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Ministers and Secretaries (Amendment) Bill 2012: Report and Final Stages (Continued)

Wednesday, 3 July 2013

Dáil Éireann Debate
Vol. 809 No. 3

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Deputy Sean Fleming: Information on Seán Fleming Zoom on Seán Fleming I move amendment No. 19:

The main section in the legislation relates to Government and ministerial expenditure ceilings, a matter that we discussed on Committee Stage. I wish to firm up the significance of ministerial expenditure ceilings. I suspect that the Minister would be happy with the general approach, although he might not agree with my exact mechanism.

  Last year's expenditure ceilings were breached by the Departments of Social Protection and Health. The Minister might claim that the Government has matters under better control this year, but my perspective is based on the largest Supplementary Estimates process in the history of the State, amounting to more than €1 billion, because the Department of Health sought hundreds of millions of euro in December after failing to control its expenditure. Its Estimates were not valid to start with. This was stated at the outset and proved to be the case. In terms of the Department of Social Protection, requirements in demand-led schemes can change. That Department also returned to the Dáil for additional money. The outcome was that expenditure ceilings for the following year needed to be rejigged, so much so that the members of the troika whom I met last year expressed concern regarding the excessive expenditure by these two Departments in particular. The troika wanted to meet the Ministers in question during some recent visits to discuss why they were not in control of their Departments' spending. Several times during the past 12 months, I told the Minister present that the Minister for Health was not listening to him, the Taoiseach or anyone on the issue of expenditure. It took being hauled in by the IMF. I welcomed Europe's intervention. Perhaps the IMF did some good work in this regard as well.

  The Minister for Health claimed that various legislation would reduce expenditure as the year passed, citing two examples. They are the reason behind this amendment. The first legislation was to deal with recouping money from private insurers, some of which has been done. The second was to get a better deal from the pharmaceutical companies on the products they supply in Ireland. It might come as a surprise to the Minister but when the Committee of Public Accounts recently asked the most senior officials at the Department of Health and the HSE, bodies that spend hundreds of millions of euro of taxpayers' money with the companies that supply these products, to explain what happened when they sat down opposite those companies and asked for price reductions, we were told that they had never sat down to have that conversation with the companies. They told us that they met a representative body of the companies concerned and did not deal with them on a one-to-one basis. It would be as if the Government tried to negotiate with the Irish Banking Federation, IBF, instead of the major banks that the IBF represents. This came as a shock and made it immediately clear why we were not making progress, that being, we were not even having face-to-face discussions with the companies.

  I will make a suggestion about the cost of medicines, a matter on which I tabled a parliamentary question this week. It is germane to this Bill, as the largest expenditure ceiling is at the Department of Health, where one of the largest costs is the purchase of drugs. We will find out how we stand in the ESRI's international comparison. We should approach the country that is getting the best deal, be that England, France or the Netherlands, and ask it to buy our medicines for us at the price for which it gets its own and to sell them to us at a mark-up of 5%. The cost to us would be a fraction of our current outlay. Other countries seem to be able to get a better deal.

  This is the background to the overspend and the need for the expenditure ceilings. I am asking that the latter be set by way of regulation, as there is no sight of an expenditure ceiling in this Bill. The section refers to Government and ministerial expenditure ceilings for this and the coming three years, yet the legislation contains no figures. The Minister might claim that including them in a Schedule would require us to change them each year, but we deal with the finance Bill, the social welfare Bill and appropriation accounts every year. A similar mechanism could be used in this case, thereby strengthening the Minister's hand in his dealings with other Ministers who might not be keeping within their expenditure ceilings. He could tell them that their ceilings were not just something agreed at the Cabinet table, but were on a statutory footing. The Minister will tell me that the figures are printed in some other document, but there is no sight of them in this legislation, the essence of which relates to expenditure ceilings.

  Amendment No. 23 on the same issue would set out statutorily those items that are current expenditure and those that are capital expenditure. The Minister will recall the confusion between how Departments interpret current and capital expenditure. He announced a stimulus package recently. Some of that money will go to filling potholes and repairing roads, which I consider to be current expenditure as routine maintenance. However, someone else might view it as capital expenditure because the tar will be there for the next ten years. I do not know which it is.

Deputy Brendan Howlin: Information on Brendan Howlin Zoom on Brendan Howlin I hope it will survive ten years.

Deputy Sean Fleming: Information on Seán Fleming Zoom on Seán Fleming Depending on the winters. I have seen crossovers between capital and current expenditure, which is not meant to happen. Even where there is no crossover within a Department, what it considers capital might be considered current by another Department. This issue must be examined.

From an overall public expenditure and policy point of view, the Department of Public Expenditure and Reform should produce a schedule or other document, backed up by way of regulation, that sets out for each Department what is meant by capital and current expenditure in order that Departments might not move from one to the other. It is easy to see how, depending on need and where the budget is flush, something could be considered capital expenditure today and current expenditure next month. We want to know where we are going. The definition should be set out by way of regulation so that, as opposed to just ourselves, everyone in the country and those who are carrying out international comparisons can know what is capital and what is current. Perhaps it was not intended, but the impression is that last year's stimulus package was new capital investment for infrastructural projects, schools and roads. Lo and behold, some of it was current expenditure. For example, I do not know whether the retrofitting of local authority housing is considered capital or current expenditure. Perhaps the finance officers of various local authorities have different opinions on the issue. It is important that there be uniformity so that everyone can know how to compare.

I picked the date of 15 September because it was one month before the annual budget or thereabouts, providing time to examine the ministerial expenditure ceilings and the amounts of capital and current expenditure. As with the appropriation accounts at the end of the year, if the ceilings must be changed, so be it, but it should be done on the floor of the House by way of regulation and legislation.

Deputy Brendan Howlin: Information on Brendan Howlin Zoom on Brendan Howlin We have discussed this matter. A subset of issues are involved. As the House is aware, from this year on, the budget announcement on the expenditure and the taxation sides will take place on 15 October each year. This forms part of the new European semester to which we have all agreed. We will not have a two-phased budget, that is, where the Estimates will be published in advance. When I saw the Deputy's amendments, I wondered whether he had made a mistake in wanting the Estimates ceilings debated a month before the budget. Things change in that month-----

Deputy Sean Fleming: Information on Seán Fleming Zoom on Seán Fleming Are they not fixed for three years?

Deputy Brendan Howlin: Information on Brendan Howlin Zoom on Brendan Howlin -----in the final determination and so on.

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