As Gaeilge

Speech by the Tánaiste and Minister for Finance,

Mr Brian Cowen, T.D.

 

Opening of New ESRI Premises, 13 September 2007.

 

 

Chairman, Director, Dr Whitaker, Ladies and Gentlemen

 I am delighted to be here today to formally open the ESRI’s new premises.

As the Chairman has said in her speech, the ESRI’s birth coincided with the onset of great changes in Ireland, which emerged from our move to embrace the international economy. The success of this move, on which successive governments have built systematically for the past forty years, is evident all around us in:

  • the increase in per capita income from amongst the lowest in the EU to amongst the highest,
  • the attainment of virtually full employment,
  • the elimination of involuntary emigration, and its replacement with immigration, including those with considerable skills,
  • the high level of international trade,
  • the two-way international investment,
  • the physical development of our infrastructure – which is evident everywhere and no less so than in this area of the city,

and all of this reflected in the growth in living standards we see all around us.  

The Government’s commitment to the establishment of the then Economic Research Institute in 1960 reflected the insight of the Department of Finance, whose then Secretary was Dr Ken Whitaker, in recognising that there was insufficient economic research being produced to inform policy making. So, from its beginning, the role of the Institute was seen as being policy-focused – aimed at producing not just analysis, but also, recommendations for policy which followed from this analysis.

I think that our country has much to be grateful for to the Institute for the work it has done in promoting this culture of soundly-based and well-informed policy-making. Over the past decade and more, Ireland has been reaping the economic and social rewards of such an approach. Thanks in no small part to the ongoing research efforts of the Institute, we as national policy-makers are well aware of the key priorities that must guide our continued economic competitiveness and development into the future. Indeed, these key policies are built into the National Development Plan 2007-2013, for which the Institute has again contributed the key preparatory analysis.  

As well as the Institute’s economics focused output, it is also appropriate to recognise the importance of the Institute’s research on social issues. It is important to society that we have a balance between economic and social policies. If we are to retain that balance into the future, we need appropriate sustainable policies which give due accord to economic, fiscal and social issues. In this context, the Institute’s work over the years on areas such as poverty, health care and ageing, is to be welcomed”.

Since becoming Minister for Finance, it has also been my firm view that the policy-making process itself should be reformed and strengthened, to increase democratic and parliamentary accountability for the actions of Government. I would like to recap today some of the progress we have made in the past few years, and to announce the next major step I am taking to reform the Budget and Estimates process that is at the very heart of national policy-making. 

In my first Budget Statement as Minister for Finance, in December 2004, I gave a statement of intent that I was willing to consider constructive suggestions for changes to the policy formation process. The following year, in the light of various contributions to the debate, I announced some major reforms. The reforms covered three key areas:-

  • First, I undertook to engage each spring with the Finance and Public Services Committee to discuss the economic and fiscal background to the current and the forthcoming two Budgets. This engagement would be informed by the medium-term Stability Programme Update that is prepared by my Department in the context of each year’s Budget.

  • Second, I announced that these economic and fiscal projections would be updated by my Department each autumn. The Pre-Budget Outlook was indeed published by my Department for the first time last October, setting out the updated medium-term policy context to inform the public and the Dáil’s consideration of the December Budget.

  • Third, I announced that all Ministers would henceforth publish Annual Output Statements, making explicit what the public could expect to see delivered, in terms of public service outputs and outcomes, from the public moneys that are voted to them by the Dáil each year. These Output Statements were in fact prepared for the first time earlier this year, and were considered by the relevant Dáil Select Committees alongside their consideration of the Annual Estimates.

In summary, we in Government have made very significant progress over the past few years. But in my view, important reforms of this nature should not be a once-off nor a stop-start business. We need to keep up the momentum for progress, to improve the policy-formation process in a way that delivers tangible and real improvements. In this way by taking firm and measured steps we can make the Budget process a key factor in improved service delivery and in achieving a more effective and efficient public sector.

Against this background, I am pleased to announce today that the Government is moving to introduce a Unified Budget, with effect from Budget 2008 in December next. This means that all of the key announcements on both the spending and the revenue side of the Budget will be announced on the same day.

The new arrangements represent a major change and a major step forward in my ongoing reforms of the budgetary process. In practical terms, the Pre-Budget Outlook to be published in October will be expanded to include detailed pre-budget estimates of the resources required to maintain the existing level of public services in 2008.  

As regards new public expenditure initiatives, up to now it has been the practice to announce expenditure increases on three separate occasions – the publication of the Abridged Estimates Volume in November, Budget Day itself and the publication of the Revised Estimates Volume in the following February. This will now be streamlined into one single announcement from now on of all expenditure developments alongside the tax measures on Budget Day.

The streamlined budgetary process will make it clear to the Dáil and to the public at large what is the pre-Budget position and what is the additional spending being proposed. This approach will also accommodate a proposal from the Dáil’s Public Accounts Committee, which in its October 2005 Report on Estimates Reform asked for a clear distinction between the pre-Budget and post-Budget allocations. 

Just as importantly, the new arrangements will help me, as Minister for Finance, and the Government as a whole to manage the public finances in a more transparent and effective manner. Spending and revenue decisions will be made clearer and handled within the framework of the Government’s overall budgetary and economic parameters. In this way, we will ensure that Ireland maintains a sound and sensible fiscal policy, fully in line with the provisions of the EU’s Stability and Growth Pact.

Ireland’s economic record over the past decade is one of tremendous success, and the economic outlook remains positive into the medium term. But it is always important to recognise and adapt to the implications of our changing economic environment. Our success to date has been built upon the foundations of sound public finances, and competitive economic policies that promote enterprise, investment and job creation. I believe that these policies – strengthened, reinvigorated and renewed – will stand our country in good stead into the future. Today’s initiative is part of our ongoing reform process.  

By coordinating all of our decisions on resource allocation, alongside the tax measures on Budget Day, the Government will be better placed to roll out our ambitious programme of national development and improved public services within a planned, progressive and sustainable framework. This, ultimately, is the approach that will deliver better policy outcomes and better value for money all round for the public whom we serve.

Just as we in Government are taking a strategic approach to reforming the way we go about our business, I am very pleased to hear that the ESRI is drawing up a strategic plan to map out its research over the next six years; in our ever-changing economy we need research programmes which address new challenges as they arise. For example, anyresearch programme must include the long-term issue of population ageing and the resulting economic and fiscal challenges, areas that my own Department are very active in as well. The Government's ongoing commitment to funding the National Pension Reserve Fund shows our determination to act in a “foresighted” manner. In this context, I am pleased to learn that the ESRI plans to develop its work on long-term issues as part of a broader programme on demographic change.  

I am sure that under its new Director, Professor Frances Ruane, and with the guidance of its Council, the Institute will continue to prosper in its new abode, and to play its part in the future economic and social development of Ireland. Finally it gives me great pleasure to unveil this plaque to mark this occasion.

 


 
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