Priority Questions.

Departmental Strategy Statements.

Richard Bruton


73 Deputy Richard Bruton asked the Minister for Finance if he has issued new policy directives since taking up his post as Minister for Finance; and if he will make a statement on the matter. [22278/08]

Since taking up office, I have been acquainting myself with the economic, budgetary and other policy issues which are the responsibility of the Minister for Finance. As the Deputy is aware, new policy directives are normally made primarily in the context of the annual Budget Statement and the Estimates cycle. I have not found it necessary as yet to issue something that might be characterised by the Deputy as a new policy directive. However, I am evaluating the current changing economic position and I will shortly be bringing my budget strategy memorandum to Government as is normal at this time of the year. Of course I have made decisions on many matters that have been brought to my attention since my appointment and I have made those decisions in accordance with what I deem to be in the prudent and best interests of the country.

I am somewhat disappointed that the Minister has not found that he has some ideas that he would like to implement on taking up office. I had understood he had been considerably interested in the post for some time. Will he, for example, consider a directive to provide that all appointments to State boards by the Minister would be presented to an Oireachtas committee so that it could have some input into them? May I suggest that he consider that it would be timely to have a medium-term strategy over the next four years bearing in mind that the existing programme for Government is based on tax revenue which will be cumulatively €30 billion off the target expected at the time it was made? Will he consider a policy directive to extend the Freedom of Information Act as requested by the Information Commissioner or to extend the powers of the Standards in Public Office Commission as it has requested? Has he considered that the request by the National Competitiveness Council that the Government should prepare a competitiveness action plan is one deemed worthy of support by the Minister for Finance and that we will have a direction that that will be done.

In substance the Deputy has asked five supplementary questions, which in a sense are very remote from the original question he raised. On his first question, of course I bring new ideas into this Department. However, I am content at this stage to explore those new ideas with my officials so that we can formulate them as concrete proposals in the Estimates cycle and in the presentation of the annual budget.

The Deputy proposed the four specific ideas. First, appointments to State boards are dealt with through Acts of the Oireachtas. In general the Acts prescribe the form for the appointment of particular members. The form and procedure for the appointment of members of various boards varies. Some appointments are made by the Government and in those cases a proposal must be brought by the relevant Minister to the Government for a Government decision on the appointment. In other cases appointments are left to Ministers. Some legislation prescribes exactly the qualifications and background, including vocational background or being a member of the public service or designated member of the public service. Statutes often lay out these matters regarding appointments to State boards. There is no uniform formula for appointing people to State boards and in the course of our debates on individual items of legislation questions are raised as to how appointments should be made. It is for line Ministers to appoint persons of suitable qualifications to boards who can discharge their duties in the public interest. It is not the responsibility of the Minister for Finance to second guess the wisdom of Ministers' selections. In my Department I must fill certain positions on boards and I fill them in accordance with their statutory purposes. I am not clear what new policy directive is open to me in this area.

I commented on freedom of information legislation during a recent conference on the Freedom of Information Act, hosted by the Ombudsman. I made the point that the introduction of a very small charge in 2003 was a desirable decision in value for money terms in that there was a disproportion between the cost of processing certain requests and the amount of information elicited from them. As a result, a small charge was introduced in 2003. It has not yet been increased and I have no proposals to increase it. It is a valuable deterrent to abuse of the system in putting the public service under a huge burden to furnish information in a disproportionate manner. I do not propose to change that.

Another aspect of freedom of information that is often canvassed is the disclosure of Government records. As Deputy Burton is aware, the original legislation envisaged that disclosure would be made after five years, and it is now made after ten years. We will now begin to see documents of the Governments that sat in 1997 and 1998. That is a reasonable period of time and I cannot take issue with it. On the Garda Síochána, again I am guided by the view of the Minister for Justice, Equality and Law Reform, which is that there are important security considerations involved although I see no harm in an exchange of opinion between senior Garda officers and their correspondents in other forces where freedom of information experimentation has taken place.

May I ask a brief supplementary question?

The Acting Chair did not limit the Minister, who went well over time.

Time is not allocated specifically. The time is six minutes in total. The Deputy could have used more time at the beginning,

The Minister could put Sir Humphrey of "Yes, Minister" to shame in his capacity to defend the status quo in long, rambling replies without seeking to reform anything that might make his Department more transparent or accountable to this House.

We may get to another priority question of Deputy Bruton's if we can move on.

We are fully accountable under freedom of information legislation.

If the Minister had not used all the time we might have had a reasonable debate.

Economic Competitiveness.

Joan Burton


74 Deputy Joan Burton asked the Minister for Finance the level of economic growth in Ireland for the first five months of 2008; the expected level of economic growth for 2008 as a whole; when his Department’s economic growth forecast for 2008 was last revised; his view on recent further downward revision in economic growth forecasts, with some respected commentators forecasting economic growth of 1% or less for 2008; his proposals to tackle falling growth, rising unemployment and persistently high inflation; and if he will make a statement on the matter. [21985/08]

Figures on economic growth are published by the Central Statistics Office on a quarterly basis, generally speaking one quarter in arrears. Data for the first quarter of this year will be published at the end of June or early July. The indicators available point to a softening in the economic conditions in the opening months of the year.

At budget time my Department forecast GDP growth of 3% for 2008, while pointing out a number of risks to this forecast. Those risks have materialised. The external environment has weakened. The short-term outlook for the US and UK has become less favourable while the growth rate of the euro area economy is expected to slow, albeit not to the same extent as in the US and the UK. At the same time, the appreciation of the euro against the dollar and sterling is becoming a cause for serious concern. Oil, food and other commodity prices have risen in recent months and the international financial market difficulties have been more prolonged than initially hoped.

Domestically, we are experiencing a sharp adjustment in the level of new house building and this is having a dampening impact upon the overall rate of economic growth. The range of the main economic forecasters spans from a low of 0.5% to a high of 3.5% for GDP for this year with the consensus for growth now approximately 2%. Compared with last December the current market consensus forecasts for this year and next have been revised downwards.

While my Department has not published revised forecasts the situation is being closely monitored. Clearly we are in a more challenging economic environment with several key indicators showing a slowdown. It must be emphasised that we face the slowdown from a position of strength and, once we take the appropriate steps to overcome the short-term difficulties, my Department expects the medium term outlook is for a pick-up to more sustainable rates of growth. It is of note that others, including the ESRI, share this assessment as evidenced by its recently published Medium Term Review: 2008-2015, in which it anticipates growth averaging 3.75% over the medium term.

How we respond to the short-term difficulties is important. To safeguard our growth prospects we need to improve our competitiveness, raise the level of exports and improve the productivity in the economy. Continued productive investment will also be important to help raise productivity and living standards and maintaining a low burden of taxation will also help stimulate private sector investment and participation in the labour force.

Will the Minister elaborate on whether he has plans to deal with what one respected firm of accountants yesterday called a pandemic of uncertainty which is now contaminating not just the construction industry, to which the Minister referred, but all sectors of the economy — what in the United States is often called the real economy as opposed to the construction industry, which is sectoral and undoubtedly has huge difficulties?

I noticed yesterday that the Minister saw fit to lecture people. I want to ask him about his comment yesterday that consumers and businesses must put up with high fuel prices and that we are not to "whinge". Does this mean that some woman with her children——

The Deputy would want to read the quotation.

The Minister is quoted in The Irish Times and other newspapers today as saying “we have to adjust our expectations” and “modify our behaviour” instead of “whinging”. Mothers who go shopping often have their children with them and the children whinge as they look for a bar of chocolate and so on. Is the Minister telling consumers to cut the whinging? He is the one on a salary of €250,000 and the Government has decreed that he will get a €20,000 increase shortly. Who is entitled to whinge? Will the Minister explain those comments? Will he withdraw his charge that people should stop whinging?

Perhaps people have something to whinge about — those losing their jobs, the businesses closing down, the construction workers becoming idle and in particular the shoppers, mothers and fathers who push trolleys around with their children, who find the price of a basket of goods a difficulty and find it difficult to make ends meet at present. Perhaps the Minister will agree that some of these people are entitled to feel let down by the Government and the Taoiseach and by the former Minister for Finance, who made a bags of stamp duty reform and partly brought us to where we are now.

The question asked by Deputy Burton is of course based on a misapprehension. I did not characterise any of the individuals referred to by Deputy Burton as whingers in the article, nor would I.

If one is prohibited from using a word in the language, I will follow Deputy Burton's injunction and refrain from using the word again. However, I will say this——

The Minister used it yesterday. He acknowledged he talked about whingers.

Yes, I did use the word. The manner in which Deputy Burton presented her question would deserve the sobriquet. The matter I was addressing was the increase in oil prices, which is a very serious matter with very serious impacts for the people to whom Deputy Burton referred — I agree with her on that. I was addressing the fact that we have very difficult choices to address in that context. We do not set the price of oil for ourselves, it is set for us by those with whom we deal. Given the character of the increases we have seen worldwide, it will impose on us certain disciplines. We have a choice, we can, as I said, complain about it or we can decide to take the actions that will address the problems it poses for us.

Will the Minister tell us——

That is precisely the point I was addressing in the article and it is all I was addressing. I was in no way lessening the concern I have and that the previous Minister had in regard to those who are most hard-pressed by this. The previous Minister addressed that matter in his social welfare measures in the last budget.

We move on to Question No. 75.

May I ask a brief question?

No, we are well over the time. No brief questions are allowed.

Does the Minister withdraw the word "whinging"? Was it a mistake to call consumers and businesses whingers?

We are on Priority Questions. Deputy Kieran O'Donnell has asked Question No. 75 and I call the Minister to respond.

I explained the context——

Will the Minister withdraw the word "whingers" in regard to consumers and businesses?

Excuse me, Deputy, am I allowed to speak?

We are on Priority Questions. We must move to Question No. 75.

I explained the context in which I used the word.

Does the Minister withdraw it?

I indicated that I observe Deputy Burton's injunction not to use it again.

The Minister should withdraw it.

Price Inflation.

Kieran O'Donnell


75 Deputy Kieran O’Donnell asked the Minister for Finance if he has monitored the impact of trends in sterling and international commodity prices on Irish price inflation; and if he will make a statement on the matter. [22279/08]

Achieving a moderate rate of inflation is a key economic policy priority given its importance in helping to restore national competitiveness. Due to the relatively high rate of inflation that we have experienced over the past number of years, the price level for consumer goods and services in Ireland is some 20% above the euro area average. In light of this, the Government is committed to monitoring developments in prices on an ongoing basis.

As measured by the harmonised index of consumer prices, annual inflation in Ireland was 3.3% in April 2008. Using the domestic measure, the consumer price index, annual inflation was 4.3% in April 2008. This represents an improvement on the consumer price index inflation rate of 5% recorded a month earlier. As in many other countries, the global rise in food and oil prices is continuing to impact on headline inflation in Ireland. In the year to April 2008, food costs rose here by some 8.4%, contributing 0.9% to the annual increase in prices, while the cost of energy rose by 7.3% and contributed 0.6%.

As regards exchange rate developments, it is well known that sterling has depreciated sharply against the euro in recent times, falling by around 15% in the year to April 2008. Given that approximately one third of imports to Ireland are from the UK, I would have expected to see this fall in sterling exerting some downward pressure on inflation. I am disappointed this does not seem to have happened to date. This issue is also of concern to the Government and my colleague, the Tánaiste and Minister for Enterprise, Trade and Employment, has been actively engaging with those concerned to see what steps can be taken to resolve the matter. As the depreciation in sterling is passed through, I anticipate a moderation in Ireland's inflation rate later this year.

In terms of the Government's response to recent price developments, I point out that as a small open economy, we are largely a price taker, which means we have few direct measures at our disposal to reduce the inflationary impact of the global rise in commodity prices.

Notwithstanding this, the Government is committed to doing what it can. In the short to medium term, this includes implementing responsible fiscal policies and promoting competition and increased price transparency through the work of the Competition Authority and the National Consumer Agency.

Additional information not given on the floor of the House.

Over the longer term, the considerable investment in the agricultural and food industries that the Government is currently undertaking as part of the national development plan will help improve the productivity and competitiveness of these sectors, with subsequent gains for the Irish consumer.

Finally, from a competitiveness perspective, I stress the importance of ensuring that the externally driven price increases we are currently experiencing are not exacerbated by internally generated second round effects. Securing a sensible and sustainable outcome to the current round of pay talks will have an important role to play in this respect.

The Minister has not addressed the issue of what the Government is going to do. In a market driven economy such as ours, the large UK multiples will charge higher prices if they can get away with it. Will the Minister instruct the National Consumer Agency and the Competition Authority to work together? My party believes the two agencies should be combined into one stronger body. By publishing sterling and euro prices across a range of sectors, they could ensure the proper competition which is currently missing from the market.

I take exception to the Minister's refusal to apologise for his comments on whinging. He is speaking to consumers and businesses. The latter provide the jobs which, along with rising prices, are people's biggest concern at present. He has done absolutely nothing in that regard. Certainly there have been increases in the international price of oil, but the Government has done nothing to quell domestic inflation. For the past seven years, it has contributed to half of all non-mortgage based inflation.

Will he and the Tánaiste instruct the National Consumer Agency and the Competition Authority to publish on a weekly basis real time prices across a range of products so people know whether they are getting value for money from UK multiples? Will he apologise and withdraw his comments about whinging? He is speaking to people who are worried about their jobs.

The Tánaiste has been actively engaged with the National Consumer Agency and the Competition Authority with a view to taking positive action on this matter.

Will the Minister do anything positive?

A parliamentary question on that matter should be addressed to the Tánaiste. I do not have responsibility for issuing directions to these bodies——

You were not long getting out the door.

——but I do share the concerns expressed by Deputy O'Donnell and I have raised them with the Tánaiste. I am sure she will take appropriate action to address the matters raised by the Deputy.

The Minister did not deal with my request for him to withdraw his remark on whinging.

That is not relevant to Question No. 75.

The Deputy did not give me an opportunity to reply. I was about to deal with his question. I already dealt with it in the context of Deputy Burton's query and I am quite happy for Deputy O'Donnell to join her on a list of those who objected to my use of the word. If Deputy O'Donnell reads the article, he will realise that I made a point to the effect that we cannot just complain about increases in the price of oil. We have difficult choices to make.

This shows a lack of understanding on the Minister's part with regard to that with which people in business are being obliged to deal. There has been a 30% increase in the price of diesel during the past year. The people to whom I refer work hard. It is an insult for the Minister to use the term in question and I ask him to withdraw it.

I have a full understanding of the difficulties being experienced by those to whom the Deputy refers. Unlike him, however, I do not just live in a world of politically correct language. I live in a world where people in our economy are experiencing real problems.

What is the Minister going to do about this matter?

I do not believe trading insults in respect of terminology will solve the problem.

What is the Minister going to do?

Will Deputy O'Donnell allow the Minister to respond? We must proceed to the next question.

The first point I made in the article to which the Deputy refers is that the price of oil is something outside the control of the Government and the Parliament.

The Minister should deal with the——

We are going too far now. We must proceed to Question No. 76.

Public Private Partnerships.

Joan Burton


76 Deputy Joan Burton asked the Minister for Finance if his attention has been drawn to the recent comments of the outgoing Comptroller and Auditor General with regard to public private partnerships; his views on this analysis; if a review is required of the structure and financing of PPPs to ensure value for money for the State and an appropriate alignment of interests between the State and PPP contractors; and if he will make a statement on the matter. [21986/08]

I presume the Deputy is referring to the comments that Mr. John Purcell, the former Comptroller and Auditor General, made during his recent appearance on a television programme. Speaking after his retirement, Mr. Purcell noted that public private partnerships are not a panacea for all of our infrastructure requirements and that PPP procurement suits appropriate projects. In the 2008 public capital programme, the Government set targets for PPP investment that average 16% of total capital investment per annum for the period 2008 to 2012. Hence, the majority of public capital projects will continue to be delivered using conventional public sector procurement.

The former Comptroller and Auditor General also noted, at a recent hearing of the Committee of Public Accounts on 17 April, that "it is not the case that PPP is good and traditional procurement is bad, or vice versa” but rather that “certain situations are more suitable to PPP solutions”. I agree with these views. PPPs are one of the options available to Government to serve its objectives. I have no plans to abandon that option.

Naturally, there are a variety of PPP models that can be applied in the procurement of projects. In choosing to adopt the PPP approach for particular projects, Departments and agencies must assess, in conjunction with their advisers, the optimum structure to use, including whether to include private finance. In this regard, State authorities have access to the financial expertise of the National Development Finance Agency, NDFA, to assist them in determining the optimum means of financing public investment projects in order to achieve value for money. The NDFA can also advise State authorities on all aspects of financing, refinancing and insurance, including risk analysis.

Has the Minister engaged in a reassessment of PPPs? One of the aspects regarding PPPs is that they are meant to transfer risk from the State to the private sector. This was fine when interest rates were low. In light of the international credit crunch, however, interest rates for private sector investment have risen dramatically. Some time ago, the former Comptroller and Auditor General, when he examined a number of school building projects that were carried out under the PPP process, pointed out that the cost of capital relating to PPPs is significantly higher than would be the case if the State borrowed such capital and commissioned projects through the traditional direct procurement method. Now that interest rates relating to the private sector are so much higher, what is the justification for engaging in so many PPPs?

What is the position as regards risk? There have been a number of reports to the effect that in the Irish case very little risk is transferred to private developers. Did the Minister feel sorry regarding what happened in the case of Dublin City Council and the private developer, Mr. Bernard McNamara, who walked away from five PPP projects in Dublin city? Thousands of people were depending on these projects proceeding in order that they might obtain new homes. The preferred bidder walked away, presumably on the basis that, in light of the current economic climate, he could no longer make money out of these projects. What is the Minister's view on this matter, particularly in light of the fact that Mr. McNamara is the preferred bidder in respect of the construction of a prison at Thornton Hall? In the latter instance, the State will be the guaranteed customer and there will, as a result, be no risk to the private provider. It walked away from the five PPPs in Dublin city but is the preferred bidder for a prison at Thornton Hall, where the State is the guaranteed customer, and there is therefore no risk to the private provider. The State, with current interest rates, may now end up spending much more on the cost of this PPP.

The Minister should be concerned about mortgaging future generations at a very high price when using the PPP procurement method unless risk is clearly transferred and the PPP provider produces the item at a much cheaper cost. I do not understand how this can happen with interest rates at an astronomical level.

The National Development Finance Agency is there to advise us on these and it is linked with the agency which manages our debt. It has a considerable competence in advising us on these matters. On the general abstract issue of PPPs raised by the Deputy, there are advantages in the PPP, as the Comptroller and Auditor General himself accepted in an answer to the Committee of Public Accounts earlier this year. Of course, we must be vigilant about them.

There are certain other advantages to PPPs as well. They involve a payment linked to performance over the entire lifetime of the project and they are long-term contracts where bidders focus on the whole life-cycle cost of the project and not just on the upfront capital cost. The construction times post-contract tend to be faster as the private sector is incentivised to complete the project in order to begin to receive regular payments.

The private sector innovation and commercial management expertise is brought into delivering important public facilities. A contractual framework to allocate risk to the party that can manage it best is devised.

I have asked the Minister to comment on my question.

The approach allows for a number of projects.

He is just reading a long text.

I will comment. I am giving the Deputy reasons——

Will the Minister comment on the questions I asked?

I am giving the Deputy the advantages——

What is the Minister's view of the provider walking away from the Dublin City Council PPPs and the fact the provider is the preferred bidder on Thornton Hall? What is the rationale of keeping the provider?

I would like to deal with that.

Unfortunately, we have no time.

The Deputy asked an abstract question. With regard to the concrete question, they are two entirely different public private partnership arrangements. They are not the same.

The whole matter deserves a full debate but we only have six minutes for this question, which have expired. I ask the Minister to move to Question No. 77.

As I understand the position, the developer is contractually committed in one of the Dublin arrangements to which Deputy Burton referred. In the other case, no legal arrangement was entered into.

So four of the five are not legally binding? Why is the developer the preferred bidder on a prison project?

We cannot go any further. I ask the Minister to move on to Question No. 77.

National Development Plan.

Richard Bruton


77 Deputy Richard Bruton asked the Minister for Finance if the national development plan will be delivered in full, on time and within budget; and if he will make a statement on the matter. [22280/08]

The national development plan, NDP, is a high level strategic framework and financial investment plan. It sets out indicative financial allocations for the investment priorities which will consolidate and enhance our economic competitiveness and provide a better quality of life for everyone in this country.

The plan brings together different sectoral investment policies into one overall investment framework, thereby promoting optimal co-ordination and alignment between sectoral policies. The plan emphasises the importance Government attaches to several horizontal themes such as promoting all-island co-operation, enhancing environmental sustainability, promoting more balanced regional development and supporting the development of the rural economy.

The plan provides a financial framework within which Departments and agencies can plan and deliver the implementation of public investment. Together with the robust value for money regime put in place by the Government, this will support the delivery of NDP-financed projects within budget and on time. It is worth noting that the majority of major roads projects in recent years are coming in on time and within budget.

The Government remains committed to the progressive delivery of the investment priorities to be financed under the NDP up to the end of 2013. This commitment is evidenced by the allocations made available from the Exchequer both in 2007 and in 2008 and the outputs clearly visible throughout the country, whether in terms of new roads, new public transport infrastructure, new schools, new water services and the very considerable delivery of public investment financed by the Exchequer.

The preparation of a progress report on NDP investment in 2007 is well advanced and will be laid before the Oireachtas in due course, where it will be subject to debate. The report will set out not only the financial outturns for each of the NDP's 88 investment sub-programmes but the actual outputs financed under the NDP and how they have contributed to supporting the NDP's horizontal objectives.

This investment will help to position the Irish economy to take advantage of a future upswing in the global economy and will help improve the quality of life in this country.

Is the Minister committed to the multi-annual Exchequer contribution set at €9.1 billion for 2009 and also for 2010?

The allocation for a particular year, as the plan indicated, is always subject to our obligations to the European Central Bank under the Maastricht arrangements. It is also subject to the prevailing budgetary position so, in devising the Estimates for this year for capital next year, sovereignty lies with the process this year.

People will be disappointed the Minister is unable to commit to the multi-annual framework, which contained these figures and was set out and published after the last budget. Does the Minister agree that one of the preconditions set out on page 16 of the national development plan was that the Government would maintain the growth in day-to-day spending in line with economic growth? The Minister and his predecessors have manifestly failed to do this. They have allowed spending in the past two years to grow 65% faster than was set out as a precondition in the NDP and this has cost €4 billion. Does the Minister accept the Government has undermined its ability to deliver the NDP by building huge current spending programmes on the back of property taxes that were plainly unsustainable?

I do not accept that but I do accept that I have an obligation, as Minister for Finance, to ensure current spending is kept under tight control and that priority is given to investments outlined in the national development plan.

That is something the Government has failed to do in the past two years, despite it having been set as a precondition for the delivery of the NDP.

The relevant quantum of investment took place in the NDP in the past two years. As Minister for Finance I will review this, examine the position this year in the mid-term review and bring forward proposals for the Government in the autumn.

Why did the Government set out in its manifesto that it would deliver the NDP in full and on time when the Minister now tells us it is subject to review and the fact the Government has failed to maintain current spending in line with economic growth means it is now vulnerable to revision? Why did the Government say something in its manifesto that it has failed to provide the capacity to deliver?

I understand my predecessor pointed out that the manifesto was subject to current budget constraints and considerations, as any manifesto should be.

The manifesto made a commitment but the Government has undermined its ability to deliver it through its actions in expanding current spending. The Government did not make the NDP its priority; winning the last election was its priority. The Government spent money it did not have and that the economy could not provide and now delivery of the NDP has been compromised.

Delivery of the NDP remains the priority of the Government in the context of public finances.

It is a priority the Government can no longer deliver.

We can debate this in future but it is clear that in the past two years all the commitments in the NDP have been met.

That is not clear to me.

It is evidenced in the substantial expenditure we have seen in improving our roads network, for example, which is taking place ahead of schedule this year due to the fine weather we have had. I have no doubt the other investments will also be progressed in the NDP.

The Minister does not sound sure and has left quite a bit of doubt around the matter.