Vol. 412 No. 5
11 Tomás Mac Giolla asked the Minister for Finance if he will outline his Department's latest estimate of the anticipated level of economic growth for this year; the way this compares with the estimate given in the budget; if he will further outline the likely implications of the lower than expected growth; and if he will make a statement on the matter.
15 Mr. G. O'Sullivan asked the Minister for Finance the estimated current budget out-turn for 1991; the expected forecast for economic growth; and if he will make a statement on the matter.
22 Mr. T. O'Sullivan asked the Minister for Finance the estimated current budget out-turn for 1991; the expected forecast for economic growth; and if he will make a statement on the matter.
I propose to take Questions Nos. 11, 15 and 22 together.
"Economic Review and Outlook 1991" published in August projected a GDP growth rate for this year of about 1.75 per cent and, depending on the scale and timing of profit outflows, GNP growth of about 1.25 per cent.
Since then the recessions in the UK and in the US seem to have bottomed out but, while the latest forward looking indicators in the UK are encouraging, signals from the US are more mixed. On the domestic front exports and, by implication from revenue recipts, non-agricultural employment are continuing to hold up, while business confidence is reported in the recent CII survey to have improved. However, trends in personal consumption and constuction employment remain weak.
On balance, there would appear to be no reason to expect this year's growth rate to differ significantly from that outlined in "Economic Review and Outlook". This would leave growth here broadly in line with the EC average but, in terms of GNP, would represent approximately a halving of the budget day forecast of 2.25 per cent. This lower growth essentially reflects the effects of weakened international confidence on business investment, and of a related weakening in domestic confidence on personal consumption and construction. Irish economic fundamentals remain sound.
Lower growth has had a direct impact on the budget arithmetic. The impact on indirect tax receipts was particularly marked both because a lower than expected volume of personal consumption represented a significant part of the total growth shortfall and because the fall-off in consumption was particularly concentrated in expenditure on motor vehicles. Together with the unexpectedly sharp increase in the number on the live register as migration patterns changed, this is one of the main reasons the current budget deficit for 1991 is likely to be in the region of £400 million, some £150 million above the budget estimate. This is broadly in line with the Government's expectations on 19 July last when introducing a corrective package to deal with the emerging situation. I am satisfied that in this very difficult year the current deficit has been contained within reasonable limits.
Does the Taoiseach accept the fact that on almost every occasion when the Government and independent economic forecasters have differed during the course of this year, the Government have been wrong? Does he agree that even the Central Bank has been, and is certainly now, continually less upbeat than the Government? Is the Taoiseach in his capacity as Minister for Finance aware of a particular forecast by one firm of stockbrokers that suggests that having regard to trends in Britain we are likely to reach unemployment levels of the order of 325,000 by mid-1993 and that unemployment is likely to reach 300,000 by next autumn? Having regard to that nightmare economic scenario, does he not agree it is incumbent on us now to use all the energies available to the State and the social partners to devise some assault on this appalling unemployment prospect?
The Deputy is embarking on a speech rather than asking questions.
I could not possibly accept this.
That was my first question, a Cheann Comhairle.
The Deputy has a long series of questions there.
How is it we are the only Deputies in the House whom the Chair continually interrupts?
Deputy Rabbitte, I will not tolerate an assault of that kind on the Chair. It is totally unjustified.
They elected him too.
We will not the next time.
The Deputy does a grave disservice to the Irish economy and to the prospects for that economy in making these outlandish and totally unjustified statements. He should not use Question Time to try to spread this doom and gloom because the situation does not warrant it. On the question of the economic forecasts as to growth, the Department of Finance experts have been consistently more correct than any other forecasters on the scene.
Ask Deputy Reynolds. That is not true, Taoiseach.
On this occasion as we all know, the forecast on which the budget was based, 2.25 per cent, was in the middle of a range of forecasts given by different commentators and experts at that time. The unavoidable falling off in economic growth during the year could not possibly have been anticipated at the time the budget was being framed. We have been over all that ground. The position now is that in spite of the difficulties that arose during the year and in spite of some of the nightmarish forecasts regarding the Exchequer borrowing requirement for the current year, things will come out reasonably good and the overrun of £150 million is far less than would have been trumpeted by various supposedly well informed commentators and experts during the course of the year and up to quite recently. I strongly advise Deputy Rabbitte to be cautious in this area because it is very much a question of estimates and forecasts and any estimate or forecast can only be made on the basis of the facts available and unexpected developments can throw any forecast off.
(Limerick East): Is the Taoiseach aware of the hundreds of complaints from compliant taxpayers, that they have been hounded by the Revenue Commissioners in recent weeks, that letters have been issued threatening the sheriff——
Deputy Noonan is raising a separate matter altogether.
(Limerick East): I am not, we are talking about the Exchequer returns.
Please, Deputy. The Deputy is raising a separate matter worthy of a separate question.
(Limerick East): Would you let me finish my question? This supplementary question is fully in order.
The Chair decides these matters, Deputy Noonan.
(Limerick East): You have not heard the question, a Cheann Comhairle.
I ask the Deputy to stay with the question before us.
(Limerick East): I am staying with the three questions before us.
Nimble footwork.
(Limerick East): Is the Taoiseach aware that the Revenue Commissioners have issued letters to compliant taxpayers one month before the payment date due, threatening the sheriff and attachment orders on them? May I ask the Taoiseach if this was done by the previous Minister for Finance to improve the Exchequer returns for the third and fourth quarters? Will the Taoiseach have the grace to do what the Chairman of the Revenue Commissioners did on radio, apologise to the taxpayers? Will the Taoiseach get up and apologise in the House?
I suppose that, in so far as the responsibility ultimately rests, so far as this House is concerned, with the Minister for Finance, I would have to reecho to this House the apology of the Chairman of the Revenue Commissioners for the mistake which was made, a mistake which the Chairman of the Revenue Commissioners fully explained. I will be glad to supply the Deputy with the full text of the answer I would have given to the priority question if the Deputy had not played into injury time.
(Limerick East): May we have a summary of the explanation for the benefit of the House? How did it arise that compliant taxpayers were threatened with the sheriff and with attachment orders?
The Deputy has put that point.
(Limerick East): What is the explanation?
It was a genuine error by the Revenue Commissioners for which they have fully and publicly apologised.
(Limerick East): Were they instructed to do so by the Department of Finance?
Certainly not.
(Limerick East): They were not instructed to apologise?
It was a routine operation of a normal annual nature undertaken by the Revenue Commissioners.
(Limerick East): Some operation, Taoiseach.
May I ask the Taoiseach, in respect of the charge that I was being outlandish in the question I put to him originally, if he accepts that Davy stockbrokers would be regarded as reputable forecasters? I know they are not the Taoiseach's favourite stockbrokers, but they are reputable?
They were appointed by the Government to be their advisers in the Greencore privatisation process.
That bears out the point I made as to how reputable they are. They would not have been recruited to Greencore unless they were very reputable. They have forecast in their report zero growth and a projected unemployment figure of 325,000. I am not being outlandish. I am merely asking the Taoiseach what is his rebuttal of that. Does he not, in any event, accept that the decline in economic growth has the most serious implications for our unemployment pattern, that there now is an unemployment crisis and that all of us in this House should focus our attention on trying to alleviate it in some fashion?
The Deputy covered many mixed and varied aspects of the economic sitution in one supplementary.
The Taoiseach will understand that I have to be quick.
First, I have given my assessment and the assessment of the experts at the disposal of the Government that the forecast we made last July of 1.25 per cent GNP for 1991 will be adhered to. I have also made it clear to the Deputy that, despite all the falling off in economic growth and the major problems for the public finances represented by changes in migration patterns, the outcome at the end of this year will not be all that satisfactory. In fact, taking everything into account, I think it is a very respectable achievement by the Government and the Department of Finance to have kept the situation so firmly under control that the overrun is of a comparatively lower order than had been anticipated.
What about my supplementary question in regard to unemployment?
With regard to unemployment, I do not think the Deputy should be alarmist in that area. The situation is clearly that in general employment in our economy is holding up well. That is a fact. There has been no significant——
That is not what the labour force survey states.
The figure of 5,000 decrease in the labour force survey is the exact equivalent of the adjustment made in 1990 after the event, so 5,000 is a margin of error in the labour force survey.
But the Taoiseach has been saying up to now that the actual number of people at work was increasing.
I am asserting to the Deputy that in so far as employment is concerned, it is holding up well and all the indicators confirm that. However, I do accept and acknowledge that the live register is at an unacceptable level and it has been conclusively proved, again and again, to have been caused in the main by the welcome return of emigrants and the cessation of emigration. That is something we welcome but, of course, it does present us with budgetary problems and also with the challenge of reducing that live register figure. I want to again assure the Deputy, and the House, that the Government have at present under very active consideration a number of initiatives designed to make an assault on that unacceptably high level on the unemployment register. I would also like to add that in regard to the rise in unemployment here, though it is no great consolation to us, this is something similar to what is taking place all over Europe at the moment.
A Cheann Comhairle——
We have dealt sufficiently with this question.
There is a question down in my colleague's name and I have not asked any supplementary.
I would have expected the Deputy to have offered earlier.
I was allowing the Taoiseach time to reply.
I will allow the Deputy a supplementary.
May I ask the Taoiseach, in his capacity as Minister for Finance, if, having regard to the unsatisfactory range of estimates for growth at any one time over the last 12 months and the wide variants to which he has already testified, he would not reconsider the reply of his Minister of State in respect of the mechanisms of measurement available to us? Would he consider it useful to instruct the Minister for Finance he appoints tomorrow to prepare quarterly figures so that this kind of unproductive debate might be set aside?
I have always felt that there is great room for improvement in the statistics available to us in this country, not just in that regard but in other areas. In other economies they are able to have very up to date figures on employment and unemployment. Here we have only an unemployment register which is not very satisfactory because the real picture is more closely given by figures for employment, vacancies and so on. In a number of areas there is definitely a need for much better or rather more up to date information.
I do not think that applies to the estimates for growth in the economy. After all, at budget time the Department settled in the middle band for 2.25 per cent and now it is almost certain that we will finish up with an actual growth rate of 1.25 per cent. When one bears in mind that we had the Gulf War and its aftereffects, that there was a major economic recession in the UK, a major economic recession in the US and a generally uncertain situation in regard to the international economy, it is not a totally disastrous error of calculation by the Department of Finance. It shows very well that the basic economy here is sound, that in spite of all those developments during a very difficult year in 1991 we were still able to maintain growth at all. In fact we were able to maintain growth at 1.25 per cent as against 2.25 per cent projected at budget time.
