Dáil Éireann Debate, Thursday - 6 May 2004
1 Mr. R. Bruton asked the Minister for Finance his estimate of the aggregate value of money which will be released from SSIA accounts when they mature; the period over which it will be released; if he has conducted an assessment of the impact on the economy of this release of funds; and if he has considered new arrangements to ensure orderly and beneficial use of these funds. [13033/04]
Amharc ar fhreagraThe SSIA scheme was opened on 1 May 2001 and entry to it closed on 30 April 2002. SSIA accounts must be held for five years from the date of the first subscription in order for the holders to get the full tax benefits. SSIA accounts are due to mature between 31 May 2006 and 30 April 2007.
It is not possible to give an estimate of the aggregate value of money which will be released from the SSIA accounts when they mature as the scheme has still two to three years to run and such aggregate value is also subject to a number of variables such as when participants die, withdraw from the scheme or vary their monthly contributions. In addition, the income or gains arising on the investment over the entire period will depend on whether the investment is in a fixed deposit account, variable deposit account or in equities and what returns these investments will provide over the entire five-year period.
My Department is keeping the economic impact under review in the context of the normal assessment of the future economic and budgetary position. Any assessment must take into account that there is a range of uncertainties in any assumptions to be made, in particular whether on SSIA maturity, account holders continue to save the amounts in whole or in part and, if not, the use to which these funds will be put.
The specific goal of the SSIA scheme was to encourage people to save over a period of at least five years. Its effect has been to stimulate such savings over varying income ranges which is evident in the extensive uptake by many low income earners. The scheme has been a success in those terms. The scheme has a specific duration. Any proposals for new schemes either to replace the SSIA scheme or other schemes to attract these funds will be considered as part of the normal annual budgetary process taking account of public policy objectives and Exchequer cost implications.
Does the Minister not agree that a wait and see attitude is not good enough? Every economic expert around the city estimates that approximately €17 billion will be released in a 12-month period, which has the potential to dramatically destabilise the economy if it is spent on imports of yachts and BMWs. The Minister needs to signal that money such as this should be invested in PRSAs to provide for future pensions, or used to support those who need to save to get houses of their own. Does the Minister not agree it is dangerous not to anticipate this and not to give clear policy signals?
Has the Government decided, as the Tánaiste indicated, the money no longer utilised at the end of the SSIA scheme should be devoted to providing for elderly people? Can we get assurances that we will not see a repeat of what happened in the lead up to the last general election when the Government had a huge spree followed by a massive hangover for which the ordinary person had to pay? We need assurances this will not result in another spending spree paid for afterwards by high inflation which undermines companies which trade in tough markets. It is not good enough to just wait and see. We need to anticipate and take action now to deal with this issue.
I will take account of the Deputy's views. Prior to establishing this scheme in April 2002 I received considerable advice from commentators and Opposition Members that it would not be a success and that people would not invest in it. I based my thinking on the fact that people make rational and sane decisions. When looking at the outcome of the scheme, I will base my thinking on the fact that people make sane and sensible decisions, as do the majority of people. That is the pragmatic approach I have taken to schemes such as SSIAs, pensions, etc.
I told the Minister that on Committee Stage of the Bill.
I remember Deputy McGrath agreeing with me and I exonerate him from criticism. Based on the debates at the time, Deputies will remember the primary purpose of this scheme was to encourage people back into the savings habit. It was anecdotally evident that while people were doing very well under the Celtic tiger, they had forgotten the good old habit of saving for a rainy day. In that regard the scheme has been spectacularly successful.
Despite the often repeated criticisms of the scheme before and since its introduction, the figures published in the Revenue Commissioners' annual report of 2002 show the spread of its 1.1 million customers across all income ranges. I will take into account what Deputy Bruton has said and the comments of bodies such as the Irish Insurance Federation on foot of a survey it commissioned.
The Government has had no discussion on the ideas proposed by the Tánaiste at the Progressive Democrats conference, nor will it until we reach the end of the SSIA schemes.
The Minister is ignoring the Tánaiste as usual.
Deputy Bruton again referred to the big spending spree before the general election. The increase in spending for 2002 over 2001 at the time of the budget and the REV was to be 14.7%. The outturn for 2002 came in under budget at 13.9%.
I would like an assurance from the Minister that we will not see a stream of Ministers like the Tánaiste, Deputy Harney, promising to spend this money on all sorts of different schemes and we will have some sensible approach to this. There is more to running an economy than creating an election feel good factor. I would like to correct the Minister. If he cares to look at his Department's own figures, in the 24 months up to May 2002, the month before the general election, public spending had grown by 48%. If that was not a wild spending spree, the Minister should tell me what is.
In the figures for 2001, both the budget and the Abridged Estimates Volume — the budget and the REV for 2001 — the spending for that year was to be in excess of 20% and it came in at close to budget. For 2002, we came in under budget. In the past seven years the differential between the amounts I estimated to be spent at budget time and the REV, and the outturn that came in, was less than 1%.
That was as a direct result of the cutbacks the Minister said were neither promised nor contemplated.
Many people will have good ideas and some that are not so good as to what to do with Exchequer moneys. I will take all these matters into consideration at the appropriate time.
Will the Minister still be there?
