The Exchequer statement for December 2012 issued by the Department of Finance yesterday is overall a very positive development for the economy – there was a spectacular bounce in tax revenues during the month which means that the €171m shortfall in year-to-date tax income recorded in November 2012 was reversed and we end the year an impressive €271m ahead of plan. Current spending however got modestly worse in December and we ended the year €666m behind plan, compared with an €654m adverse variance in November. But the third element of the basic national profit and loss account, capital expenditure, it really had an amazing turnaround in December because at the end of November 2012 we had spent €2.446bn of our capital budget which was a whopping €405m behind budget. This shortfall was the subject of trenchant criticism on here because what the Government was apparently doing, was cutting back on the capital budget so as to fund overruns in current spending, mostly in James Reilly’s Department of Health, and in the Department of Social Protection.
But by the end of December 2012, capital expenditure had climbed €843m from €2.446bn to €3.489bn and at year end, capital spending was just €145m behind budget. Amazing.
And slightly incredible, that one quarter of the total annual spend was in the final seasonal month of the year, The information released yesterday doesn’t give any breakdown of the spend in December 2012 by project but we do learn that Phil Hogan’s Department of the Environment spent €352m in December alone, and Leo Varadkar’s Department of Transport, Tourism and Sport spent €286m.
That we are spending our capital budget is to be welcomed because this is one way in which our tax euros get recycled back to us, and economists will tell you that shovel-ready construction in particular is one of the best ways of a government generating economic growth. By not spending €145m of the capital budget in 2012, we have lost 1-3,000 jobs based on Department of Finance and NAMA projections.
But did we really spend €843m on capital projects in the month of December? Because if we did, you would expect a big boost to employment figures which will be released at 11am today by the CSO. Somehow, though I have my doubts.
In one case of which I have anecdotal evidence, [at least some of] December’s increased capital spending went on imported equipment rather than “shovel-ready construction”. It did help to get the budget spent before the end of the year, though. It might be interesting to find out how much of December’s increase went on new kit rather than on wages. bjg
Could it simply be some large capital projects which had an end of year start or end date when payment was due?
This happens every year. Similar pattern in 2011 if you look here http://per.gov.ie/wp-content/uploads/NetExpenditureProfiles2011.pdf
Replies to parliamentary questions suggest that the “end-loading” pattern is due to a number of factors including a tendency to pay the big bills towards the end of the year. As suggested by previous commentator, there are suspicions that some of it may represent last-minute (i.e poorly planned) purchases of ICT and other items of expensive kit due to the “spend-it-or-lose-it” attitude that used to prevail in these matters. There may also be an element of “round the corner” spending and feather-bedding for the year ahead, albeit no doubt justified by contractual obligations. At any rate, you have made an interesting observation which raises questions as to whether capital spending is being properly managed or whether it is something of a runaway train. Remember, this is borrowed money and it is costing us.
Is there a breakdown of this capital budget published at any stage?
Or if not, would it be subject to an FOI request?
@Kieran, I think you are looking for a breakdown by project, and all we have from this Government is the Infrastructure and Capital Investment Programme published in November 2011
http://per.gov.ie/wp-content/uploads/Infrastructure-and-Capital-Investment-2012-16.pdf
And of course the infamous €2.25bn stimulus announcement last summer
http://per.gov.ie/2012/07/17/minister-howlin-announces-an-additional-e2-25-billion-domestic-infrastructure-stimulus-to-create-much-needed-jobs/
For information, there is now a monthly breakdown of capital and current spend by government Department – this is the year end breakdown
http://finance.gov.ie/documents/exchequerstatements/2012/analspenddec.pdf
And this is the November 2012 breakdown.
http://finance.gov.ie/documents/exchequerstatements/2012/analspendnov.pdf