- Deputy Thomas P. Broughan asked the Minister for Finance if there will be more further revised estimates in relation to Budget 2019; if he is continuing to rule out a second Budget in 2019 in the event of a disorderly Brexit; and if he will make a statement on the matter. [9814/19]
When this Government started in 2011, we had a second budget – a mini-budget – that year. In 2009, we had a kind of major budget to address the deficiencies in the 2008 budget. If there is a general election this year, it is probably inevitable that we will have a second budget. After the revisions and rescheduling that we discussed in the House last week, is it not likely that regardless of what happens on Brexit, the Government, if it is still in office, will have to come forward with another budget?
The central scenario that is forecast in budget 2019, as prepared by my Department, is the assumption that the UK will make an orderly exit. This would involve a transition period being agreed that extends or replicates existing frameworks until the end of next year. In other words, it is assumed that the UK will remain in the Single Market and customs union during this period. The baseline forecasts for 2021 onwards assume the EU and the UK will conclude some form of trade agreement. It is clear that the impact of Brexit on the economy and the public finances remains highly uncertain. The timing and nature of the UK’s exit remains unclear. As more information becomes available, my Department will update and publish its assessment in the stability programme update which will be submitted to the Commission in April. Additional information will be available at the time of budget 2020, which will be introduced in October of this year. This will enable the Government to design the appropriate budgetary policy response. As I have said before, there will not be an additional budget for this year. The appropriate policy response to a disorderly Brexit, in the short term, is to allow the automatic stabilisers to provide a counter-cyclical support for our economy.
Dr. Mark Cassidy, who is the chief statistician with the Central Bank, expressed surprise at yesterday’s meeting of the Committee on Budgetary Oversight that in budget 2019, the Minister did not budget for a significant surplus as a cushion, given that we knew we were heading into some kind of Brexit and perhaps – hopefully not – a cliff-edge Brexit. Those of us who are interested in finance have had a chance to look at the European semester report, which acknowledges that the economy is continuing to strengthen but notes that the improvements in the budget balance are stalling. Most of all, we have had a continual history of under-forecasting. I am thinking particularly of the disastrous management of the national children’s hospital. As I mentioned recently, I have been reading the Minister’s management committee notes on risk factors. Given that these facts and issues are coming together, is the Department of Finance carefully managing expected expenditures or unknown expenditures this year?
I will take a supplementary question from Deputy Burton.
I would like to ask the Minister about the announcement he made regarding the new proposed treatment in respect of VAT and imports. Has he done an estimate of what the cost of this new treatment will be? What will be the impact on cashflows? How will it be accounted for? What are the expected cashflow implications? For how long will those implications persist? What does he expect the cost of that measure to be?
Three questions have been asked. As I have already said to Deputy Broughan, I am planning that there will be just one budget this year. That budget will be delivered in October of this year. We ended up moving to a very slight surplus of 0.1% last year. As I acknowledged at the time, that surplus was driven by corporation tax figures in November and December which came in even higher than expected. During the debates in this House on the two budgets for which I have been responsible, no Deputy has called on me to run a higher surplus. It has not happened yet.
That is not true.
I often compliment Deputy Boyd Barrett on the detail of the proposals he puts forward. I also argue that they would be disastrous.
They would involve a big surplus.
I do not recollect those policies yielding a surplus. If the Deputy ever holds the job of Minister for Finance, it is very unlikely that he would make the case for sustained surpluses within our economy.
Absolutely I would.
I am sure the Deputy would be looking to spend the surplus immediately.
The Minister has set a challenge for the Deputy.
Deputy Burton asked how much the move we have made in relation to deferred accounting will cost this year. We do not have a figure for the cost this year, for the simple reason that if a disorderly Brexit takes place, it will clearly create economic costs and difficulties which we have tried to quantify. It is difficult for me to be able to say what exactly the mitigating effect of this move would be. The effect for this year is more likely to be a cashflow effect, rather than a cost effect.
We continue to hear ominous reports regarding the possibility of a no-deal Brexit, or something that incorporates elements of a no-deal Brexit. A week or two ago, Commissioner Oettinger told us that a no-deal Brexit would produce a general recession in this country that would be incredibly serious for indigenous industries like agrifood. The Governor of the Bank of England has said he expects something like a cliff-edge drop in growth – it could be 9% or 10% – which would bring us into major depression territory. I wonder what preparations, if any, have been made by the Department of Finance to have some sort of a cushion for such circumstances. I agree with my colleague that the characteristic shared by the budget proposals the Minister has received from the left every year is that they have all been well balanced. We have been prepared to come up with new taxes to balance our proposals. The key point is that the Department needs to be very ready.
There is a difference between a budget being balanced and a budget moving into surplus. I am quite happy to look at the different proposals and alternative budgets that Deputies submit to me. However, I do not recollect Deputies Broughan or Boyd Barrett ever saying we should raise money that we should not spend.
No, we have done so.
I stand to be corrected by the Deputy.
I will send it to the Minister
I am sure the Deputy will correct me if he is moving to a hawkish position on the national finances of the country.
We would spend properly in health, in particular. We would fund the health budget. We would also focus on housing.
If that is the Deputy’s view, his surplus credentials are already weakening. I have outlined on a number of occasions all of the different things we have tried to do to deal with a no-Brexit scenario. In response to some earlier questions, I outlined where the Revenue is from a staff point of view and the work we are doing from an infrastructure point of view. A number of weeks ago, the Department of Finance published its forecast for what will happen to our economy in the event of a disorderly Brexit. The forecast points to an immediate and sudden change in our growth potential for 2019 and 2020.