Dáil Éireann Debate, Thursday - 26 January 2017
3. Deputy Dara Calleary asked the Minister for Public Expenditure and Reform his Department's plan to undertake an expenditure review in 2017; the timelines involved; if the review will include a comprehensive review of departmental expenditure ceilings; and if he will make a statement on the matter. [3598/17]
Amharc ar fhreagraThe Minister announced on budget day that there would be an expenditure review in 2017. We are three months on from budget day and I want the Minister to outline the detail of that review, the timescale involved and what impact it will have on preparations for budget 2018.
Preliminary work began on this at official level at the start of this year. I will be bringing to Cabinet in the next two weeks papers and proposals further laying out the process and the manner in which I aim to deliver this work.
This review will systematically examine the costs of existing policies to identify scope for funding of new initiatives from existing resources. This represents a change from the approach taken in previous spending review rounds, with a focus on the need to prioritise between competing demands, rather than a need to reduce overall expenditure. This review will also see a move away from the comprehensive approach taken in previous years to a system of rolling selective reviews. All current departmental expenditure - with the exception of pay rates - will be examined over a three-year period.
The expenditure report for 2017 details the expenditure ceilings from 2017 to 2019 for each of the ministerial Vote groups, which are within the allocations allowed by the latest forecasts of available funds. The aim of this process is not to review or reduce expenditure ceilings, rather to examine existing spending within those ceilings to identify less efficient or effective areas and thereby create space for new, higher priority, more effective and efficient initiatives. This process operates within the wider budgetary architecture and the medium-term expenditure framework, which supports sustainable expenditure policy, anchored by adherence to the fiscal rules. This reprioritisation and focus on totality of spend, rather than on incremental increases in expenditure, is something I have repeatedly emphasised.
The spending review will operate as a separate but parallel process to the budget. This year, the spending review process is beginning earlier than would have been the case previously.
I am still in the dark as to the practical steps of the review. There will be rolling selective reviews and new processes. When will Departments be informed of the process? Does the notion of a rolling selective review mean that some Departments will not be involved in the process this year or will they all be involved? Will this process be completed ahead of the summer when Departments submit their various budget priorities for 2018? What will be the consequences? The Irish Fiscal Advisory Council said previous expenditure reviews and ceilings were consistently breached and raised. What will the consequences be or will there be discussions about consequences for a Department that does adhere to its expenditure ceilings? Will the new controls arising from the fiscal rules be part of this review?
Yes, all Departments will participate. We have selected, at official level, specific subheads within each Department that are equivalent to approximately one third of the expenditure under which this approach will be used, setting out the objectives for those expenditure subheads and using cost-benefit analysis and other economic techniques to determine whether they are delivering the objectives set in respect of them. I would expect the work to be completed in the second half of this year rather than the first half. It will be exceptionally serious if a Department breaches its expenditure ceiling. All our efforts go in month after month to making sure it does not.
The spending review will be complete in the second half of this year. Can the Minister confirm that it will not have any impact on budget 2018? He has identified a third of the expenditure in the various Departments. How were those budget votes identified? If they are excluded will they not be limited or subject to scrutiny? Does that mean that certain areas of expenditure will get away with not being scrutinised? How were the various Votes selected?
I answered the Deputy's question about the timing of the review when I said it will be completed in the second half of 2017. Clearly, my objective is to get this work done as early as possible in the second half of 2017. That would facilitate the redeployment of existing expenditure in the hope of delivering new initiatives next year, or delivering existing objectives in a better way. Areas of expenditure were selected on the basis of policy relevance and discussions between officials in my Department and the Department that is responsible for the relevant subhead. The answer to the Deputy's question about whether other areas of expenditure will get away with it is "No". We have outlined a rolling process. The objective is that we will cover a third of Government expenditure every year. This means we are aiming to cover all Government expenditure over a period of approximately three years.
