Finance Committee calls for quarterly scrutiny of budget estimates - Lynch

30 November 2012

Statement by Ciarán Lynch TD

Labour T.D. for Cork South Central, and Chair of the Finance Committee, Ciarán Lynch, has said that according to the Committee on Finance and Public Expenditure, budget estimates and targets should be examined by Oireachtas Committees on a quarterly basis rather than at year-end.

The Committee is writing to the Minister for Public Expenditure and Reform Brendan Howlin T.D., setting out a proposal to change the current system where estimates, budgets and accounts are reviewed on a once-off basis near the end of the year.

Deputy Lynch said: "In areas where there is control over expenditure and specific targets are set, rather than estimates being examined at year-end, these instead should be considered on a quarterly basis by the Committee on Finance, Public Expenditure and Reform to examine if these targets are being met. In the private sector there would be a monthly, a quarterly and a half yearly examination of expenditure against the estimate and any deviation must be explained by budget holders so action can be taken. In terms of Oireachtas oversight, a similar procedure should adopted with the expenditure against the voted estimate considered every three months.

"The problem with the current system is that cost over-runs or failures to make savings often only become apparent in the final quarter, leading to some departments seeking extra financing or having to make larger savings or a 'balloon' saving in the final months or weeks of the year to meet targets.

"At our Committee meeting this week, I used a simple example to illustrate this problem. A saving of €10 a week has to be made over a 52 week period - if that hasn't been done after quarter one, two or three, then, what happens is that we end up with a €40 saving that has to be made every week in the final quarter to reach the target. Such an approach causes difficulties, ultimately impacting upon Departments which have managed their spending within budget.

"Instead, if the expenditure against the estimate is examined on a quarterly basis, we can see if they are on target earlier in the cycle and, if they are not, we can ascertain the reasons behind any slippage. In some cases, the saving that is being envisaged may not be realisable and it is better to know this in the first or second quarter, so that a different approach may be considered. In other situations, the adjustment in the estimates is not being achieved because it is not being managed properly. Again, if this is the case, it is better to establish this after the first or second quarter and the committee could bring in the relevant managers to explain why this has been allowed to happen.

"Reviewing expenditure against estimates on a quarterly basis would introduce a certain fiscal discipline into the management of national accounts and allow smaller adjustments to be made earlier in the cycle rather than in a large adjustment at year-end. We hope that the Minister will give the Committee's proposal due consideration."

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