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Departmental Budgets

Dáil Éireann Debate, Wednesday - 24 October 2018

Wednesday, 24 October 2018

Ceisteanna (62)

Bernard Durkan

Ceist:

62. Deputy Bernard J. Durkan asked the Minister for Public Expenditure and Reform the extent to which his Department continues to monitor all Departments, public bodies and their agents in the context of ensuring that they remain within budget; the extent to which departures from expectations have been identified and remedies thereto suggested; and if he will make a statement on the matter. [43909/18]

Amharc ar fhreagra

Freagraí ó Béal (7 píosaí cainte)

This question seeks to ascertain the extent to which the Minister's Department monitors the performance of all Departments and agencies with a view to identifying potential overruns in expenditure in any given year and taking corrective measures or ensuring that those Departments take corrective measures.

I thank the Deputy for his question. Managing the delivery of public services within allocations forms a key part of the responsibilities of every Minister and Department. My Department is in regular contact with all other Departments and offices to ensure that expenditure is being managed within the overall budgetary parameters. The drawdown of funds from the Exchequer is reported on each month against expenditure profiles in the fiscal monitor published by the Department of Finance. However, given the scale of Government expenditure, which is €61.8 billion, and the cash basis of Government accounting, the need for Supplementary Estimates can arise for a number of reasons, including policy decisions, timing issues and overspends. They are a budgetary tool that allows for the proper alignment of funding allocations within planned expenditure. They can only be allowed where they can be accommodated within the overall budgetary parameters. As set out in the most recent budgetary monitor, total gross voted expenditure at the end of September was €44.8 billion, which was broadly on profile. Net voted expenditure of €36.04 billion was €45 million below profile with net voted spending in 14 out of 17 Vote groups being below profile. As outlined in the fiscal monitor, current spending is 0.6% ahead of profile, with the main driver of this variance being health expenditure.

As outlined in Expenditure Report 2019, as a result of policy decisions, including in relation to the provision of a 100% Christmas bonus to social welfare recipients, additional capital for the Department of Housing, Planning and Local Government, and expenditure pressures in the Department of Health, the gross voted expenditure outturn for the year is now estimated at €62.8 billion. This is a change of €1 billion with the key element being the change in the Department of Health.

As I speak, the Joint Committee on Health is discussing the same issue relating to that Department and others. I see two issues. One is the degree to which budgeting projections are accurate. If they are not accurate, are there not contingencies? If not, why not? I would not regard it as good policy to find that individual Departments or their subordinate bodies were running shy of what was anticipated at the beginning of the year in one way or another, either short or ahead of expenditure. I ask the Minister if any specific action is being taken to ensure that all Departments either project accurately or remain within budget.

Every effort is made to ensure that we have credible Estimates that I can present to the Oireachtas at the end of each year. A huge amount of engagement happens with all Departments about this. With a small number of exceptions, the Estimates put forward to the Oireachtas for Departments tend to be either exactly met or, at times, come under profile. I know this is the subject of engagement within the Joint Committee on Health and I acknowledge that for the Department of Health this year, the difference between projected and actual expenditure is very different to what it was last year. This is not a matter that we can normalise moving into next year and that is why we have made such efforts to put in place such a large increase in health expenditure for 2019. As the Deputy is aware, the projected Estimate for health for next year takes much of the expenditure for this year, puts it into the base and builds on that again to deal with all the service needs and overhead costs.

I thank the Minister for the reply. Having been a member of a health board, quite a long time ago, I have been conscious of the overruns in the health area for many areas. The difficulty is that it has to be possible, at some stage, to identify precisely what the budget should be and then to be able to identify precisely the areas in which an overrun occurs, not only in the Department of Health but in all Departments. I appreciate that capital projects may unexpectedly impact on budgets. If a Department becomes accustomed to an overrun cushion in any given year, is there not a tendency to use that as a means of extending expenditure, notwithstanding that it already had a budget and was supposed to work within it?

It is true to say that a number of Departments are consistently under profile as well as consistently over profile, with the Department of Health being the biggest. With regard to the health budget, the Minister said he has increased expenditure for next year to ensure that does not happen again. That is welcome. He is plugging the hole. How much of that was recurring spending? I am concerned that we have €1 billion of an increase in the health budget for next year and much of that was based on the windfall that we got from corporation receipts. If that is not the case, maybe the Minister can clarify that. I am concerned that we may not have those windfalls next year. It is not prudent to use once-off windfalls to plug a hole in recurring spending every year. Will the Minister confirm levels of recurring spending?

I will deal with each Deputy in turn. Deputy Durkan has acknowledged the pressures that can develop within a number of Departments, including the Department of Health, for budget overruns. The Minister, Deputy Harris, and I have worked very hard to put in place an Estimate for next year which reflects the learning we have had about challenges that have occurred during 2018. The way we have done this relates to a point that Deputy O'Brien has just put to me. We have looked at levels of expenditure for this year, particularly with regard to recruitment, which we believe will continue into 2019. We have tried to fund that in a new way. It has meant that the current expenditure settlements that other Departments have received have had to take account of that because we have to make choices. With regard to what Deputy O'Brien said, additional tax take for 2018 has contributed to dealing with the difficulty for this year but I am mindful of the point he has made about reliance on corporation tax next year. This is the reason why I have not assumed that nearly €700 million of the corporation tax collection that we received in 2018 will be available in 2019. I have taken that out of my figures. That €700 million is roughly equivalent to the additional revenue raised by, for example, changing VAT in the hospitality sector and other tax measures that I put in place to try to avoid the overreliance that the Deputy is warning against.

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