Michael Ferris
Ceist:73 Mr. Ferris asked the Minister for Finance his views on whether the budgetary process is satisfactory; the reforms, if any, he proposes; and if he will make a statement on the matter. [19509/98]
Vol. 495 No. 2
73 Mr. Ferris asked the Minister for Finance his views on whether the budgetary process is satisfactory; the reforms, if any, he proposes; and if he will make a statement on the matter. [19509/98]
As the Deputy is aware, the whole budgetary process was considered extensively in Delivering Better Government and as a result there has been an ongoing programme of reforms in this process. I would draw his attention to the multi-annual approach to the budget which was begun by my predecessor. In my first budget, I published projections showing expenditure by individual Ministerial Vote Group for 1999 and 2000 on a no-policy-change basis.
74 Mr. Quinn asked the Minister for Finance his view on whether budget surpluses would be better applied towards infrastructural development rather than set off against the national debt, having regard to the comments of the head of the National Treasury Management Agency. [19516/98]
I am well aware that our rapidly growing economy requires significant investment in infrastructure to prevent bottlenecks which could hinder competitiveness. It was for this reason that I provided significant increases in capital spending in my first budget. In this regard, I would draw the Deputy's attention to the increase of 23 per cent in the Exchequer funding under the Public Capital Programme in 1998. The 1997 budget increase was 9 per cent. I can assure the House that in preparing my upcoming budget, I will give full consideration to the economy's investment needs having due regard to the capacity constraints in the building and construction sector.
However, the case for reducing the national debt is compelling. As the Deputy is aware, the national debt stood at over £30 billion at the end of 1997. A reduction in this will lead to a reduction in debt servicing costs which will release resources for more productive purposes in future years, including improvement in our public services, continued tax reform and infrastructural development. Running a surplus now is a continuation of the prudent fiscal policies which have been a key element of our recent economic success. During this exceptional period of growth it would be inappropriate for Government to spend all the additional resources. We must prepare ourselves to cope with a number of significant challenges. We are facing slower growth rates. EU transfers will reduce, which will increase the burden on the public finances.
Looking further ahead we must also prepare the public finances to cope with much slower levels of growth in the next century as the current favourable demographic trends unwind and the number of elderly citizens increases.
Finally, I would point out that the stability and growth pact commits the Government to a budget which is close to balance or in surplus during economic conditions such as we are experiencing at present. As the Irish economy is now growing at exceptional rates, significant budget surpluses should be achieved in order to meet the objectives of the pact.