Richard Bruton
Ceist:112 Mr. R. Bruton asked the Minister for Finance his estimate of the cost of spending commitments by Government in the new social partnership deal. [5633/03]
Priority Questions. - Departmental Expenditure.
The public service pay agreement under the proposed social partnership agreement, Sustaining Progress, provides for a pay increase of 7% over an 18 month period with an initial six months pay pause. This increase is to apply as follows: 3% from 1 January 2004; 2% from 1 July 2004; and 2% from 1 December 2004. It is estimated that the cost of implementing these increases is €548 million in 2004 and €928 million in 2005.
In addition to this increase the awards recommended by the Public Service Benchmarking Body would be implemented as follows: 25% of the increases in 2003 backdated to 1 December 2001; 50% of the increases from 1 January 2004; and 25% of the increases from 1 June 2005. The estimated cost of implementing the benchmarking increase is €565 million in 2003, of which €290 million relates to arrears from 1 December 2001, €825 million in 2004 and €985 million in 2005. In the public service the payment of the increases will be dependent on the achievement of measures to modernise the public service and the maintenance of industrial peace.
It is not possible at this stage to provide an estimate of the cost of several of the commitments made under the agreement as details of what is to be done will be the subject of further discussion and examination.
Is it true that the Minister has made a commitment that social welfare rates will be increased in line with NAPS to 30% of the average industrial wage by 2007? Has the Minister estimated this cost and factored it in?
The Minister has just given figures which show the pay side coming close to €4 billion. Does the combination of this pay commitment and the social welfare commitment mean he can finance these within the existing tax rates or does he intend, over the coming years, to do what he did this year and fail to provide any indexation of tax allowances and bands to taxpayers? What is the Minister's estimate of the affordability of these commitments and what do they mean for taxes?
There is a commitment in the agreement to increase the personal rate of social welfare payments to €150 in 2002 terms. The question of how to pay for all of the commitments in the programme will depend on the resources available to the Government at the time, as is usually the case. Each budget must be taken on its merits and the commitments are in the programme.
I have given the figures for pay, which are the quantifiable figures at this stage, but the Deputy will have to wait until the budget for an answer to his question on tax rates.
Why has the Minister not estimated the cost of any of the other commitments and why can he only give estimates in relation to pay? The Minister is asking everyone to sign up to the partnership agreement. He is the one person to whom we look to estimate the costs. Why does he not know what those costs will be? Surely this is not an acceptable basis on which to ask taxpayers and consumers to accept an agreement that may well mean far greater charges and taxes for them?
Does the Minister agree that the combined cost of the allocations to pension funds and SSIAs will impose huge burdens on the Exchequer in the next two or three years? There is a need for a realistic assessment by the Minister of the tax implications of all of those proposals. The Minister does not seem to be willing to offer that.
The overriding fiscal requirement in An Action Programme for the Millennium relates to compliance with the terms of the stability and growth pact. This agreement is also predicated on keeping the fiscal position on a sustainable basis. As the Deputy is aware, making predictions of the level of growth in the Irish economy and of the factors which will affect levels of economic activity and other such guesses are not wise. I can give the Deputy figures for the various items in terms of present day cost, but it would be speculative to imply from such figures that one has to increase or decrease tax rates or to assume what the Government's commitment regarding taxation will be. The Government makes decisions each year in the light of the prevailing circumstances.
Apart from the commitments to benchmarking, am I to understand that no firm commitments have been made by Government with a financial tag attached to them? Apart from benchmarking have no firm commitments been given regarding social welfare, other social inclusion measures or tax?
As the Deputy well knows, there have been many previous agreements. The Government stands over its commitments but they are to be met over a period of time and they depend on the overall economic situation. The Government is firmly committed to implementing the proposals in the agreement and will honour them. As with every other agreement, there is an overriding proviso regarding the sustainability of the public finances. That being said, the Government hopes to do all of these things within the resources available to it. That is the commitment the Government has made.
There is nothing new in what I am saying. Previous Ministers for Finance would have said the same about every programme ever brought forward.