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Budget 2019

Dáil Éireann Debate, Thursday - 27 September 2018

Thursday, 27 September 2018

Questions (82, 83)

Barry Cowen

Question:

82. Deputy Barry Cowen asked the Minister for Public Expenditure and Reform further to Parliamentary Question No. 64 of 20 September 2018, if current spending overruns of €209 million according to the August Fiscal Monitor if maintained to the end of the year will be filled by capital spending underspends of €361 million; and if he will make a statement on the matter. [39273/18]

View answer

Barry Cowen

Question:

83. Deputy Barry Cowen asked the Minister for Public Expenditure and Reform if there are capital underspends in Departments at the end of the year if these underspends are automatically carried over to 2019; if not, if that funding will be drawn from the capital funding allocation for 2019; and if he will make a statement on the matter. [39274/18]

View answer

Written answers

I propose to take Questions Nos. 82 and 83 together.

As outlined in the August 2018 Fiscal Monitor published by the Department of Finance, overall gross voted expenditure to the end of August 2018 was €39,449 million. This was €152 million, or 0.4 per cent, below profile and €2,874 million, or 7.9 per cent, higher than expenditure for the same period in 2017. Gross voted current expenditure of €36,770 million was €209 million, or 0.6 per cent ahead of profile and €2,353 million, or 6.8 per cent ahead of the same period last year. At the end of August 14 out of 17 Ministerial Vote Groups were either broadly in line or below profile, with an aggregate underspend of €207 million versus their current expenditure profiles. Health, Education and Skills, and Justice were ahead of their gross current expenditure profiles by an aggregate amount of €416 million.

Given the scale of gross voted expenditure, €62 billion in aggregate for 2018, the need for Supplementary Estimates or the surrender of funds to the Exchequer at end-year can arise for a number of reasons. Additional funding requirements in one area may be partly offset by underspends in another area. The exact scale of any underspends is difficult to assess at this stage in the year. However, the expenditure outturns for the last two years provide an indication of the potential range.

As reported in the December 2017 Fiscal Monitor, gross voted expenditure in 12 out of 17 Vote Groups was in line or below profile for the year. These profiles reflected the allocations set out in the Revised Estimates for Public Services 2017 published in December 2016 and the Further Revised Estimates presented to the Dáil on 17th October 2017. The aggregate underspend on current expenditure across these 12 Vote Groups was €208 million. As set out in the December 2016 Exchequer Statement, gross voted expenditure in 11 out of 16 Ministerial Vote Groups finished the year at or below their total expenditure profile. The aggregate underspend on current expenditure across these 11 Vote Groups was €238 million. Consequently, based on the level of current expenditure underspends over the last two years in Vote Groups that underspent relative to their profiles, voted current expenditure underspends in the region of c €0.2 billion could be expected to partly offset the expenditure pressures emerging in Health, Education and Justice.

At the end of each financial year, unspent voted allocations must be surrendered to the Exchequer. However, as set out in the Public Financial Procedures, there is an exception in relation to voted capital. Section 91 of the Finance Act 2004 provides that a maximum of up to 10% of the capital envelope of each Vote may be carried over to the following year by way of ‘deferred surrender’ to be spent that year on priority capital programmes. The total amount of capital carryover at end-2017 was €70.3 million.

At the end of August, gross voted capital expenditure of €1,679 million was €361 million, or 11.9 per cent below profile and €521 million ahead of end-August 2017. The Department of Housing was €175 million below profile with a significant proportion of this capital underspend being due to a timing issue relating to Irish Water, which is expected to revert to profile. Consequently, excluding the Department of Housing, gross voted capital expenditure is €186 million below profile. At end-August 2017, the equivalent underspend was €163 million. At end-December 2017, after taking capital carryover of €70 million into account, the equivalent capital underspend, excluding the Department of Housing, amounted to €54 million, which is approximately 1 per cent of the overall capital allocation. However, given the nature of spending on capital projects there is a particular difficulty in assessing the potential full year outturn at this point in time.

Managing the delivery of public services within budgetary allocations is a key responsibility of each Minister and their Departments. Taking into account the level of underspends in previous years outlined above, it is important that where Departments have expenditure pressures arising in certain programmes the scope to reallocate expenditure from other programmes is fully examined in order to mitigate the risk of an overspend. Any increase in expenditure in one sector, unless offset by expenditure underspends elsewhere, either voted or non-voted, or additional revenues, would result in a deterioration in the general government deficit from a projected 0.2 per cent of GDP this year and 0.1 per cent of GDP next year. Consequently, as part of the Budget process, work is ongoing to determine the scale of any potential Supplementary Estimate requirements for this year, the potential impact on aggregate voted expenditure in both 2018 and 2019, and potential offsetting revenue or expenditure across all areas of General Government.

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