Dáil Éireann Debate, Tuesday - 29 September 2020
340. Deputy Bernard J. Durkan asked the Minister for Public Expenditure and Reform the extent to which he expects to rely on the principle of reform to meet various spending targets in 2020 and subsequently; and if he will make a statement on the matter. [27256/20]
View answer342. Deputy Bernard J. Durkan asked the Minister for Public Expenditure and Reform the extent to which he expects increases in public expenditure to be necessitated in 2021 and subsequently in respect of current expenditure; and if he will make a statement on the matter. [27261/20]
View answer343. Deputy Bernard J. Durkan asked the Minister for Public Expenditure and Reform the extent to which current and capital expenditure have evolved in the course of the past 12 months; and if he will make a statement on the matter. [27262/20]
View answer344. Deputy Bernard J. Durkan asked the Minister for Public Expenditure and Reform if he foresees an increased reliance on borrowing to meet current expenditure costs over the next five years; and if he will make a statement on the matter. [27263/20]
View answer348. Deputy Bernard J. Durkan asked the Minister for Public Expenditure and Reform his plans to allow greater expenditure than anticipated by some Departments in order to offset the negative impacts of Covid-19 and Brexit; and if he will make a statement on the matter. [27267/20]
View answerI propose to take Questions Nos. 340, 342 to 344, inclusive, and 348 together.
The fiscal position entering the Covid-19 crisis was reasonably positive. A General Government surplus of 0.4% of GDP was recorded in 2019, a balanced budget in structural terms was delivered, and debt to GDP ratio of 59%.
From an expenditure perspective the initial response to the Covid-19 crisis was swift, with emergency measures introduced to support and protect households and enterprises. In total, it is estimated that additional Covid-19 related expenditure supports of approximately €16 billion are to be provided this year, a significant investment that equates to 9% of GNI*. These additional expenditures would bring gross voted expenditure for 2020 to over €86 billion, an increase of over €19 billion or almost 30% relative to last year.
In July, Dáil Éireann approved additional Covid-19 health expenditure in the Health Revised Estimate. This Estimate included a €2 billion increase relative to the Health allocation set out in the REV published in December last year. Further resources have also been recently agreed by Government in relation to the 2020/2021 Winter Initiative and officials in my Department are actively engaging with their counterparts in the Department of Health and the HSE on the scale of additional funding that will be required over the rest of this year.
The labour market has borne a significant brunt of the impact of the crisis so far. In light of this, the Government has taken significant steps to cushion, where possible, the impact on households and businesses. Taking into account expenditure on the Pandemic Unemployment Payment and the Wage Subsidy Scheme, Social Protection expenditure will be over €30 billion this year, an increase of over €9 billion relative to REV 2020. In addition €1 ½ billion of Exchequer funding has been made available for liquidity measures, restart grants and commercial rates waivers to support business. Further to this, additional resources have also been made available to support the significant efforts undertaken to ensure the safe reopening of our Education systems.
Looking forward, the overall Budgetary Strategy for 2021 will focus on prioritising crisis management measures to address the challenges posed by Covid-19 and Brexit while preserving and maintaining existing levels of service within core expenditure programmes. Work is ongoing in assessing the impact of Covid-19 costs in 2021 and further details will be set out in the 2021 Expenditure Report.
The Government will need to continue to run a deficit next year to address the challenges posed by Covid-19 and Brexit. The State will borrow to cover this deficit. We are in a position to borrow this money because of the actions of the European Central Bank and the credibility of our public finances. Taking a longer-term view, it is important that, as the economy returns to growth and employment is restored, the deficit is reduced year-on-year to underpin the sustainability of the public finances and to ensure the funding for our key public services.
In support of this process, the Programme for Government commits to continuing reform and improvement of the Budgetary process and proposes that each Minister will be required to produce service improvement and reform plans in conjunction with my Department, within an overall context of an enhanced focus across Government on issues of well-being. In implementing this reform, my Department will look to build on the budgetary reforms already in place and the significant work on public service reform already completed.
Adopting this approach will ensure stronger dialogue in this House on key elements of budgetary policy and will help to facilitate the continued development of budgetary decisions, consistent with the maintenance of stable public finances.
