Thank you everyone for your contributions to date.
Yesterday, during the plenary session of our economic dialogue, we had 31 different contributions. We then had a very substantive discussion in the breakout sessions and another set of discussions again this morning.
Just as each of you have invested all your time and energy into all of this, with the exception of when Minister Noonan and I were in Cabinet, we were here too. We wanted to hear what everyone had to say and we wanted to hear your views. I also want to make reference to my Oireachtas colleagues who are here and thank them for their contribution, Deputies Donnelly, Phelan and Rock, all of whom are equally busy and who took time out to participate in the sessions and did so in a very constructive manner, reflecting the importance they attribute to this and the role of the budgetary process in the new political environment that we are in. And I also want to acknowledge Deputy Eamon Ryan and David Culinane who are not here now but have been present for significant parts of the last two days. Thank you for your contribution.
WHERE WE STAND
I want to pick up on a concept that we have all become familiar with which is the concept of fiscal space; the room to manoeuvre. And you will have heard Min. Noonan in the Summer Economic Statement outline that that fiscal space currently, and it’s obviously something that we’ll have to look at now in the context of what’s happening abroad, was over €11 billion. If you extrapolate from that what the spending portion of that is that figure was between €9bn and €9.3bn, a huge amount of money. But across the same five year period the State is currently planning to spend €291bn meeting the current commitments that we have. So we’ve had much discussion here focusing on how we might spend the €9bn if it were to be available in additional expenditure. Let’s reflect on the fact that in meeting the current commitments that we have, and if we were to meet our current commitments, which we’re aiming to do, that base is €291bn. So the increment is just over 3% of expenditure of between €55bn and €59bn every year were we to deliver on our plans, which is our clear ambition for the next five years.
Let’s look at capital then, which again is something that as Alan (Barrett), the Chairman, has referred to which has been a big focus of discussion. Capital expenditure equates to 7% of our expenditure every year, so we spend 93% of on other needs that are not capital, and they are good choices and they are legitimate choices. But that 93% is driven by choices that we all have talked about over the last number of days that Government then has to make further decisions in relation to. For all of the focus that we have had on capital expenditure – and I think that there is a growing consensus in this room regarding the role it needs to play in the future, and there is a clear consensus in government in relation to that- it equates to 7c out of every €1 that we spend in our country at the moment.
Now I listened with great interest to a very helpful contribution made this morning by the rapporteur in relation to infrastructure at this National Economic Dialogue. The ambition that he outlined for Government expenditure on capital formation, as a percentage of national income, to move into the 4% to 5% spectrum. Were this Government able to deliver the spending plans that we have and the revised spending plans that we confirmed last week, which of course are going to be open to revision in the medium term that would take our investment in capital expenditure as a percentage of national income to 3.9%; so in line with the beginning of the spectrum outlined this morning.
But, and here’s the but, what I was struck by this morning, is that all our focus in relation to capital was in relation to how much money we’re going to spend. Despite the fact that I’ve outlined a spending framework here, that’s not the approach I’m going to be taking. The approach I’m going to be taking is, what projects represent good value for the taxpayer and what projects deliver against the social cohesion that we have all talked about in different ways. Because what we cannot do, is go back to where we were, which is to making commitments in relation to additional capital expenditure ending up in a queue with projects costing more than they should. Or end up as a prompt for rent seeking taking place in our economy, where we spend more in relation to acquisition and in relation to construction than we should. We want to be delivering outputs at better value to the taxpayer than we did in the past.
We all know about the changed environment we are now in as a result of the additional uncertainty that we are now dealing with as a result of last week. And that for me, makes it even more important that we make even more careful, even wiser choices and more sensible decisions about where and how we spend our money. Because you heard Minister Noonan address the concept that I believe is at the heart of how we need to respond back to the challenges we face. The need for the worries of insecurity, the worries of uncertainty and a vital part of how this Government will have to respond back to that is by making sensible choices in relation to resources that, while they are greater than where we thought we would be in 2011, are still lower than all the level of expectation that is there. And that is why you will be hearing myself and my dept. talk about how we want to drive reform in our public services even faster in the coming years. That’s why you’ll hear me talk, as I did only today about the value of the Lansdowne Road Agreement, about recognising the choices and the contributions that public and civil servants have made in getting our State to this point. And about having certainty in relation to how we plan our finances in future.
GROWTH TOWARDS A JUST SOCIETY
That brings me on to the final point that I want to conclude with, which is that concept of choices. A number of you have acknowledged the theme of this Dialogue which is ‘Growth Towards a Just Society’, and the concept of a ‘just society’ is something that has particular resonance within my own Party too in terms of what we want to do with a growing economy. But we will ultimately need to make choices about how to do that. I’ve heard many of you speak about the consequences of choices that had to be made recently, but I want to be clear with all of you, as somebody who voted for those choices, who defended those choices and then had to make those choices for enough years, the main reason I wanted to see falling bond yields in our country, was because I was terrified that if we didn’t reverse that trend, the kind of intergenerational difficulties that many of you have touched upon, our country could have faced for years to come. My views and my convictions about why those choices need to be made are as genuine as all of the views and visions that all of you have shared.
Ultimately as a Government we have to outline where we believe scarce resources need to be allocated. We’ve outlined that – our vision- in our Programme for Government and I just want to assure you that the diversity of views that I’ve heard over the last day and a half will certainly inform choices that we look to make to inform budget 2017 and beyond. And so it’s for all of those reasons that I again want to thank you for your contributions and to say that we look forward to continuing to build on them now in the coming weeks, months and years, ahead.