Is cúis áthais dom teacht anseo in bhur measc arís tar éis an olltogcháin. Tá súil agam go mbeidh na Seanadóirí go léir atá anseo tofa don Teach uasal seo agus go mbeidh seans acu arís seirbhís iontach a thabhairt do mhuintir na hÉireann san bhliain seo chugainn.
When my Government colleague, the Minister for Finance, Deputy Bertie Ahern, opened the debate on the Supplementary Estimates in the Dáil on Tuesday, he took the opportunity to welcome both the old and new Members of that House. May I now take this opportunity, a Chathaoirligh, to bid farewell to you and the other outgoing members of this Seanad. Perhaps I should just say au revoir and I sincerely hope that we shall all meet again under similar circumstances in the New Year.
As the House will be aware, the annual Appropriation Bill gives statutory effect to the Departmental Estimates for the supply services, both non-capital and capital, including all Supplementary Estimates, which were approved by the Dáil, since the last Appropriation Act.
The 1992 Bill appropriates to the various services set out in the schedule the sum of £7,925,202, 753. This comprises the original Estimates of £7,630,174,000 set out in the 1992 revised post-budget Book of Estimates, and Supplementary Estimates totalling £294,933,000. Following the normal practice, the Bill also approves the use of certain Departmental receipts, amounting to £964,177,401 as Appropriations-in-Aid.
This year's Bill also covers two Excess Votes relating to 1990. The minor excess on the President's Establishment arose from an under-estimation of expenditure on salaries and wages in December 1990. The excess involved is £1,488, a very modest excess indeed.
The excess of £94,265 on the Superannuation and Retired Allowances Vote arose as a result of the late submission of claims by a number of Departments in December 1990 for recoupment of payments made earlier in the year in respect of lump sums, death gratuities and marriage gratuities.
In accordance with established financial practice, the Public Accounts Committee have examined these excess Votes and had no objections to them. The Dáil approved them on Tuesday last.
Apart from authorising the Estimates and any Excess Votes, the Appropriation Bill, also has another essential purpose, in that it provides a statutory basis for the calculation of the issues which the Minister for Finance is authorised, under the Central Fund [Permanent Provisions] Act, 1965, to make from the Exchequer towards meeting the cost of the following year's services before the Dáil has an opportunity to approve the Estimates for that year.
Accordingly, if the Appropriation Bill is not passed by both Houses of the Oireachtas before the end of the year, the provisions of the 1965 Act would not come into effect. As the financial year is about to end, this debate provides me with a useful opportunity for a brief review of the budgetary and economic outturn for 1992 and of the prospects for 1993.
The year 1992 was an eventful one in many respects, but not particularly so in budgetary terms. The first quarter was on target, but some drift on the expenditure side emerged by mid-year, due in particular to the knock-on effects of the adverse international economic climate on the level of domestic unemployment. A significant overrun was also emerging on the Health Vote.
These, and other, additional spending demands led the Government to introduce a mid-year corrective package. That timely intervention by the Government, assisted by strong buoyancy on the corporation tax front and by savings on Central Fund services brought the budget back on target by end-September.
While some further pressure on expenditure emerged in the final quarter, the overall budgetary situation remained good. It was clear, however, that the opening budgetary position for 1993 would present a formidable challenge to the incoming Government. Accordingly, with a view to easing these pressures somewhat, the Government decided to bring forward to this year the payment of some £71 million of arrears of special increases due to Public Servants, on 1 January 1993. We also brought forward the payment of some £20 million of expenditure on the Agriculture Vote.
As a result of these measures, there will be some slippage on the 1992 Exchequer borrowing requirement target of £290 million, or 2.4 per cent of GNP, but it should nevertheless remain comfortably within the 3 per cent general Government deficit/GDP ratio which, as the House will be aware, is one of the main convergence criteria in the draft European Monetary Union Treaty. The steady downward thrust of recent years in the debt/GDP ratio will also br maintained.
Despite our pre-emptive action, there is no doubt that the 1993 budget will present a formidable challenge to the incoming Government. Increased pressure on public spending in the social area will continue in 1993. This pressure will be all the harder to cope with because of the erosion of part of the tax revenue base due to the advent of the Single Market. For instance, VAT at point of entry will be eliminated and the Deposit Interest Retention Tax must be modified. While the VAT loss should be partially offset by alternative measures within the VAT area, the DIRT adjustment will produce significant losses.
It is essential that whatever Government comes into office, it must continue to pursue the appropriate budgetary management strategies that we have consistently pursued since 1987. This country must continue to meet the convergence criteria, set out in the draft European Monetary Union Treaty, the most important of which so far as the budget is concernerd is the ratio of the general Government deficit to GDP, which is set at 3 per cent.
The problems, which the Government experienced this year in relation to its own finances, are a reflection of the wider difficulties faced by the economy. But we must not lose sight of the fact that there are many encouraging aspects of Ireland's economic performance. Despite the continued international economic downturn, we expect real GDP growth of about 2.75 per cent for this year. While this level of growth is not much stronger than the previous three years, it is an excellent performance given the depth of the recession in some of or trading partners.
On the international scene, the outlook for the coming year is for only a modest and gradual pick-up in growth. According to the OECD "Outlook" published last night, the pace of expansion of OECD output may edge up in 1993 to around 2 per cent, but is unlikely to reach 3 per cent until 1994. However, prospects for the United Kingdom, which is still of course a significant export market for Ireland, are somewhat better, with growth projected at 1¼ per cent for 1993, compared with declines of 2 per cent in 1991 and 1 per cent in 1992.
Information about domestic economic developments for the first three quarters of 1992, is now becoming available and supports the general picture of quite robust growth, which compares well with the performance of our trading partners. Despite higher interest rates, inflation at the end of the year, has turned out at 2.25 per cent and averaged 3 per cent for the year as a whole. Excluding interest rates, the price level has actually fallen in this quarter, thus reflecting one of the positive benefits from sterling's devaluation.
Retail sales up to September have increased by 3 per cent and even allowing for some slow down in the final quarter they seem likely to average 2.75 per cent for the year as a whole. In spite of predictions earlier in the year, new car sales were down by only 1.25 per cent as of end-September and are expected to show a decline of about the same order for the full year.
It is particularly encouraging that Ireland's industrial exports have continued to out-perform international markets, with growth in this sector expected to be about 6.5 per cent in 1992. Growth in agricultural exports has been very buoyant as a result of the resumed live export trade and also due to the considerable sales from intervention stores. Up to September, agricultural exports grew by 30 per cent over the same period last year and growth of the Order of 25 per cent is likely for the year as a whole. Manufacturing output has also performed well and is expected to grow by about 8 per cent this year.
Labour force surveys an other indicators show that non-agricultural employment has held up well, despite the very difficult international environment. Labour force survey data show a rise of 4,000 in the year to last April and there was an increase of 700 in manufacturing employment in the second quarter of the year. Unfortunately, while growth in total employment of about 2,000 could be achieved, this has not been enough to prevent a further rise in unemployment, giving an average live register of 284,000 for the year.
Clearly, a significant improvement in employment is now the top priority for all parties. The key to this lies in better and stronger investment in a general environment which keeps cost increases to a minimum. The days of easy competitiveness gains in the UK are over. We must make certain that the positive effects of the recent currency changes, particularly significantly lower inflation, are of lasting economic benefit.
We are all aware of the problems which higher interest rates are causing to many in the business sector, but this is the short term effect which we must endure for keeping the Irish pound strong. The real, longer-term challenge is to come to terms with the new and very difficult external environment which has been a fact of life since last September. We must be clear that devaluation is not the answer. It would be likely to lead to even higher interest rates for an even longer period, would increase debt service costs, would add to the overall level of national debt and consequently, would disimprove the debt-GNP ratio.
Even at a time of international recession, better competitiveness allowed us to take an increased share of stagnant overseas markets. A good economic performance, underpinned by clear monetary and fiscal policies, has helped us during this difficult period. As conditions improve, these policies will also be the platform on which to build future growth. The Government is determined that its attention will not be distracted from the main issue of creating the right environment for growth and job creation.
Before I sit down, I should like to welcome to this House Senators Daly, Leyden, Roche and Farrell. I congratulate them on their appointment to the Upper House of Parliament and wish them, together with their colleagues, every success. I wish all the candidates in the forthcoming Seanad election every success. Míle buíochas daoibh agus rath Dé ar na Seanadóirí go léir.
