This Bill is traditionally one of the last items of legislation which the House debates before the Christmas recess. Its core purpose is to give statutory effect to the departmental Estimates for the supply of services, both current and capital, including all Supplementary Estimates which were approved by the Dáil since the last Appropriation Act.
The Bill appropriates to the various services listed in the Schedule for the year ending 31 December 2000 the net sum of £16,864,443,000. The total amount comprises the original net Estimates of £16,374,866,000 as approved by the Dáil last June and net Supplementary Estimates totalling £489,577,000 which have been approved by the Dáil in recent weeks.
The Bill also seeks approval for the use of departmental receipts amounting to £1,789,557,000 as appropriations-in-aid of the services listed in the Schedule. The Estimates and Supplementary Estimates which are included in the Schedule have been approved by the Dáil and the Bill seeks to give them formal legal effect.
The debate on the Bill also provides an opportunity to review the budgetary and economic position and, in particular, our economic performance in 2000 when we continued to experience strong economic growth and buoyant public finances. GNP growth in real terms for 2000 is estimated at 8.6%, somewhat higher than the 6.3% originally forecast this time last year. A number of factors have contributed to this strong performance, including a strong international economy, the falling value of the euro and buoyant domestic demand conditions. Economic growth has averaged about 8% since 1993. For the year as a whole, employment is expected to increase by 74,000. This is an increase of 4.5% compared to 1999. In response to the exceptional demand for labour, unemployment is now at an historic low, 3.7% for November compared to an average of 5.5% for 1999.
Our exceptional economic performance continues to transform our public finances with yet another general Government surplus expected this year of 4.7% of GDP. Furthermore, the general Government debt to GDP ratio continues to fall rapidly and is now projected to fall to 39% for the year 2000. In 1997, this figure was 65%.
While the economy is in good shape, inflation presents a problem. Last summer the Government introduced measures to address domestically generated inflation and on budget day the Minister, Deputy McCreevy, announced further specific measures. Latest figures show that the Government's measures to control inflation, which has been fueled mainly by external factors, are having an impact. The current published forecast is for inflation to average 5.5% for 2000.
Inflation is estimated to fall in 2001, with an average rate of 4.5% now expected for next year. These forecasts assume that the adverse effects of this year's oil prices and interest rates and of the declining euro will unwind through 2001. These projections also assume pay moderation within the social partnership framework over the period.
The outlook for the economy is strong. Real growth in GNP is forecast to slow from an estimated 8.6% this year to an average rate of 6% in 2001 to 2003. Employment growth is expected to moderate from 3.5% in 2000 to an annual average of 2.5% over the period to 2003. Continued significant budgetary surpluses are anticipated in 2001 and beyond, with the debt GDP ratio falling to 24% by 2003. At least 1% of GNP will continue to be allocated to the national pension reserve fund. The amount of the fund already stands at over £5 billion.
My colleague, the Minister for Finance, set out some core strategic objectives for this year's budget. The measures he announced will manage the economy to secure our continued success, improve our quality of life, promote a fairer society and reward work and enterprise through ongoing tax reform. This Government has ensured that its policies continue the disciplined approach to budgetary policy which has contributed to Ireland's exceptional economic performance. To sustain this performance, we must continue with a prudent approach to the public finances in line with the stability and growth pact and within a budgetary framework which enables us to maintain competitiveness. This involves adherence to and implementation of the terms of the Programme for Prosperity and Fairness and the implementation of the national development plan.
The partnership approach has underpinned the success of the economy since 1987. In a consensus based approach to wage determination covering both the public and private sectors, successive multi-annual agreements have sought to improve the competitiveness of the economy through partnership. The Programme for Prosperity and Fairness focuses on the continued competitiveness of Ireland in a global economy and the need for a flexible, dynamic and well educated workforce. It aims to further enhance living standards and reduce social exclusion on a basis that will prove sustainable over the longer term.
The programme is dynamic and flexible. This has already been tested by the response of the Government and the other social partners who worked within the framework of the new agreement to deal with the difficulties arising from the recent higher than anticipated inflation rate.
In my role as Minister of State with special responsibility for children, I wish to take this opportunity to mention the recent budgetary measures in relation to children. Recently I published our first national children's strategy which represents a significant advance in the priority afforded to children in public policy. Building on this Government's commitment to the welfare of our children, the measures announced in this year's budget are the largest ever package of sup ports for children and their parents. It is, in fact, the first children's budget in the history of the State. These measures include significant increases in child benefit rates – the first step in a three year programme, additional supports for foster parents, including the increase of up to 180% in the allowance payable to foster parents who play a vital role providing a home and support to vulnerable children and the extension of both paid and unpaid maternity and adoptive leave periods.
In addition, the Government has also put in place a wide range of measures to increase the supply of child care places. The national development plan includes £250 million for child care and a further £40 million has recently been added to this. A number of changes to tax law were introduced in recent years to encourage the increased supply of child care facilities. Discussions will take place with employers' bodies on how the rules for existing schemes might be modified to increase the provision of child care facilities at a reasonable tax cost to the Exchequer. We are introducing a major Civil Service child care initiative. A total of £10 million in capital will be provided to allow for 15 Civil Service crèches throughout Ireland over the next two years. It is the Government's intention that these policies, together with those priorities outlined in the national children's strategy, will accelerate the move towards the elimination of child poverty in Ireland.
I will now briefly outline some of the detail of the Appropriation Bill before the House. Section 1 – appropriation grants – gives statutory effect to the departmental Estimates for the supply services, non-capital and capital, including all Supplementary Estimates which were approved by the Dáil since the last Appropriation Act. The Dáil approved the original 2000 net Estimates for departmental expenditure which totalled £16,375 million on 27 June 2000. Since then, the Dáil has approved a number of Supplementary Estimates for various Departments which in total amount to £489 million.
This extra amount brings the total grant for supply services expenditure in 2000 to £16,864 million. Section 1(1) of the Bill appropriates this total amount of £16,864 million to the various supply services or Departments as listed in the Schedule. In addition, section 1(2) provides for the application of a total amount of £1,789 million in departmental receipts as appropriations-in-aid of the grants for the supply services listed in the Schedule.
I will outline briefly the main factors which have given rise to the additional expenditure and the requirement for the Supplementary Estimates this year. Four Departments accounted for £468 million or 95% of the total Supplementary Estimate of £489 million. The main factors giving rise to the extra allocations in these areas are as follows.
An extra net allocation of £192.5 million was granted to the Department of Education and Science. Of this, £88.8 million was needed to cover an expected shortfall in EU receipts in 2000, £37.5 million was granted for early payment of capitation grants to schools, £27.4 million was for additional pension costs, £17 million was provided for additional capital for schools and £10.3 million was for teacher and child care assistant costs. This additional allocation brings the total net 2000 Estimate for the Department to £3,258 million.
Net additional funds of £121 million were approved for the Department of the Environment and Local Government. Of this, £80 million was provided to accommodate an increase in expenditure which arose because of better than anticipated progress in major road improvements projects together with higher costs. A further £45 million was granted for the water and sewerage services programme, an extra £30 million is being provided to address the funding requirements of local authorities and an additional £23 million is being provided to cover the cost of accommodating asylum seekers. The excesses were partially offset by a £50 million underspend in the local authority and social housing programme due to delays in the regeneration of Ballymun project and savings of £10.6 million due to a slower than anticipated start to the village and urban renewal operational programme under the NDP. This extra funding brings this Department's total net 2000 Estimate to £1,762 million.
The Department of Health and Children was granted an additional net £111.5 million. Of this, £46 million was allocated to cover the cost of various pay deals, £41 million was provided for the demand led drug schemes, a further £22 million was needed to cover GMS payments, an extra £21 million was provided to fund PRSI and superannuation costs and £18 million was required for hepatitis C High Court awards payments. These additional costs were partly offset by buoyancy from the health contributions to the Vote. The total net 2000 Estimate for the Department of Health and Children was £3,638 million.
Net additional funds of £43.2 million were granted to the Department of Justice, Equality and Law Reform mainly to provide funding for the buy-out option of the private financing element of the contract for the new Midlands Prison in Portlaoise. This extra allocation brings the total net 2000 Estimate for this Department to £1,058 million.
The other main spending area in 2000 was the Department of Social, Community and Family Affairs where the total net Estimate was £2,877 million.
I will deal finally with section 2 of the Bill. Article 17.1.2º of the Constitution requires that the financial resolutions of each year must be enacted into law by the end of that financial year, that is by 31 December 2000 in the case of the financial resolutions passed on budget night, 6 December. However, Article 17.1.2º also allows for the 31 December deadline to be deferred if an Act to that effect is passed before the end of 2000. This section makes provision for this deferment to be invoked.
This provision of this section of the Appropriation Bill will maintain the normal statutory deadlines for passing budget measures into law, namely, 84 days for completion of the Second Stage and four months for enactment of the Finance Bill. Identical provisions were included in the 1998 and 1999 Appropriation Acts.
In commending the Bill to the House, I would say that while we can all be proud of our continuing prosperity, this prosperity brings its own challenges. In facing these challenges, the Government remains committed to ensuring that all sections of society receive a fair share of our increasing national prosperity. The necessary resources will be applied to improving priority public services which will enhance the quality of life and living standards of all.