Simon Harris says spending ceilings on departments will be ‘binding’

By Gráinne Ní Aodha, Press Association

Tánaiste Simon Harris has said the new spending ceilings on Government departments will be “binding”.

He said a medium-term fiscal plan for the country, which Ireland’s budgetary watchdog had warned was late in being submitted, had been approved by the European Commission.

He said the Government had been “juggling” different demands, and while the Irish economy was in “good health”, the country needed to return to “a rhythm of regular spending structures”.

The Irish Fiscal Advisory Council had said in November that a medium-term fiscal plan had not been submitted to the European Commission and warned the Government was “budgeting like there’s no tomorrow”.

It's an absolute priority for me during my time as finance minister, and the two budgets that I will deliver in this role, to see how we can incentivise savings and investment

It has repeatedly criticised the Government for not adequately preparing for an ageing population, climate change and of being over-reliant on corporation tax from a handful of large US multinationals.

It has also criticised the previous Fine Gael-Fianna Fáil government for repeatedly breaching a spending increase cap of 5 per cent.

Harris said there was a lot of extra spending in capital and infrastructure, but new spending ceilings on government departments would now be “binding”.

“That’s not how we’re budgeting anymore because we now have this medium-term fiscal framework that basically means spending ceilings are now binding, and as Minister for Finance, I won’t be lifting those spending ceilings any further,” he told RTÉ’s This Week programme.

“So we have allowed for a significant level of spending growth, and we’ve tried to balance that. But as a result of that, Government departments do have to live within those envelopes.

“Yes, they have to, because if they don’t, it has a knock-on effect into the following year’s spending because the spending ceilings are now binding under the new plan.”

He added: “A lot of the extra spending that we’re profiling is in the space of capital, of infrastructure, of things that are absolutely vital and, in many ways in the Department of Finance, we actually see that as a saving into the future because we’re acquiring public assets.

“We’re also running budget surpluses and setting money aside into two long-term saving funds.”

Harris, who is also leader of Fine Gael, was asked about a range of issues during the interview, including housing, defence, two match fixtures between Ireland and Israel due to be played, and the rejection of a critical care unit for the Rotunda maternity hospital.

He also said that Ireland are “laggards at a European level” in relation to savings that do not accrue interest.

“It’s an absolute priority for me during my time as finance minister, and the two budgets that I will deliver in this role, to see how we can incentivise savings and investment.

“It’s a complex area, I’ve got to be honest, it involves tax, it involves how much somebody can put into an account, potentially tax-free.

“So what I intend to do over the next period of time, over the next number of weeks, is publish a roadmap, a framework,” he said, adding that he had looked at models in Canada, Sweden and the UK.