Thursday, 20 June 2019

Questions (43)

Thomas P. Broughan


43. Deputy Thomas P. Broughan asked the Minister for Public Expenditure and Reform his views on the proposals by the Irish Fiscal Advisory Council in the fiscal assessment report June 2019 that a prudent medium-term fiscal strategy should include three-year expenditure ceilings and a speed limit, that is, a statement of sustainable growth rate limits for net policy spending; and if he will make a statement on the matter. [25628/19]

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Written answers (Question to Public)

The Estimates process and the determination of expenditure ceilings now takes place as part of a whole-of-year budgetary cycle.  The Summer Economic Statement sets out the broad fiscal position and the National Economic Dialogue facilitates engagement between the Government and stakeholders. The pre-Estimates Departmental expenditure position is provided in the Mid-Year Expenditure Report (MYER).  This sets the baseline for examination of budgetary priorities by the Government and the Oireachtas. Following detailed consideration, Ministerial Expenditure Ceilings are published in the Budget day Expenditure Report.

Expenditure Report 2019 sets out the revised baseline for current expenditure out to 2021 after taking account of pre-commitments in relation to demographic pressures in Health, Social Protection and Education, public service pay agreements, and the estimated carryover impact of certain budget measures. Planned capital investment levels out to 2027 have been set out under the National Development Plan. The allocation of these resources at a departmental ceiling level are set out in the Revised Estimates Volume 2019, out to 2022.

The Ceilings also include an amount of unallocated resources in 2020 and 2021, based on the fiscal projections at Budget time last year.  These can be utilised to meet the carryover impact of Budget 2019 measures or for new expenditure measures. Indeed, the flexibility provided within the ceilings allow Government to direct available additional resources towards key services at a time of increased demand and to new priorities. In addition, at Budget time each year Government can decide to allocate additional resources for spending increases by either introducing revenue raising measures and/or redistributing resources allocated for taxation measures.

While this approach has been the subject of comment, it has been informed by the experience in the years leading to the fiscal crisis and is targeted at ensuring that the overall increase in expenditure each year is set at a level that is affordable both now and in the future. This necessitates an approach to expenditure management in which a systematic programme of expenditure reviews and efficiency-generating reforms is underway in each sector to ensure that priority initiatives can be supported and developed in a sustainable manner. The Summer Economic Statement, which will be published in the near future, will set out the Government's updated medium-term economic and fiscal strategy, and in this context I will be giving careful consideration to the inputs and advices of the Irish Fiscal Advisory Council.