That Dáil Éireann condemns the Taoiseach and his Ministers for gross misrepresentation of the budgetary position in the run-up to the general election, and for abandoning all prudence in the management of public finances which has resulted in the general Government balance being €5 billion off the target set by the Government itself.
I wish to share my time with Deputies O. Mitchell, Ring, Connaughton and McCormack. Tonight we are in a very grave situation in that in a short number of months after the general election what I believe is the united voice of the Opposition parties is setting a case of the People versus Deputy B. Ahern and Companies. I lay eight serious charges before the Dáil tonight of gross mismanagement of the public finances. The charges are that on 13 May 2002 the Minister for Finance, with the collusion of the Taoiseach and other Ministers, deliberately and knowingly misled the public about the true state of the public finances; the Minister for Finance recklessly undermined the tax base by indulging in ill-considered tax giveaways that were only partially costed; the Taoiseach and his Ministers in 2001 and again in 2002 engaged in public spending far beyond the limit sanctioned by the Dáil; the Taoiseach and his Ministers abandoned the minimum standards of prudent management of public finances by repeatedly entering into binding commitments without assessing the true costs or benefits of those commitments; the Taoiseach and his Ministers have failed to deliver improvements in public services to warrant the massive spending they have undertaken; the Minister for Finance profligately tapped once-off sources of revenue to paper over the deficit spending in a way which is not in accord with the sound principles of financial management; in implementing cutbacks the Taoiseach and his Ministers have crudely targeted spending that benefits weak and voiceless sections of the community and have increased charges to the public at a time when runaway inflation is already undermining living standards and competitiveness; and the Taoiseach and his Ministers conspired to squander a surplus created by Irish workers of €4.8 billion and in its place will run up a deficit this year of at best €750 million by the end of the year.
If a person buys a second-hand car and finds on returning home that the clock had been tampered with and turned back, what really rankles with him or her is that he or she has been conned. One has no comeback when one's proud choice begins to guzzle gas, burn oil and break its timing belt because the people who have made these commitments are safely on their way and gone out of reach. That is what happened with the Irish public when the Government and Minister sold them a pup as to the true nature and state of the public finances in the run-up to the general election. Gradually, over the summer months, the public began to see the reality under the bonnet of that "much done, more to do" model they had just bought. A sad state of affairs was revealed. The sick were asked to pay 21% more in drugs refund, 26% more at casualty, 10% more in their hospital beds, parents had to pay 70% more to register their children at college, staff in hospitals were laid off, promised recruitment was cancelled, local authority rents were increased by 18%, the VHI increased by 18% and the ESB increased by 13% in order to fuel Government coffers. Support for disadvantaged pupils and adults trying to return to education was cut. This is what the "much done, more to do" model produced over the summer months. Yet the Taoiseach and his Ministers repeat the mantra "no cutbacks". Even Fianna Fáil backbench TDs – sadly none of them are here this evening – began to blush as they were kept in the dark, knee deep in manure, while these cutbacks were loaded on people's backs.
Three days before the election the Minister gave a solemn assurance that the budget was fully on target, no cutbacks were planned secretly or otherwise and taxes would come in on target. However, within three weeks of the election he produced a detailed memorandum calling for a detailed menu of cutbacks and new charges to be implemented. He asks us to believe none of this was in preparation prior to the election when he made his solemn commitment. I do not accept that because the figures speak for themselves. The Taoiseach said earlier that the figures were showing a very healthy state of affairs up to 13 May when the Minister made these pronouncements. This could not be further from the truth. Tax revenue in January was minus 6%, plus 9% in February, minus 7% in March and static in April and May. There was clear evidence tax was going off the rails at that stage. Spending was even worse. In January and February, it was up 22%, in March it was up 36% and in May it was up 50%. The Minister let go of the reins on the public finances. Ministers were spending and recruiting left, right and centre in the run-up to the election. The Minister made commitments in the budget, including on tax, which he had not properly costed and the people were taken in.
The Taoiseach will not call them cutbacks because if he did, he would be admitting he lied to the people. Senior Ministers and the Taoiseach knew exactly the medicine that was in preparation for the public at the time these commitments were made. It was deception on a massive scale. From the very beginning the budget figures were treated with contempt. They were no more than a spin to give a veneer of respectability to the reckless political project that was under way. We are told that the Department of Finance was issuing warnings but the Taoiseach and his Minister partied on. Recruitment to the public service accelerated and spending was brought forward for maximum electoral impact. I recall that child benefit was brought forward. There was so much money they could not get it out the door fast enough. This was the great new partying the Minister pronounced. The monthly evidence that spending was out of control and that revenue was collapsing was simply ignored. This was an inconvenient truth that would wait until after the election.
The Minister for Finance recently let the mask slip in Killarney when he said, "What was I to do? I was there to win Fianna Fáil the election." That is the sort of cynical thinking that underpinned the pronouncements made during the course of the general election. The people now realise it and this is why their anger is so deep. The public is now to suffer the hangover for the Government's binge. In the scramble for cutbacks the Government has left untouched the big bureaucracies, army of advisers and spindoctors. Instead the axe is falling on the crumbs that come across the table to ordinary punters, those dependent on the State for health and education services and on local authority housing lists for housing. The cuts have fallen on the weak and voiceless because the Government knows it will get away with it. They are the soft touch. When Ministers were asked to tighten up, they did not turn first to the bureaucracies that are producing so little. The Minister repeatedly expresses his anguish at how little these bureaucracies are producing, yet he presided over a situation whereby instead of trying to reform public spending to get better value the Government, in its stumbling for cutbacks, imposed extra charges on ordinary people.
It is difficult to believe the Government has squandered the hard-earned surplus of €4.8 billion built up by the workers of this country in just two years. It took just two years for the Government to let that surplus go out the window. The sad tale is there for anyone to read. I know the Minister does not like to be reminded of the harsh facts. In 2001, the Dáil approved extra spending of €2.9 billion at budget time. The Taoiseach allowed his Minister to spend €3.6 billion and he overran by 24%. In 2002, on current performance the Minister, having received sanction for the budget for €2.8 billion, is now heading for an increase in spending of €4 billion. This is a 45% overrun in the spending commitments sanctioned by the Dáil at budget time. If that is not massive loss of control of public spending, I do not know what is.
The story is the same on the tax side of the budget. In budget 2001, the Minister said he would raise an extra €3.2 billion but he raised just €649,000. He was 80% short of the target he set himself. In 2002, his target was €2.4 billion in extra tax revenue. He is saying optimistically he will raise €1 billion extra but one does not believe him. On his own estimate he will be 54% short of target. Was that not a case of public finances being shot through by reckless Ministers? They made tax commitments that they clearly could not live up to. They have cost the taxpayer a fortune. They just ignored the spending restrictions the Dáil agreed to when they were imposed and they ploughed on. We have had so many examples of this. Deputy Olivia Mitchell could tell one of the example of medical cards for those aged over 70. The Government had no clue what it would cost when it made that commitment.
When Stadium Ireland was introduced it was heralded as a marvellous idea. Where are we now? We have spent €400 million and we have nothing. The Taoiseach is now traipsing the country with an offer of land probably worth another €500 million looking for people to come and take on this project. The Minister knows in his heart there was no proper costing of that project and no proper assessment of its benefits. This was a political whim, like so many other spending projects that the Minister allowed his colleagues to embark upon. That was the sad truth of what happened. The public will suffer the hangover for this binge, not the Taoiseach. He will not make room in his Estimates to rectify this matter.
The Minister came into the House week after week telling us he would meet his budget target. He said he would do so after the election and would work miracles. Then, gradually, he admit ted that maybe €300 million on the spending side has to be made good, but that he would battle on. Then, in respect of tax, he said we might lose €300 million, but would battle on. Then the figure became €500 million, then €1.3 billion. Week after week the story, which was so rosy before the election, became grimmer. He tells us spending will still come in at 14.4%. I had a look at what that would mean for Departments and what they would have left to spend in the last quarter of 2002 if each Minister was to come in on target. In nominal terms, not real terms, and not making any allowance for inflation, the Department of Justice, Equality and Law Reform will have to spend 2.2% less than it spent in the last quarter of 2001; the Department of the Environment and Local Government will have to spend 14% less; the Department of Education and Science will have to spend 1% less; the Department of Agriculture and Food, 52% less; and the Department of Health and Children, 3% less. The real binge was in the Department of Arts, Sport and Tourism, which will have to spend 33% less. The Department of Community, Rural and Gaeltacht Affairs will have to spend 6% less.
We have burned out the spending in the first half of the year trying to coax votes to come the way of the Government. If the Minister is serious about bringing the budget in on target, will he tell us how the Department of Health and Children will make another 3% nominal cut, a 10% real cut, in its last quarter? How will the Department of Justice, Equality and Law Reform make a 6% real cut and how will the Department of Agriculture and Food make a 60% real cut? The list goes on. I would like the Minister to tell us how these cuts will be achieved because we have not yet heard about the nature of the cutbacks. It will be one hell of an autumn if those cutbacks are delivered.
No doubt the Minister will stand up in the House and reply that the growth we all thought would occur did not materialise. I took the trouble, and maybe some do not do so, to read back on the Budget Statements of 2001 and 2002. The Minister said what he believed would happen if growth did not reach the targets. Growth was two points short of what he expected. The impact that he predicted and stood over was that the general Government balance would be one point higher than he predicted. However, it was three points higher. It was obvious that the Government had lost control of spending and taxation at that point. The Department of Finance's model was collapsing. Again, in 2002, the Minister's prediction of growth at the time of the budget was 3.9%. His latest estimate suggests 3.6%, a difference of 0.3%. That would have been accompanied by a tiny deviation in the GGB, but the Minister has admitted it will be €1,600 million off target.
Growth does not explain the way in which the public finances have deteriorated in recent years. As I set out in the charges earlier, one of the fictions on which the budget of 2002 was built was the notion that one could dip into the deep pockets of the Minister who had little funds everywhere. He had the Central Bank reserve and the PRSI fund, which he raided quite happily. Like the highway robber, he was going to grab the benefit of notes that people did not cash. From the new coins that he issued, he was going to grab €370 million. There was great creative accounting, amounting in total to €3 billion. He brought forward the payment dates for corporation tax and self-employed tax. Every conceivable fund and trick was used to try to paper over the fact that he had an enormous underlying Exchequer deficit.
However, he did not bank on the reaction of his friends in the EU. Barely was the ink on the budget dry when they told him in the run up to March that he could not use the euro changeover to gloss over his deficit. They ruled that out, and they ruled out more in June. The Minister did not let on that his carefully constructed edifice to conceal the deficit was crumbling away. The public was not told this, but it was quietly admitted in memos sent to the EU, acknowledging that he recognised that the edifice was collapsing. We are only now beginning to see what is happening.
The Minister for Finance keeps telling us we are facing a tough year. I would like to know his opening statement. Since I have taken on this brief, I cannot believe the shambolic way in which he lays figures before the Dáil for approval: it is unbelievable. We do not get access to his projected profiles of public expenditure or tax. Therefore, we cannot track them from week to week. I have heard learned media commentators blaming the Opposition parties for not being able to track the fact tax and spending were going off line. The Minister refuses to publish the profiles of spending for the year ahead. If he did we could have proper transparency and accountability.
I had great faith in the Minister that he would transform the way in which we framed our budgets, that he would have Estimates before the House three months before the start of the tax year and that he would have a whole new opus, but that has just not happened. On behalf of Fine Gael, I will move during this session a Private Member's Bill based very considerably on the New Zealand experience. They have brought in a fiscal responsibility Act. This is not the crude sort of thing that happens in California saying one must keep one's budget in balance. It recognises that there are cyclical ups and downs, but it sets out firm principles of sound public management. As I said earlier, the Government has abandoned the sound principles of public management of the finances, and it is necessary that we reinstate them.
The House needs to assert itself. It is about time that the backbenchers on the Government side and the elected Members of the Opposition took back some responsibility. The Minister has doubled the spending on the health services is the past five years – that was his boast – but I do not see any improvement in the quality of the health services in my constituency. Waiting lists are longer and it is harder to get speech therapists, occupational therapists and physiotherapists. The Minister has spent the money, squandered the boom that was created by Irish workers and we have nothing to show for it. It is about time the Dáil took back some responsibility and demanded accountability from Ministers, and I hope this will happen.
Will the Minister state what will be the opening position next year? In last year's budget he forecasted an opening Exchequer deficit of nearly €3 billion for 2003. That did not take account of the fact that taxes crumbled by €1.3 billion, on the Minister's own admission. The figure pertaining to benchmarking is €1.1 billion. If there is a growth in spending, which the Minister predicts, an extra €1 billion will be required. Those figures show there will be a huge opening position. I would like to hear the Minister's estimate because it seems we cannot fund this easily without getting quite close to breaching EU restrictions. I heard the Minister proudly tell his colleagues yesterday that he would come in again with a balance this year and that he would have a small surplus. I do not see how he will do that against the background I have depicted. Perhaps it would be good if we had a little honesty from the Minister tonight.
The public rightly feels conned by the scale of the misrepresentations of the past few months. It is time there was honesty rather than the guff about the state of the public finances we have heard from the Taoiseach and the Minister. We are being treated like fools and people will not accept that. I hope that from tonight there will be more honesty in the way proposals are framed and presented and that a true picture of where we stand is given.