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Budget Statement 2013 (Continued)

Wednesday, 5 December 2012

Dáil Éireann Debate
Vol. 785 No. 2

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(Speaker Continuing)

[Deputy Michael Noonan: Information on Michael Noonan Zoom on Michael Noonan] Reaching such an early agreement with the United States will be of great benefit to Irish business.

Conclusion

  When I stood before the House last year on 6 December, the Government was locked out of bond markets. Our two-year bond yields were almost 10%; now they are less than 2%. We have seen a total transformation in only 12 months. Today, markets and foreign lenders are lending once more to Ireland and are willing to lend to Irish businesses. That is essential for our businesses and our economy to continue on the path to recovery.

  Confidence is returning to Ireland. Unemployment fell by 3,600 on an annual basis in the third quarter of this year - the first year-on-year fall recorded since 2005. The Manufacturing Purchasing Managers' Index shows that Ireland is the only country in the euro area to record an expansion – the ninth consecutive month of expansion. Retail sales have recorded strong growth in recent months. Services exports are running at double-digit growth. In five of the past six months, consumer sentiment has risen.

  When this budget is implemented, most of the tax consolidation committed to by the Government will have been completed and even though the revenue target for 2014 is €1.1 billion the carry-over effect of today’s measures reduces that to approximately €500 million. In 2015 the carry-over effects will reduce the programme target of €700 million to a similar level. People have asked me to point the way forward. They have asked whether harsh budgets will ever end. When we are here next year, please God, the tax take will be approximately €500 million, not over €1 billion as in previous years and the tax take the following year will be a similar amount.

Deputy Mattie McGrath: Information on Mattie McGrath Zoom on Mattie McGrath The Minister is some man.

Deputy Michael Noonan: Information on Michael Noonan Zoom on Michael Noonan We are making progress and in doing this I am setting out the likely levels of future revenue consolidation to reassure people and to boost their confidence. This will help businesses to plan and to invest and it will encourage people to plan their spending. It will allow the markets to assess the sustainability and credibility of our fiscal strategy in the full knowledge that what we have undertaken to do, gets done. We are now well on the road to recovery so let us look to the future with confidence.

Deputies: Hear, hear.

Deputy Mattie McGrath: Information on Mattie McGrath Zoom on Mattie McGrath We are in a cul-de-sac.

An Ceann Comhairle: Information on Seán Barrett Zoom on Seán Barrett I now call on the Minister for Public Expenditure and Reform, Deputy Brendan Howlin, to make his statement.

Deputy Mattie McGrath: Information on Mattie McGrath Zoom on Mattie McGrath What about a standing ovation? Come on lads, clap.

An Ceann Comhairle: Information on Seán Barrett Zoom on Seán Barrett Members should settle down please. I called on the Minister.

Deputy Tom Hayes: Information on Tom Hayes Zoom on Tom Hayes Deputy Mattie McGrath gave the Minister a standing ovation when the Opposition was breaking the country.

An Ceann Comhairle: Information on Seán Barrett Zoom on Seán Barrett I called on the Minister. Did Members not hear me?

Minister for Public Expenditure and Reform (Deputy Brendan Howlin): Information on Brendan Howlin Zoom on Brendan Howlin To complement-----

Deputy Richard Boyd Barrett: Information on Richard Boyd Barrett Zoom on Richard Boyd Barrett A Cheann Comhairle, on a point of order-----

An Ceann Comhairle: Information on Seán Barrett Zoom on Seán Barrett There is no point of order.

Deputy Richard Boyd Barrett: Information on Richard Boyd Barrett Zoom on Richard Boyd Barrett Why do you not listen to me?

Deputy Brendan Howlin: Information on Brendan Howlin Zoom on Brendan Howlin To complement-----

Deputy Richard Boyd Barrett: Information on Richard Boyd Barrett Zoom on Richard Boyd Barrett We do not have copies of the statement.

An Ceann Comhairle: Information on Seán Barrett Zoom on Seán Barrett What statement?

Deputy Richard Boyd Barrett: Information on Richard Boyd Barrett Zoom on Richard Boyd Barrett The Minister's statement.

An Ceann Comhairle: Information on Seán Barrett Zoom on Seán Barrett It will be circulated.

Deputy Mattie McGrath: Information on Mattie McGrath Zoom on Mattie McGrath It would all leak beforehand.

Deputy Brendan Howlin: Information on Brendan Howlin Zoom on Brendan Howlin The convention is that it is not circulated until I begin speaking.

An Ceann Comhairle: Information on Seán Barrett Zoom on Seán Barrett Will the Minister please proceed without interruption.

Deputy Brendan Howlin: Information on Brendan Howlin Zoom on Brendan Howlin To complement the Budget Statement by the Minister for Finance I am announcing the Expenditure Estimates for 2013. This Government continues to face a daunting challenge in repairing the economy and the public finances. Difficult decisions are still required. We are committed to meeting that challenge, and are confident that through good government we can lead Ireland back to independent funding and back to sustainable growth in living standards and in employment. The expenditure adjustments I am announcing amount to just under €2 billion out of an overall adjustment of €3.5 billion. As a result, current expenditure will be reduced to €51.1 billion in 2013, and capital spending to €3.4 billion in 2013. I am very conscious that adjustments of this scale, of necessity, affect everyone. However, we have sought to be fair, protecting the most vulnerable to the greatest extent possible.

Political Reform

  The crisis that we are enduring is a result of a series of related failings. Ours is a banking, fiscal and political crisis. It will not be resolved unless all three issues are addressed. That is why the Government established a Department of Public Expenditure and Reform, not merely a Department of public expenditure. This represents the Government’s commitment to more effective and open government. Measures including whistleblowing reform, new freedom of information legislation, the new powers recently conferred on the Ombudsman, legislation to empower the Oireachtas to hold inquiries within the existing constitutional constraints, legislation to bring greater transparency to lobbying activity, and revised ethics legislation in response to the reports of the Moriarty and Mahon tribunals are all at an advanced stage of preparation in my Department. The Minister for the Environment, Community and Local Government, Deputy Hogan, has also announced a programme of radical-----

Deputy Mattie McGrath: Information on Mattie McGrath Zoom on Mattie McGrath Who is he?

Deputy Brendan Howlin: Information on Brendan Howlin Zoom on Brendan Howlin -----local government reform.

Deputy Mattie McGrath: Information on Mattie McGrath Zoom on Mattie McGrath Cá bhfuil sé?

Deputy John Halligan: Information on John Halligan Zoom on John Halligan Is he still on holidays?

Deputy Brendan Howlin: Information on Brendan Howlin Zoom on Brendan Howlin We are working too on revised budgetary procedures to enhance the role played by parliamentarians in our budgetary process. For the first time, this year Oireachtas committees debated the annual Estimates in advance of decisions taken. Changing budgetary processes for all eurozone member states may make this the last December budget in this country.

  Oireachtas committees are also scrutinising legislation in advance of finalisation by Government and feeding constructively into the decision-making process. I intend to bring proposals to Government shortly for Ireland to participate in the global Open Government Partnership, reinforcing our commitment to progress in this area. These are crucial reform measures which stand as this Government’s response to our governance crisis. I believe they will not only help bolster confidence in our political system but will help to enhance openness and transparency around policy formation in the State.

Spending Pressures

  Today though, is primarily about our fiscal crisis. We must cut spending while the pressure on our public services remains greater than ever. Last year’s census revealed that there were almost 350,000 more people living in Ireland than in 2006. Compared to 2008, there are over 565,000 more medical card holders today. There are over 50,000 more students in our schools and almost 30,000 more third level students. There are almost 80,000 more people in receipt of the State pension and nearly 200,000 more people receiving jobseeker's payments each week. It is against that backdrop that we must continue to meet our fiscal targets and to reach a deficit of below 3% by 2015.

Public Service Reform/Croke Park Agreement

  Reducing public expenditure and numbers while continuing to provide key public services and social supports is not easy. That is why we are undertaking the most comprehensive reform of the public service since the State was founded. The Croke Park agreement has been essential in supporting this reform. The value of a stable industrial relations environment in achieving a fiscal consolidation of this scale should not be underestimated. Public service staff numbers will be reduced to approximately 287,000 in 2013, a reduction of some 33,000 from the 2008 peak of 320,000. We plan to go further to reduce this number to 282,500 by the end of 2014.

  Public servants have already had two pay reductions, totalling an average of 14%. Top salaries have been reduced by up to 30% and capped at €200,000. We have also reduced the salaries for new entrants to the public service by a further 10%. Public service pensions have been reduced, saving more than €100 million annually. Legislation for a new single public service pension scheme has been enacted to reduce future pension costs.

  We are implementing a radical reform of the way in which public procurement is organised, to yield significant savings. We are reducing duplication and waste through greater use of shared services for a range of back-office functions. For example, a new human resources shared service centre for the Civil Service will reduce human resource headcount by 17% and costs by 26%, with annual net savings of €12.5 million.

  We are taking a focused and integrated approach to external service delivery of non-core activities, where appropriate. In April, we published a new e-Government strategy, which builds on Ireland’s strong recent performance in this area. The most recent European Commission e-Government benchmarking exercise shows that Ireland is now ranked first in Europe for the provision and sophistication of online services to businesses and citizens. We have agreed the standardisation of annual leave and paid sick leave across the public service, which will yield both productivity increases and cost savings.


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