Government must not allow Departments dip into capital expenditure to pay for current spending overruns – CIF
The Construction Industry Federation (CIF) has cautioned the Government that they can not allow Departments to supplement current expenditure overruns from the voted capital expenditure. This follows the recent admission by the Government that total net capital spending by the Government at the end of September was €1.7 billion, despite an allocation of €3.9 billion in voted capital expenditure being allocated for 2012.
The CIF raised this issue during a meeting with Ministers Michael Noonan and Brendan Howlin to discuss their pre budget submission.
Speaking following the meeting, CIF Director General Tom Parlon said, “We are very worried that capital spending is now seen as a fund that the various Departments can dip into whenever their current expenditure costs overrun. If they have a cost overrun they aren’t worried about curtailing this spending, instead they’re supplementing it by taking it out of the money that was allocated for capital expenditure.
“That is not the reason this funding was assigned in the Estimates for 2012. This money was distinctly set aside for capital spending projects when Minister Howlin announced the spending estimates for the year.
“When he announced the reduced capital spending for 2012, he outlined that €3.9 billion would be provided for voted capital expenditure this year. On a straight line basis you would imagine that by the end of September approximately €2.9 billion of that allocation would have been spent.
“However according to figures released by Minister Howlin only €1.7 billion has been spent on capital expenditure by the Government as of the end of September. According to the Minister this figure is only 13.6% behind profile. On that basis the Government had planned to have spent €1.96 billion by the end of September.
“This means that during the final three months of 2012, the Government plans on bringing forward approximately €2 billion in voted capital expenditure. In other words there will be more capital spending in three months than has taken place during the first nine months of the year.
“We are very worried about the way the various Departments are approaching this issue and we asked Minister Howlin and Minister Noonan to look at this issue during our meeting with them. Hopefully this will lead to a change in thinking by the various Departments. Otherwise capital spending allocations will be absolutely meaningless as the trend of dipping into this source of expenditure to meet day to day cost overruns continues,” Mr. Parlon concluded.
During the course of their meeting with the two Ministers the CIF also discussed the possibility of a property tax holiday for people purchasing new houses, mandatory mortgage lending rates for banks and a reduction in VAT on construction services.