anything can be. The hands of Government cannot be tied. If the Government in 2007 was looking at a three-year horizon, it would have been a very different horizon to view by the end of 2008. There has to be flexibility to be able to alter course to meet changed circumstances and that is understood.
I agree. I just wanted to check it.
By and large, the idea is to give as much certainty as possible but it cannot be locked in.
It is not locked in for the following year either. Is that correct? I will give an example. Let us say the Government makes its decision and the Minister for Public Expenditure and Reform informs the Dáil that these are the ceilings for 2014. What month would this happen?
We are presenting now a multi-annual budget twice a year. We are giving the horizon in April and then just before the budget itself, pre-October, we will present the multi-annual framework for the next three years. This is a twice-annual reporting. By and large, that should, with fiscal discipline and more settled times, be a horizon that is replicated in the next horizon with some sense of certainty. It is only where things will alter in some sort of changed circumstances or a significant change in policy which alter the horizons that have been set.
Is the April document the SPU?
So the SPU in April will contain expenditure ceilings for each Department.
Yes; on a multi-annual basis.
But that can change in the budget subsequently.
It is a statement of intent.
We published the SPU in April this year but we have taken no regard for what decisions will be made in the October budget, clearly. The horizons are set but the specific details will be altered and there will be a new pre-budget set of documentation published to set the new horizons before the budget.
I thank the Minister. I have a concern which I hope is groundless and it is do with Dáil oversight. As the Minister has explained, twice a year the Government will inform the Dáil of the latest updated expenditure ceilings for a Department. These are statements of intent rather than legally binding on the Government.
I think they are more than statements of intent but they are not legally binding.
In a great many cases, ceilings will be the actual targets set in the budget. There are probably not too many people will come back to the Government to say that they were told to spend €10 billion but that they only need €8.5 billion.
Is the Deputy saying that floors and ceilings become confused?
Yes. The ceiling becomes the maximum.
It becomes what one expect. Let us say it is health.
Use it or lose it.
Let us say it is health and it says €10 billion. If that was the April figure, one would expect in the budget that the proposed sum would be €10 billion. My concern is that the Government is going to set these figures and inform the Dáil that they are the ceilings. In fact, they are the targets. Does the Minister consider that the Dáil loses any of its budgetary oversight ability, limited as it is, in this mechanism? It is not a leading question. I am not convinced that is the case. I am genuinely curious to know if the Dáil is losing anything. I acknowledge that the Dáil is gaining a great deal in terms of oversight in this but is it potentially losing something?
No. As the Deputy rightly says, the Dáil is gaining. I do not see how it could lose anything. Oversight as it was done over the last 20 years was not particularly strong. As Deputy Fleming has repeatedly and strongly made the case, it was post-fact consideration of expenditure. The money was spent. The construction of a budget each year was entirely an Executive function. One might say that is still largely the case, but I would like it not to be. In less challenging times, when we have money to spend in an expansive way, it will be easier for Opposition Members to engage in the budgetary process. I recognise that it is difficult for Members of the Opposition to table budgetary cuts and to express a preference for one cut over another. The whole idea of a multi-annual framework and comprehensive view of expenditure so that most options - not necessarily all - are on the table. That would facilitate engagement with line Departments in the committee system and explore the options. For example, in the area of social protection, a committee could consider the sum of money spent on child benefit and ask, realisitically, if the correct approach is being taken. Should there be a different balance and should the money be spent on service rather than provided directly? The money we spend on the elderly could be considered. In the context of the debate we have just had, there is an enormous quantum of money spent on the disabilities sector if one looks at departmental expenditure. The Department of Education and Skills spends €1.3 billion on special education. Approximately €1.5 billion is spent on disabilities by the Department of Health. Approximately €3 billion is spent on disabilities by the Department of Social Protection. If one looks at the Department of Transport and others, an enormous quantum of money is spent. In a structured Parliament, we should be asking if that is the best way to support our citizens with disabilities. I hope the budgetary and committee process would, on a whole-year basis, get its teeth into that. It would not be about asking if someone spent the money they were supposed to in the proper way but about outcomes and appropriate approaches. It would break down the silo attitude of Departments. If money is transferred from one Department to another to better effect, it should be welcomed.
That is something we have discussed before and it is entirely relevant to the changes being provided for in the section. The Minister's example of disability spending is a very good one. It speaks to an issue I have raised before. Hopefully, the sub-committee and the broader finance committee have a reasonable interest and experience of expenditure. We only look at the expenditure within the Minister's Department, however. I accept fully that the committee should not second guess the Minister for Health and the committee dealing with health issues. However, there are two areas in which the sub-committee could usefully debate issues. One is the spread of spending, which is not necessarily about what is contained within the health budget. The Minister for Public Expenditure and Reform has a remit across all Departments which means the sub-committee to which he answers should usefully do the same exercise. We would not look at what is spent, for example, on acute medicine versus community-based care, but it would be useful for the sub-committee to ask what the total quantum of spending is and to determine if it is rising or falling. We have discussed this before and the Minister was not hugely amenable to the idea. However, there is nowhere else that the Dáíl looks at these things. If that is the Minister's remit, it is properly the remit of the sub-committee remit. The second area involves the example the Minister just gave of the disabilities sector. The Minister has just listed four or five huge pots of money. There is nowhere that they are all tied together. Arguably, this is the only committee which could do so. It is an issue for the chairman also.
It is an issue which has been addressed directly with the Minister. The Minister has agreed to engage with the sub-committee on the macro framework.
That is great. The provision is coming in as a condition of the troika deal. Do we know if it is being rolled out across Europe as part of the broader budgetary process? Is it becoming standard practice everywhere?
Yes. The provision operationalises the management component of the so-called six pack, which consists of five directives and one regulation introducing what the Europeans call the expenditure benchmark. It is being rolled out across the European Union.
My understanding is that the Bill is intended to amend the 2011 Act by changing the one year to a three-year provision. Is it doing anything else? In layman's terms, it is a simple exercise of finding and replacing every instance of the term "one year" with the term "three years".
Largely, that is it. There are amendments I am introducing on behalf of the Minister for Finance in relation to the designation of the fiscal council. We will be dealing with that shortly.
Is it the Minister's view that there are no other substantive changes involved in section 1 other than to move from one year to three year terms in the 2011 Act?
I am not aware of anything else of substance that is fundamentally different from the existing legislation.
On the no-policy-change document, I am sure the other Deputies are putting together their budget proposals. I am beginning to put one together.
The no-budget-change document would be incredibly useful. It tends to come out only 24 hours before the budget. I would find it incredibly useful as the benchmark for what would happen if we did nothing. That would allow me and my team and other Deputies to consider how we will reach targets. Is it possible to get the no-change document early this year? I would certainly use it as the baseline for my budget proposal.
I will consider that and revert to the Deputy.
I like the idea of a three-year, rolling forward period. It is really an expression in advance for years 2 and 3 of the three-year period of budget expenditure and approval - outline expenditure and outline approval. Could it be that in the case of changed circumstances, the Government might find itself on the back foot and encounter difficulties in revisiting year 2, which becomes year 1 the next year?
It is no great harm to be on the back foot if one is changing things. One must then explain. We require a Department to explain where there is a substantial change. It is part of the normal annual cycle that an explanation is required. It is a good accounting procedure.
The positioning of it in terms of the understanding of the greater public will be important. They might see it as being a declaration of intent at certain levels for year 2 and that an adverse event outside the economy forced it back.
That has to be explained to people.
I have three quick questions on the section.
Has the Minister considered inserting the expenditure ceilings as a schedule to the Bill, or where is their statutory standing? The Minister will state it is referred to in the document that issues, the SPU, before the budget. It would make the Minister's job easier if he had the expenditure ceilings set in legislation instead of a Minister feeling that he or she would get a Supplementary Estimate. It would make the process much stricter and tighter. Would the Minister consider that?
Let there be, each year, an amendment to approve the new ceiling. It would be a good exercise each year, if there are changes in other circumstances, that the Minister could possibly do that.
There are procedures about legislation. One cannot simply have evolving legislation onto which one appends provisions every year.
There is a finance Bill every year.
It is a new finance Bill. We will not restate the principles of accounting.
I refer to the ceiling, the schedule of the numbers only.
That is done in the budgetary White Paper, which is the pre-budget document.
I will signal my intention to table an amendment on Report Stage that it should be part of the legislation rather than a White Paper.
On the next point, in subsection (10), to which there is no amendment but which is part of this, the Bill states that the Minister can specify the difference between current and capital expenditure. How satisfied is the Minister that his Cabinet colleagues and staff in the Departments observe that line because, as he mentioned here previously, the definition of current expenditure in one Department might be considered capital expenditure in another?
For instance, warships.
Exactly. I am sure what the OPW does under current expenditure could be considered capital expenditure by another Department. Previously, in the Department of Health we saw the HSE dipping into its capital budget to balance its current budget. Is the Minister satisfied that those definitions are sufficiently strong and correct? He has the blue book, but what I am asking is what is the sanction for those breaking such definitions?
I myself have been learning in the past two years. One would imagine one would know what is current expenditure and capital expenditure. Some, for historic reasons - as Deputy Mathews correctly stated - such as warships, are current.
They could be blown up in six weeks.
Garda cars also come under current, whereas items that one would imagine are capital in the Office of Public Works are current as well. Apparently, it is all down in this lovely book, Public Financial Procedures.
Is Public Financial Procedures available on the Department's website?
One will get it on the Department of Public Expenditure and Reform's website. All my Department officials go around with it as a Bible.
As Gaeilge, as well. Finally, on this section, as we have mentioned capital expenditure, where fits the different stimulus packages for which the Minister called in this legislation? The Minister mentions current and capital expenditure in subsection (10). Where does the stimulus package work its way through these figures?
I am delighted. Would the Minister elaborate?
For example, the €100 million that I allocated-----
It is current.
-----includes €50 million allocated to the Department of Transport, Tourism and Sport for roads which will be simply subsumed into the roads budget.
Yes. The funding allocated to the Department of Environment, Community and Local Government for the retrofit will be in its current allocation as well. Then there is the additional capital allocation to the Department of Education and Skills for the additional schools.
Will that require a Supplementary Estimate because the Department will be spending more than its original Estimate? Will the Minister explain that?
It will be accounted for at the end of the year.
I am not arguing about that funding being spent. They are now spending more than was originally intended. It is for a good purpose, but will it require a Supplementary Estimate?
Yes. It will be a rounding-up at the end of the year. For example, in the discussion I had with the Minister for Education and Skills, Deputy Quinn, on the schools, we debated what was the best way to proceed. I opened the discussion by asking if I had €50 million to allocate to the Department of Education and Skills, what is the best way, in terms of stimulus, that I could get capital works going. I did not know whether it would be a new summer works scheme, the construction of individual schools, refurbishment of all schools, a broadband scheme for schools - whatever he wanted to do. The Minister came back and said there were X number of schools ready to go to tender if he had the funding and, although the cost of this would be €90 million, if I provided him with €50 million he would re-jig his capital budget to find the other €40 million because this is a good thing to do. We will present that in a balanced way at the end of the year.
Is the Minister saying that when there are stimulus initiatives there is a logical follow-on that it will increase the Departments' expenditure ceilings set down in the previous year's budget, that every stimulus announcement requires, by and large, a change to the ceiling?
By and large, that is true. However, some of the very significant expenditure will be off balance sheet.
They are PPPs.
I move amendment No. 22:
In page 5, before section 2, to insert the following new section:
2.—The Ministers and Secretaries (Amendment) Act 2011 is amended by inserting the following section after section 17:
"17A.—(1) A public service body may, and shall if requested by the Minister, provide to the Minister such information as may be reasonably necessary for the purposes of any function of the Minister under subsection (6) or (7) of section 17.
(2) Information provided to the Minister under subsection (1) shall not include any personal data (within the meaning of the Data Protection Acts 1988 and 2003).
(3) Where the Minister requests information under subsection (1) the information shall be provided in such form and manner and within such period as the Minister may specify.".".
I propose that this new section be added to the Bill to allow for the provision of information necessary for the proper and effective operation of ministerial expenditure ceilings.
The section proposes that public service bodies shall provide to the Minister for Public Expenditure and Reform such information as is necessary for the purposes of the proper and effective operation of ministerial expenditure ceilings. This is a permissive section to allow public service bodies supply the necessary aggregate information to my Department to enable me, as Minister, and the Department to properly monitor and operate expenditure ceilings that are set out in this Bill. Personal information, as defined by the Data Protection Acts, would not form part of that requirement.
At present, many Departments and offices gather information, for example, on details of their grant spend. Where my Department has sought information to enable a better estimate of expenditure to be made over the medium term, it has been our experience that a lack of a specific power to overcome legal obstacles has in the past caused delays in providing information due to the lack of clarity regarding the legal position. In this context, it was felt that, without such a section being provided, the ongoing operation of ministerial ceilings could become more difficult or challenging. It is, therefore, sensible and proper to provide in the Bill for a clear permissive section to allow Departments, offices and public service bodies to pass on such information as is necessary to set multi-annual ceilings at the appropriate level.
I welcome that, but there is an interesting point here. Will it give the Minister for Public Expenditure and Reform more power in finding out what is happening in a Department than the line Minister? In theory, the Minister concerned has the line responsibility. Could the Minister get that and give it to the Minister for Public Expenditure and Reform? Deputy Howlin states there are potentially some impediments in the system and he has not been able to access it directly. Can the Minister for Public Expenditure and Reform sidestep the Ministers if he wants to know what is happening in a programme, for example, in the Department of Social Protection, the Department of Education of Skills or the Department of Health? Has Deputy Howlin, as Minister for Public Expenditure and Reform, the power and they shall provide it to him, not even to the line Minister?
As a matter or courtesy,-----
Leaving aside normal courtesy.
Under normal protocols, anything that is going through a Department to me or to anybody else would automatically go through the Minister.
Will the Department of Public Expenditure and Reform work through the line Minister? The new section refers to a public service body. Therefore, the Minister for Public Expenditure and Reform could write directly to-----
-----the NRA, a VEC or whoever, as the case may be. Is the intention that the Department of Public Expenditure and Reform will go directly to the bodies or go through the Minister?
We deal with every agency in any event. My Department deals with every section.
The Minister feels there is a bit of a gap that he is trying to tighten up, which is fair enough.
When I saw this, I asked why was it necessary because are we are getting that information. By and large, we are getting it. As my good friend, the Minister for Finance, Deputy Noonan, usually says, "Ar eagla na heagla.", for clarity, and so there will not be any impediment to getting it or legal confusion about have I the right to get it, we have provided for this section.
Amendments No. 23 to 26, inclusive, are related and may be discussed together.
I move amendment No. 23:
In page 5, before section 2, to insert the following new section:
3.—The Fiscal Responsibility Act 2012 is amended in section 8 by substituting the following for subsection (4):
“(4) The Fiscal Council shall—
(a) endorse, as it considers appropriate, the macroeconomic forecasts prepared by the Department of Finance on which the Budget and stability programme will be based,
(b) provide an assessment of the official forecasts, and
(c) in relation to each Budget and stability programme, provide an assessment of whether the fiscal stance for the year or years concerned is, in the opinion of the Fiscal Council, conducive to prudent economic and budgetary management, including by reference to the provisions of the Stability and Growth Pact.”.”.
This amendment makes statutory provision for the Irish Fiscal Advisory Council to be responsible for endorsing the macroeconomic forecast on which Ireland's budget and stability programme will be based. The assignment of this endorsement role is a requirement under the two pack regulations. To clarify, the endorsement required is that the Irish Fiscal Advisory Council endorse the macroeconomic forecasts on which the budget and stability programme will be based. This means that the council will endorse the macroeconomic forecasts on which budgetary proposals will be prepared and on which the Government will then decide. In the interests of independence, the council cannot be required to endorse. Instead, it is required to fulfil the endorsement function and could, should it find it appropriate to so decide, announce that it will not endorse the forecasts. That sounds a little more convoluted than it is. We are obliged under the two pack regulations to have an independent agency. The Government has determined it should be the Irish Fiscal Advisory Council and the Minister for Finance has asked me to provide for this in statute. This is the statutory vehicle available to do this.
Amendments Nos. 24 and 25 are technical amendments, consequential on the acceptance of the amendment to permit the Irish Fiscal Advisory Council to take on the endorsement role envisaged under EU rules. Amendment No. 26 is also a technical change. As the Bill now contains a section which is amending the Fiscal Responsibility Act 2012 to add to the role of the Irish Fiscal Advisory Council, it is necessary to amend the Long Title and this is proposed in amendment No. 26.
Why is this amendment being made in this Bill? It is an amendment to the Fiscal Responsibility Act 2012 which was the responsibility of the Minister for Finance, Deputy Michael Noonan. It is strange to introduce this amendment in this Bill. If the Minister, Deputy Michael Noonan, is minded to alter section 8 of that legislation, he should do so.
Second, on the particulars of the change being proposed, paragraph (a) is the new part, as paragraphs (b) and (c) remain as in the legislation. The Minister is introducing an obligation on the Irish Fiscal Advisory Council. The council "shall endorse, as it considers appropriate, the macroeconomic forecasts prepared by the Department of Finance on which the Budget and stability programme will be based". I did not catch the Minister's explanation for its role in the endorsement procedures. Will he repeat it? The purpose of the Irish Fiscal Advisory Council is to be independent; therefore, the Minister must square the circle for us. On the one hand, there is the independent status of the council and, on the other, there is an obligation to endorse the Department of Finance's forecasts. If one were a cynic, one might wonder if this was in some way related to the fact that the Irish Fiscal Advisory Council had been critical of the Government, perversely because it believed the Government was not dishing out enough austerity. That reflects the particular composition of the council. There were certainly no radically different views introduced to it, but that is another day's work. Will the Minister square the circle of independence, on the one hand, and the endorsement role, on the other? Will he also explain why this amendment to the Fiscal Responsibility Act 2012 has found its way into this Bill? It should more properly be introduced as an amendment to legislation from the Minister for Finance, Deputy Michael Noonan.
This amendment is part of the legislative steps to bring the budgetary reforms that we have agreed to at European level into statute law here. A number of changes to our budgetary process are being introduced and the Bill, as amended, should complete all the necessary changes required before next year's budget. On the Deputy's question, this is the legislative vehicle we have before the end of this parliamentary term and we want to complete it in advance of the budget. We will not have another chance. There is no other finance legislation before the Dáil.
Under the two pack regulation, "National medium-term fiscal plans and draft budgets referred to in paragraphs 1 and 2 shall be based on independent macroeconomic forecasts, and shall indicate whether the budgetary forecasts have been produced or endorsed by an independent body. Those forecasts shall be made public together with the national medium-term fiscal plans and the draft budgets that they underpin". We are required to do this.
On the question of what body would be appropriate one to undertake the macroeconomic endorsement, we have determined that it should be the Irish Fiscal Advisory Council. Notwithstanding its criticisms, that is the body we believe is the best fit for this task. The form of wording in the amendment is in the positive, but the council is perfectly entitled not to endorse. That is understood. The council will make a judgment call, either to endorse or to refuse to endorse the macroeconomic framework on which the budget is proposed to be constructed.
It is important to be tight in defining these things. The wording is that the Irish Fiscal Advisory Council "shall endorse", while the requirement from the troika concerns whether the forecasts have been endorsed. The council can either endorse or not endorse. Perhaps the wording should be "shall endorse or not endorse, as appropriate".
I asked that question of the Parliamentary Counsel.
It would express it clearly. Paragraph (a) refers to the macroeconomic forecasts, while parageraphs (b) states "provide an assessment of the official forecasts". Are the macroeconomic forecasts and the official forecasts one and the same?
There would be a tendency to believe they were from the way this is presented. What are the official forecasts?
The independent macroeconomic forecast is defined in the definition under Article 2 of the two pack regulation. "Macroeconomic forecast" means macroeconomic forecasts produced or endorsed by independent bodies, as opposed to state bodies.
I do not understand-----
I will come back to it. On the Deputy's first point about the word "endorse", it seems in plain English that it is required to endorse, but that is like saying it is required to give a judgment. I asked the Parliamentary Counsel about the words "shall endorse". That means it shall make a determination in terms of endorsing.
Yes, it is either endorse or not endorse.
No, in legal language I am advised by the Parliamentary Counsel that "shall endorse" means either shall endorse or shall not endorse. It is entitled to do either and that is captured by the phrase used.
I am afraid so.
That is weird. It does not make sense.
You should sit up here sometimes, Deputy.
The other function is to provide an assessment of the official forecasts. It is not clear what the official forecasts are. Let us call a spade a spade. I am not saying I am not agreeable to what the intention is, but let it be stated correctly.
With all due respect to the Deputy, the Parliamentary Counsel advises on the legal language used.
The Parliamentary Counsel got it wrong in the referendum campaign on children's rights. There was a contradiction in one of provisions, as I pointed out.
We will stick with what we have in front of us today.
The wording that the Irish Fiscal Advisory Council shall endorse is presumptive. It makes a presumption of endorsement. The provision continues, "as it considers appropriate". It would be more accurate to state "shall endorse or not, as it considers appropriate". It is better language and would be much clearer.
That sounds eminently sensible to me.
You are the Minister.
Yes, but I am not the Parliamentary Counsel. For the avoidance of doubt, I will go back to the Parliamentary Counsel between now and Report Stage.
The Minister should do that.
I will ask.
Will the Minister tell us-----
I asked the same question and I am assured, with regard to reading it into the formal record-----
The Minister should ask again. He should not mind that.
I will do that.
The macroeconomic forecast will be produced by the Government or Department and the Fiscal Advisory Council will endorse it or otherwise. The official forecast is by the Government. What is the distinction between the macroeconomic forecasts and the official forecast?
The original fiscal responsibility legislation, now the Fiscal Responsibility Act 2012, outlines what an official forecast is in the definition section. It means the macroeconomic and budgetary forecasts published by the Department of Finance for the purpose of fiscal planning and known as the spring forecasts and the autumn forecasts.
How does it differ from the macroeconomic forecasts?
The macroeconomic forecasts are produced by the Department in the context of the budget and are subject to the changes implicit in the budget. They represent the pre-budgetary position.
There are different timings of forecasts.
Correct. There are different forecasts because of the different timings.
That is precisely it; it is like two different snapshots in a movie reel.
Two different perspectives on the horizon as one moves closer to it.
It is not clear from these definitions. We should return to the draftsman.
The question of endorsing or not endorsing does not work for me. If Professor John McHale endorses the forecast, it is an act that the Dáil, people and media can see. Not endorsing it is not an act; it is the absence of endorsement and, therefore, it is easier to miss. One can either endorse or say nothing, but that is different from having to-----
I will take more advice. Plain English is not often exactly what the parliamentary draftsmen determine as legal text.
Yes. I understand that the Fiscal Advisory Council produces its own macroeconomic forecasts. Is that still the case? Does that override the provision about which were talking?
No. The council can do separate forecasting. This is the area of the Minister for Finance, Deputy Michael Noonan, whose advisers state there are two processes that are allowed under the European treaties. Ours involves the Government, or Department of Finance in this instance, preparing an economic forecast to be validated, or not, by an independent counsel. It is permissible under the treaty for an independent forecast to be made by an independent body, and that has been done by some countries.
Can we check the position? I may be wrong but recollect discussing with the Fiscal Advisory Council a compliance issue in respect of which I gathered it was the body designated to produce the independent forecast. It has already approached the finance committee with its view on the Department of Finance, for example. It largely thought the work was pretty good. I understood that the council was to produce its own report and that this was part of compliance requirements. Did we not have a discussion with the Fiscal Advisory Council on the types of models it would use and the funding and expertise needed to produce the macroeconomic forecasts?
It was not during my time as Chairman.
Let me explain. What I am addressing is our treaty obligations under the new two-pack and how Ireland will fulfil that obligation. I have set that out. If the Irish Fiscal Advisory Council wishes to prepare its own reports, documentation or forecasts, there is no impediment. However, it would not legally fulfil our treaty obligation. If we send the Deputy a copy of the memorandum of understanding between the Fiscal Advisory Council and the Department of Finance, it may be helpful. I am advised it will be a public document once this legislation is enacted. It is useful to see the memorandum of understanding between the council and the Department.
On subsection (c), it is stipulated that the Fiscal Advisory Council shall provide an assessment of whether the fiscal stance for the year or years concerned is, in the opinion of the council, conducive to prudent economic and budgetary management, including by reference to the provisions of the Stability and Growth Pact. What is the basis of the assessment? What methodology does it use in arriving at the assessment? There is tension or a difference in objectives in respect of the provisions of the Stability and Growth Pact and the independent assessment, by whatever methods, of the Fiscal Advisory Council in determining whether the fiscal stance is conducive to prudent economic and budgetary management for Ireland. There is a conflict.
The Minister has said he will ask the draftsman about this.
It is simply replicating the law of the land.
If when the Department produces its forecast – I presume a variety of factors will be encompassed – the council says it is not correct, there is no measure in the legislation stipulating that it must produce its own forecast. What happens if the Fiscal Advisory Council does not buy into the Department's forecast, on which the budget is based?
Obviously, there will be a debate about the true basis of the forecast. If it is not endorsed through independent validation, there will be a debate about it. In the event of the council failing to endorse the forecast, the resulting steps would be considered by the Government. According to the code of conduct of the regulations, the budget and stability programme will need to be published with supporting explanations as to the non-endorsement. I presume that the reservations and rationale behind them would constitute an appendix to the forecast.
I move amendment No. 24:
In page 5, subsection (3), line 17, after “Act” to insert “(other than section 3)”.
I move amendment No. 25:
In page 5, after line 19, to insert the following subsection:
“(4) The Fiscal Responsibility Act 2012 and section 3 may be cited together as the Fiscal Responsibility Acts 2012 and 2013.”.
I move amendment No. 26:
In page 3, line 10, after “2011” to insert “AND THE FISCAL RESPONSIBILITY ACT 2012”.