It is proposed to reply to Questions Nos. 14, 24, 27, 29, 35, 55, 63, 64, 70 and 92 together.
I wish to make clear at the outset that the interim decisions on public expenditure which the Government has recently taken are aimed at containing the growth in gross current supply services expenditure in 1996 within the 2 per cent real increase figure to which it committed itself in the programme, A Government of Renewal.
A review of spending trends carried out recently by my Department pointed to a risk that, based on a continuation of existing programmes and policies, gross departmental current spenting would grow next year at a rate slightly in excess of the 2 per cent real limit. Accordingly, in the interest of prudent budgetary management the Government decided on a measured and appropriate response at this point to an emerging unfavourable trend in order to avoid excessive dislocation of public services which would have been inevitable had the response been delayed. The interim measures which were announced on 8 June were as follows:——
— all Ministers are to identify measures to control public spending within their Departments. This will involve all Ministers reviewing their existing policies and expenditures with a view to maximising the benefits to be obtained within the Government's spending target.
— there will be no recruitment to posts paid for out of public funds which would have the effect of increasing the numbers of posts above that on 9 June, unless there is specific prior Government approval. All Ministers are to halt the process of recruitment for additional posts with effect from 9 June 1995, unless and until the Government decides that such recruitment may take place in particular areas.
Their primary purpose is to ensure that the Government's 2 per cent limit on real current spending next year will not be breached and that there is thus sufficient scope in next year's budget to make further progress in reducing taxes in favour of employment.
The impact of these decisions will be reflected in the detailed Departmental spending bids for 1996 which are now being drawn up. These estimates will be examined in detail by Ministers over the coming months and final figures for each Department and agency will be published in the 1996 Estimates volume.
Let me make one point absolutely clear. Public spending in 1995 is on target. There are no indications of the emergence of any significant underlying pressures driving spending off course. The Government is determined to achieve its target for 1995 of a 6.9 per cent nominal increase in gross non-capital supply services spending. The midyear Exchequer returns which will be available early next week should provide confirmation that we remain on course.
The inflation data for mid-May are not a cause of concern in so far as this year's Estimates are concerned. Underlying inflation, exclusive of the recent change in mortgage interest rates, actually declined in the quarter. I am confident that the average rate of price increase over 1995 as a whole will be close to my budget-day estimate of 2.5 per cent.
I assure the House that, in the light of the foregoing, there are no plans to introduce a mini-budget in 1995.
The prudent action which the Government has taken has resulted from a careful and timely examination of the outlook for expenditure in 1996. The Government commenced its examination well in advance of the publication of the recent OECD survey on the Irish economy. It is totally misleading to suggest that the Government decision to initiate action to control the emerging expenditure trends in 1996 was taken in direct response to the OECD survey. This is simply not true. Also, I reject allegations that the OECD survey is "highly critical". The survey, in fact, is very positive. I acknowledge that there are some criticisms but these are in general constructive, in that the concern of the OECD is to ensure that the Government's present successful policies are maintained. In this regard, I remind Deputies that the OECD's comments in relation to the growth in public expenditure relates to the growth in the recent past — not to the Government's plans to contain the real increase in current supply expenditure to 2 per cent per annum on average over the next two years.
This Government is taking positive and determined steps to ensure that the growth in public expenditure is kept firmly under control. We are committed to curbing the excessive growth in current Government spending which has emerged over the last five years. We are convinced that this positive action will yield significant benefits in terms of increasing the room for manoeuvre to improve the incentives for work through the tax and social welfare system, and in terms of keeping downward pressure on borrowing and thus on interest rates and inflation.
This disciplined approach will provide the resources to promote additional employment, reward work and reduce taxation.