I welcome this opportunity to address the Seanad on the Appropriation Bill, 2002. As Members are aware, the core purpose of the annual Appropriation Bill is to give statutory effect to the departmental Estimates for supply services, both current and capital, including all Supplementary Estimates approved by the Dáil since the last Appropriation Act.
The Appropriation Bill, 2002 appropriates to the various services listed in the Schedule for the year ending 31 December 2002 the net sum of €29,341,108,000. The total amount comprises: the original net Estimates of €28,844,853,000 as approved by the Dáil prior to the summer recess and the net Supplementary Estimates totalling €496,255,000 which have been approved by the Dáil. The Bill also seeks approval for the use of departmental receipts amounting to €2,481,119,000 as appropriations-in-aid of the services listed in the Schedule. As I mentioned, the Estimates and Supplementary Estimates included in the Schedule to the Bill have been approved by the Dáil. The Bill seeks to give them formal legal effect.
The Supplementary Estimates do not convey the full story in relation to expenditure trends in 2002. It is anticipated that the additional pressures reflected in the Supplementary Estimates will be offset by savings elsewhere across the Votes. The recently published White Paper included a forecast outturn for 2002 which indicates that spending this year will be on or close to the target set. The provisional end-year outturn will be published as part of the end-year Exchequer statement on 2 January next.
The Bill also provides an opportunity to review the budgetary and economic position which I am happy to take today. The Government and the previous coalition has had an excellent track record overall in terms of ensuring public spending each year is managed within the approved allocation for the year. Between 1997 and 2001 the average variation between the level of spending planned in the revised Estimates volume and the end-year outturn was less than 1%.
The recently published abridged Estimates volume for 2003 and last week's budget have been framed in very different circumstances from those of previous years. Members will be aware that on budget day last year the projections for 2003 and 2004 signalled projected deficits for each of those years. Since this time last year the situation has become more difficult because of the unexpected continued weakness of the international economy. While Ireland may be an island geographically, it is certainly not an island in the economic sense. We live in a small open economy and cannot avoid the effects of the slowdown in world economic growth. The challenge, therefore, for us is to see what steps we can take to place ourselves in the best position to benefit from the international economic upturn when that occurs. The first priority is to get back to a sustainable rate of spending growth in order that it is more in line with available revenues. This does not mean a reduction in absolute levels of spending nor does it mean a low level of public spending given the levels of increase in recent years. However, it requires difficult decisions if we are to protect and maintain the economic gains we have made in recent years.
The recent budget measures announced will promote social well-being in society. The budget measures will enable continued economic progress by further developing our infrastructure, promoting equity in society and helping protect the weaker sections within it.
I will now briefly outline some of the detail of the Bill. Section 1 gives statutory effect to the departmental Estimates for supply services, including all Supplementary Estimates approved by the Dáil since the last Appropriation Act. The Dáil approved the original 2002 Estimates for departmental expenditure which totalled €28.8 billion prior to the summer recess. Since then it has approved a number of Supplementary Estimates for various Departments totalling €496 million. This extra amount brings the net total grant for supply services expenditure in 2002 to over €29 billion or nearly €32 billion in gross voted spending. Section 1(1) appropriates this total net amount of €29.3 billion to the various supply services for Departments and Offices as listed in the Schedule. In addition, section 1(2) provides for the application of a total amount of €2.48 billion in departmental receipts as appropriations-in-aid of the grants for the supply services of those Departments and Offices.
I will now outline the main factors which have given rise to the additional expenditure and the requirement for the Supplementary Estimates this year. The total amount of €496 million can be broken down as follows: health and children –€210 million; transport –€100 million; education and science –€91 million; justice, equality and law reform –€28 million; and other sectors –€67 million. The areas of health, transport and education account for €401 million or 80% of the total amount of the Supplementary Estimates.
The following are the main factors giving rise to the extra allocations in these areas. In the area of health and children, the net additional cash requirement is €210 million, including a shortfall in appropriations-in-aid of €41 million. The gross additional spending requirement is €169 million, of which €12 million is for capital and €157 million for current spending.
There is inevitably a degree of uncertainty in forecasting the actual costs of demand-led schemes and, therefore, the original Estimates may not provide fully for these costs. This year an additional €183 million is required for these schemes. The cost of the general medical services scheme has risen significantly in the current year. Increased costs are arising as a result of a number of factors, including the decision to grant medical cards to the over 70s and some inaccuracies in the databases in relation to cardholders. The rising cost of drugs within the GMS scheme is also having a significant impact.
An additional sum of €10 million is required for compensation payments and legal costs associated with the compensation tribunal to compensate persons who have contracted hepatitis C from the use of anti-D blood products. In addition, funding of €8 million is required under the heading of community drugs schemes.
Allowing for offsetting savings and corrective measures in relation to health spending taken earlier this year, there is a net requirement of €157 million in respect of current expenditure. In relation to capital expenditure, allowing for savings elsewhere, a total of €12 million is required for amalgamation works at Cork University Hospital and refurbishment works at the Royal Hospital, Donnybrook.
The Vote for the new Department of Transport requires a net Supplementary Estimate of €100 million. The gross requirement was €126 million which was offset by savings of €26 million. The main item is significant additional funding on road maintenance and improvement. The Government has devoted considerable resources to the national roads programme with investment of approximately €2.62 billion over the period 2000-02. The unprecedented level of activity has resulted in higher than anticipated levels of expenditure in 2002 which has necessitated a Supplementary Estimate this year of €125 million in respect of grants payable to the National Roads Authority. The bulk of the additional expenditure arises on schemes in progress or now completed and public-private partnership schemes at tender stage.
With regard to the Department of Education and Science group of Votes, substantive Supplementary Estimates for the first and second level education Votes and a token Supplementary Estimate for the third level Vote are required in 2002. The net amounts sought for each Vote are as follows: Vote 27, first level education –€47 million and Vote 28, second and further level education –€44 million. The total required is €91 million.
These Supplementary Estimates arise mainly for the following reasons. An additional €12 million is required to pay for additional resource teachers and part-time teaching hours for children with special needs. An additional €16 million is required to provide for the salaries of full-time special needs assistants employed in the primary system to support children with disabilities.
An additional €19 million is sought for the capital funding of primary schools. This sum is needed to continue the process of addressing substandard accommodation in primary schools. The Government remains committed to continuing the work it has commenced and consolidate the substantial progress made to ensure the needs of schools throughout the State are met over time.
With regard to second level and further education, a Supplementary Estimate of €44 million for Vote 28 is required because receipts from the European Social Fund projected to be received by the Department of Education and Science as appropriations-in-aid in 2002 are lower than that provided for in the original 2002 Estimates. Vote 29, third level and further education, requires a token Supplementary Estimate amount of €1,000.
An additional €600,000 is required to meet extra expenditure incurred by the Dublin Dental Hospital in respect of pay and superannuation. Government accounting regulations require that a technical Supplementary Estimate be sought for any additional amount, even though there are sufficient savings on other subheads within the Vote to meet the extra expenditure.
An additional €28 million was allocated to the Department of Justice, Equality and Law Reform as follows: €8 million to the Garda Vote, which is being funded by savings from the departmental Vote, and €20 million to the prisons Vote relating to pressures on overtime. In 2002 the cost of overtime was almost 30% of overall pay costs for the service. Existing agreed staffing arrangements mean that, in particular, it has been necessary to resort to overtime working to cover prisoner escorts, staff leave, staff training, sick absences and staff shortfalls.
The Minister for Justice, Equality and Law Reform has made the continuing level of prison overtime a top priority issue for his Department. Officials of the Prison Service have been engaged in a detailed exploration of alternative working arrangements for the operation of prisons and places of detention and are finalising the details of a draft package or framework of proposals for such change on which to consult with the staff side. While it is intended that there will be an impact from the implementation of the package of measures in 2003, much will depend on the pace of the negotiations with staff interests.
With regard to the courts Vote, a Supplementary Estimate of €1,000 was introduced to allow the transfer of additional appropriations-in-aid receipts to expenditure subheads. A Supplementary Estimate of €15 million was provided for the Department of Agriculture and Food to compensate for a shortfall in EU Structural Funds.
Net additional funds of €107,000 were approved for the Vote for the Houses of the Oireachtas and the European Parliament. The need for a Supplementary Estimate arose in respect of the legal and other expenses relating to the sub-committees of inquiry into the Abbeylara incident and the mini-CTC contract and the higher than anticipated number of former Members not returned following the general election. This led to the payment of severance and termination payments and pension liabilities.
The Central Statistics Office was granted an additional €1.1 million. This sum was made up as follows: €714,000 arose due to a shortfall in the appropriations-in-aid subhead while €387,000 arose in an administrative budget subhead relating to expenditure on the census of population 2002.
The Department of Enterprise, Trade and Employment required a sum of €12.5 million to provide Nítrigin Éireann Teoranta with the funds which the two shareholders in Irish Fertiliser Industries, namely, ICI and the State, acting through NET, have agreed to provide for ex gratia severance payments to former IFI workers.
A Supplementary Estimate of €30 million was required for the Department of Arts, Sport and Tourism. A sum of €20 million was granted to provide financial support for the GAA and the FAI in respect of specific capital developments. An additional sum of €3 million was granted to enable the Irish Sports Council to provide financial support for the IRFU towards the development of rugby and €7 million was granted to provide for commitments to the aquatic and leisure centre at Abbotstown, which will be completed in time for the 2003 Special Olympic World Summer Games. Supplementary Estimates of €8.5 million were provided for the Office of Public Works for humanitarian aid for victims of severe flooding.
I refer to section 2. 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 year, that is, by 31 December 2002 in the case of the Financial Resolutions passed on budget night, 4 December 2002. However, the Article also allows for the end-year deadline to be deferred if an Act to that effect is passed before the end of that year, in this case, before 31 December 2002. The section makes provision for this deferment to be invoked. This provision will maintain the normal statutory deadlines for passing budget measures into law, that is, 84 days for completion of Second Stage and four months for enactment of the Finance Bill. Identical provisions have been included since the 1997 Appropriation Act.
In commending the Bill to the House I reiterate that the level of funding provided by the Government in 2002 builds on significant investments made since 1997. This is indicative of the Government delivering on its commitment to improve priority public services and invest resources wisely.