This article looks at the recently published Comprehensive Expenditure Report 2015 – 2017, which sets out the Irish Government’s expenditure allocations and measures for the next three years. In particular, it looks at the allocations for the Department of Transport, Tourism and Sport. Certainty about allocations for the medium-term is very helpful, but there is some disappointment about the levels of allocation for the public transport sector.

COMPREHENSIVE EXPENDITURE REPORT 2015 – 2017

The current Government has been engaged in on-going evaluation of public expenditure since it came into offi ce in 2011. The fi rst Comprehensive Review of Expenditure was carried out in 2011. The outcome of that process was refl ected in the Comprehensive Expenditure Report 2012 – 2014, which was published in December 2011. The Second Comprehensive Expenditure Report 2015 – 2017 was presented to Dáil Éireann on 14 October 2014 by the Minister for Public Expenditure & Reform. It set out the Irish Government’s expenditure allocations and measures for 2015, and the expenditure ceilings for 2016 and 2017.

The objective of the Comprehensive Expenditure Review process, which led to the Report, was to provide the Government with a comprehensive set of decision options that would serve to:-

• re-align spending with the revised Programme for Government priorities;

• meet overall fiscal objectives; and

• explore new and innovative ways of delivering Government policy in a reformed Public Sector.

Each Government Department carried out a review of its existing expenditure across its main spending programmes and submitted the outcome of that process to the Department of Public Expenditure and Reform. These informed Budget Day decisions on the allocation of expenditure for 2015 to 2017. Departmental submissions to the review process and other supporting analysis papers that were considered as part of the process are available on the internet – http://www.per.gov.ie/departmental-submissions-and-analysis-papers

In addition, the public and interested parties were invited to submit comments and suggestions in relation to public expenditure and reform in the context of the review. Over 60 submissions were received from a mixture of individuals and organisations which were considered by the relevant Government Departments as part of their analysis. A summary of the type of proposals submitted is available on-line – http://www.per.gov.ie/comprehensive-review-of-expenditure

The Chartered Institute of Logistics and Transport is one of the organisations that made a submission to the Minister for Public Expenditure and Reform, for this consultation process.

DEPARTMENT OF TRANSPORT, TOURISM AND SPORT

The Government in moving towards a balanced budget has had only limited scope to expand public expenditure – current or capital. In this regard, the Comprehensive Expenditure Report (CRE) points out that – “…expenditure increases in the future will have to fit within available resources which means that Government Departments need to oversee continued strict financial and operational management of expenditure to ensure that service level pressures and other emerging spending demands are managed and addressed within the budgetary parameters”.

The Department of Transport, Tourism and Sport, like other Departments has had to work within these constraints. There are, however, a few Departments that are being given some leeway in the prioritisation and protection of key services. The CRE points out that – “…the Government has, as far as possible, prioritised expenditure by those Departments most closely aligned with providing vital public services and social transfers: Social Protection, Health and Education”.

Against this background, what are the allocations for the Department of Transport, Tourism and Sport for the next three years? Table 1 shows the allocations for both current and capital expenditure, for 2015 through 2017, by comparison with the estimated outturn for 2104. It shows an increase of only €4 million (+0.6%) in current expenditure between 2014 and 2017. In the case of capital expenditure, the increase is slightly larger; there is a planned increase of €25 million (+2.5%) between 2014 and 2017. Combining capital and current allocations, there is a planned increase of €29 million (+1.8%) between 2014 and 2017.

The CRE makes it quite clear that Departments will not have much room to manoeuvre when it comes to the limits on the allocations. Specifically, in the case of the Department of Transport, Tourism and Sport, the CRE states that – “… The multi-annual expenditure ceilings are binding and it will fall to the Department of Transport, Tourism and Sport to deliver services within these agreed allocations for the period 2015-17. This includes responding to emerging expenditure pressures over that period without recourse to additional Exchequer allocations” To meet these constraints, the transport department will have to ensure that ongoing reform and efficiency measures, and reprioritisation of expenditure, are achieved.

PUBLIC TRANSPORT

Within the foregoing allocations, Public Transport is the biggest area of expenditure for the Department of Transport, Tourism and Sport. It represents 80% of the total allocation of €1.63 billion (current and capital) for 2015. The next highest is Tourism Services at 8%, followed by Maritime Transport & Safety and Sports & Recreation Services at 5% each. Finally, Civil Aviation is just under 2% of the total.

In absolute terms the allocation for Public Transport is €1.3 billion for 2015, and will be of the same scale in 2016 and 2017, unless a radical change is made in the distribution of the total allocations by the Department of Transport, Tourism and Sport. This level of allocation for Public Transport is considerably lower that the amount invested in the halcyon years 2006-2008. During those years the annual transport investment, under Transport 21, was twice the level now planned, for annual current and capital expenditure, for Public Transport in the years ahead. Owing to the fi scal crisis, successive Governments have had to make swinging cuts in all sectors of public expenditure, including transport.

Nevertheless, the Chartered Institute of Logistics and Transport in its submission to Minister for Public Expenditure and Reform argued that – “…the top priority for transportation expenditure (capital and current) should be to maintain the transportation capacity that already exists and that is currently in use. Failure to act now will require greater expenditure in the future to restore the transportation system to a satisfactory standard”.

SOME CONCLUSIONS

The new Comprehensive Expenditure Report (CER) makes the overall case well for the level and distribution of multiannual expenditure ceilings for the three year period 2015 – 2017. However, on one specific front – namely Public Transport – the case needs to be made for a fresh look at increasing the level of investment over and above the investment allocations that have been made in the CER.

The case for higher levels of investment in land transport has been made recently in a report entitled ‘Investing in our transport future: A strategic framework for investment in land transport”; this report was completed for the Department of Transport, Tourism and Sport by a Steering Group last August. The Group estimated that an annual investment funding of between €1.2 billion and €1.6 billion would be necessary to maintain a ‘steady state’ land transport system. This does not include provision for investment to increase capacity or build new projects beyond those already contractually committed and is also exclusive of the cost of subventing public transport services.

The results of the Steering Group report provide evidence of the need to increase the allocation for investment in Public Transport in the coming years. Any additional allocations need to be targeted. In particular, there is a need for targeted investment to be made to tackle re-emerging congestion, to address long-term transport bottlenecks and to help meet Ireland’s future emissions targets for greenhouse gases under the EU Climate and Energy package for 2020. Any additional allocations to provide for specific projects, such as these, will first have to be subject to detailed economic appraisals in order to ensure that public money is being put to its most productive use. That means that the criteria laid down in the Public Spending Code, issued by the Department of Public Expenditure and Reform will have to be met. Overall, the objective should be to have suffi cient infrastructural capacity to support the economy as it continues to compete successfully in global markets.

 By Tom Ferris, FCILT