DÁIL PQs WITH THE DEPARTMENT OF PUBLIC EXPENDITURE ON BREXIT

  1. Deputy Thomas P. Broughan asked the Minister for Public Expenditure and Reform the amount of expenditure set aside in budget 2019 for the additional costs of Brexit preparations; if supplementary funding may be needed in this regard; the cost to date of Brexit preparations for the Office of the Revenue Commissioners and for all other Departments; and if he will make a statement on the matter. [17776/19]

We have had the Brexit contingency action plan since last December with sectoral analysis and the various costs of mitigation throughout the Government. What other plans has the Minister made in this regard, in particular with regard to Revenue and all other areas where Brexit is already impacting? The uncertainty has been extended to 31 October. At any time we could be dealing with a disorderly Brexit. Are there revised plans?

Deputy Paschal Donohoe

Since the UK referendum result in 2016, my Government colleagues and I have taken a number of steps to build up the resilience of our economy so that we have the capacity to deal with adverse economic shocks. These include building up our budgetary buffers by balancing our books. The steady increase in public spending implemented in recent years, with a particular focus on public capital investment which has increased by approximately €1.4 billion in 2019, plays an important role in supporting resilience in the face of Brexit

Budget 2019 was prepared based on the central scenario that the UK will make an orderly exit from the EU. In total, a gross voted allocation of €66.6 billion is provided across all Departments. This includes additional expenditure of approximately €115 million related to Brexit and follows the dedicated measures to prepare for Brexit that were announced in the budgets for 2017 and 2018. This funding will enable the implementation of necessary measures, including in the areas of customs and food safety controls.

Additional funding was provided to the Department of Agriculture, Food and the Marine and its agencies to further strengthen the agriculture sector’s ability to become more resilient in addressing the challenges of Brexit.

With regard to Revenue, 400 staff were fully appointed between September 2018 and April 2019. We will continue to assume that Brexit will occur at the end of October. This is my working assumption. The only question is what the nature of that Brexit will be.

Deputy Thomas P. Broughan

This afternoon, the Minister will give the Committee on Budgetary Oversight a briefing on the stability programme update. Last week, Dr. McQuinn and Dr. Bergin from the ESRI appeared before the committee. Their basic figures were a bit shocking. They spoke about trade shock in the three Brexit scenarios of deal, no deal and disorderly. The figures for no deal show a reduction in growth by 2.6% to 0.8% in 2020 and a reduced level of real output in the Irish economy over ten years by 2.6%. What struck us most is the impact on households. The Minister must agree the uncertainty about Brexit is already impacting on us. We are beginning to see an impact on imported goods in how prices are rising because sterling and the euro are moving towards parity. The ESRI told us the impact on the real personal disposable income of households would vary between being 2.2% lower in a deal scenario, 3.9% lower in a no deal scenario and 4.2% in a disorderly no deal scenario. Whatever way we look at it, households will be severely impacted. Is the Minister preparing to cost the type of social transfers we may need for the most vulnerable households? We have heard from the Commissioner, Mr. Hogan, of possible supports from the European Union for farmers, industry and other areas of the Irish economy. Households may be forgotten about in this. Is this something going into the general mix of how we might deal with this major crisis for our country?

Deputy Paschal Donohoe

We have already published our own estimates regarding what impact we believe a disorderly Brexit would have on our economy. They are included in the stability programme update which, as the Deputy said, we will discuss this afternoon. The figures we have published on the impact on the Government’s financial position assume we would need to borrow to ensure our income support programmes and social insurance schemes would be able to meet the additional demand on them. There is a huge amount of conjecture regarding what would be the effect per home and per citizen because the event we are facing into is unique and we are still unsure what it will look like. The one thing that is clear is a Brexit scenario of any kind will not be as good as the trading relationship we have at present with the UK. It will shift and this will affect our economy. This means the schemes we have in place to support citizens and families will be needed.

Deputy Thomas P. Broughan

With regard to Revenue and the customs service, does the Minister have ongoing contact with the UK Government on the proposals it seems to speak about in its public discourse regarding ways to preserve having no Border in this country?

Has there been any discussion along those lines in respect of the cost of technologies which could ensure that we continue to have the seamless border to which Speaker Pelosi referred yesterday?

The loss of 80,000 jobs, which Dr. McQuinn and Dr. Bergin postulated in the context of the worst type of disorderly Brexit, would have a profound impact on public finances and so on. By 31 October, we will be into our stability programme update and budget cycle. Is it still possible, given the situation in the UK, that we may need a revised budget next month in order to address some of the matters that we have discussed?

Deputy Paschal Donohoe

As to whether a revised budget is going to be needed this year, the answer is “No”. I indicated when we were facing into the prospect of Brexit that I would not be presenting another budget to the House. Instead, what I said I would allow to happen is the so-called automatic stabilisers, to which the Deputy is referring, coming into play in light of the fact that people will need support from the Department of Employment Affairs and Social Protection and the Department of Business, Enterprise and Innovation. We would simply let that happen and let it flow through to a budgetary position that would then be different from where we were on budget day last year. The view that I articulated then is even clearer now because if and when Brexit occurs, it will be even later in the year than we previously thought. That view is unchanged.

On the Deputy’s question as to whether I am engaging with the British Government in respect of the use of technology on the Border, the answer is also “No”. All of the engagement I have had with the British Government, primarily with the Chancellor of the Exchequer, Philip Hammond, has been about the backstop and about how we can avoid being obliged to put infrastructure in place on the Border.