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Proposed laws to limit public spending aren't binding enough - Troika

Brussels believes the Irish government’s legislation to give legal effect to spending ceilings leaves too much wiggle room.

Both the European Commission and ECB believe legislation enforcing spending limits on government departments is too flexible to be workable.
Both the European Commission and ECB believe legislation enforcing spending limits on government departments is too flexible to be workable.
Image: Barry Cronin/Photocall Ireland

PROPOSED NEW LAWS to impose mandatory spending limits for Irish government departments offer too much flexibility to departments to breach the limits, rendering them virtually meaningless, the Troika has argued.

A draft European Commission document obtained by TheJournal.ie is critical of a bill which intends to enforce new limits on how much each government department can spend.

The proposal – contained in the Ministers and Secretaries (Amendment) Bill, which was published in September but not yet discussed in the Oireachtas – would also see ministers provided with three years’ of spending limits in advance, in order to help medium-term fiscal planning.

The Commission document reveals criticisms held by Brussels, however, which believes that the current draft leaves too much discretions for ministers to breach their spending limits without any need for parliamentary approval.

It says:

[...] the current draft does not sufficiently narrow down the conditions under which the Government may evoke an escape clause and thus be allowed to diverge from expenditure ceilings.

Rather, the Government enjoys significant latitude to increase the ceilings without adequate accountability, as it only requires a proposal of the Minister for Finance.

It also adds that the concerns – which are shared by the ECB – does not offer enough assurance that the ceilings laid out on a non-legal basis for 2012, 2013 and 2014 are being met.

This is because “the Minister for Finance may only make recommendations to the competent Ministers but is not actually empowered to impose binding ceilings” for the time being.

The report further remarks that while the current government published a Comprehensive Expenditure Report ahead of Budget 2012,  and has pledged to keep a three-year rolling ceiling at the centre of its domestic budgets, no spending targets for 2015 were included in Budget 2013.

In full: More of TheJournal.ie‘s coverage on the leaked European documents >

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Gavan Reilly

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