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Thursday, 23 Sep 2021

Written Answers Nos. 203-217

Tax Code

Questions (203)

Pádraig MacLochlainn

Question:

203. Deputy Pádraig Mac Lochlainn asked the Minister for Finance the plans he has to change the restrictive tax rules which can inflict a double tax on cross-Border workers who are based in Ireland, particularly when the temporary Covid-19 waiver on these rules ends in January 2022, in order to ensure that thousands of cross-Border workers do not face a financial penalty by seeking to work from home. [45767/21]

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Written answers

I assume that the Deputy’s question may relate to the taxation of cross-border workers who are Irish resident but commute to work in another jurisdiction and claim relief in accordance with section 825A Taxes Consolidation Act 1997, which is commonly referred to as Trans-Border Workers’ Relief.

The relief effectively removes the foreign employment income from a liability to Irish tax where foreign tax has been paid on that employment income (and such foreign tax is not refundable). In simple terms, the effect of the measure is that Irish tax will only arise where the individual has income other than income from a foreign employment.

The relief applies subject to certain conditions, which includes the requirement that the duties of a qualifying employment are performed wholly outside the State in a country with which Ireland has a Double Taxation Agreement. There is an exception in respect of merely incidental duties which may be performed in the State.

I am advised by Revenue that, in light of the unprecedented circumstances arising due to the Covid-19 pandemic and the resulting public health restrictions to limit movement, for the tax years 2020 and 2021, a concessional treatment for such taxpayers would apply, whereby if employees are required to work from home in the State due to Covid-19, such days working at home in the State will not preclude an individual from being entitled to claim this relief, provided all other conditions of the relief are met. The effect of this concessional treatment allows individuals resident in the State and working for a non-resident employer carry out their employment duties in the State and continue to pay tax in another jurisdiction.

I am aware that there have been calls to place this concessional treatment on a statutory footing so that individuals who are resident in the State, but work outside the State for a non-resident employer, can continue to avail of the relief if they exercise their duties of employment in the State.

During the debates on Finance Bill 2020, I undertook that this matter would be examined as part of the work of the Tax Strategy Group (TSG) for 2021. The resultant paper was discussed by the TSG as part of its deliberations on 8 September last. The examination encompassed very detailed consideration of all relevant matters including the equity of treatment between Irish residents who pay tax in the State, the competitive position of Irish employers and the established principles of international tax. The review identified a number of significant concerns from a policy perspective when having regard to the interest of the wider body of taxpayers encompassing Irish resident employees and employers. The full TSG paper (TSG Paper 21/04) can be located here -

www.gov.ie/en/collection/d6bc7-budget-2022-tax-strategy-group-papers/.

Over the coming weeks between now and Budget 2022, I propose to give this matter further detailed consideration having regard to the comprehensive review carried out under the auspices of the TSG and the fundamental points which the TSG paper raises.

It should also be noted that Ireland has an extensive network of Double Taxation Agreements which have the effect of eliminating double taxation on the same income source. Relief is generally afforded by way of exemption or granting relief for foreign tax paid in the country of residence of the individual.

In the event that an individual does not qualify for Trans-Border Workers’ Relief he/she may be entitled to relief from double taxation under the terms of the relevant Double Taxation Agreement, thus a double taxation charge would not arise in such circumstances.

Budget 2022

Questions (204)

Brendan Griffin

Question:

204. Deputy Brendan Griffin asked the Minister for Finance his views on reducing the VAT on smokeless coal in Budget 2022 (details supplied); and if he will make a statement on the matter. [45806/21]

View answer

Written answers

As the Deputy will be aware, it is a longstanding practice of the Minister for Finance not to comment, in advance of the Budget, on any tax matters that might be the subject of Budget decisions.

Budget 2022

Questions (205)

Fergus O'Dowd

Question:

205. Deputy Fergus O'Dowd asked the Minister for Finance if his attention has been drawn to a pre-budget submission (details supplied) ahead of Budget 2022; and if he will make a statement on the matter. [45813/21]

View answer

Written answers

In advance of the Budget, as Minister for Finance I receive a large number of pre-budget submissions on a wide range of issues.

These can range from highly detailed and developed proposals for specific changes to existing taxes, reliefs, exemptions and allowances to more straightforward requests, for example, to increase the single person tax credit. Many submissions contain proposals across a range of taxes and allowances that are of particular relevance to the sector in which the person or representative organisation operates. Some are from individuals describing their personal circumstances to place their proposals in context.

The Deputy will be aware that many representative organisations publish their pre-budget submissions on their websites and see it as part of their communication strategy with their members. The vast majority of these pre-budget submissions are sent electronically to my office in the Department of Finance and this is the preferred method of receipt.

My office had not received the Dundalk Chamber budget submission when this PQ was put down. Nonetheless, its contents will be considered in the context of the forthcoming Budget.

However, as the Deputy may be aware, it is a longstanding practice of the Minister for Finance not to comment, in advance of the Budget, on any tax matters that might be the subject of Budget decisions.

Fiscal Data

Questions (206)

Pearse Doherty

Question:

206. Deputy Pearse Doherty asked the Minister for Finance the projected General Government Balance as a percentage of both GDP and GNI* in each of the years 2021 to 2069 consistent with the methodology and assumptions used in his Department’s publication Population Ageing and the Public Finances in Ireland in the two scenarios outlined in table 6 of page 26, in which the SPA remains constant and in which previously legislated increases in the SPA take place in tabular form. [45847/21]

View answer

Written answers

The Department of Finance published a report entitled Population Ageing and the Public Finances in Ireland on Friday September 17th. The purpose of the report is to highlight the likely economic and budgetary impacts of population ageing in Ireland over the coming decades.

Included in the report, for illustrative purposes, is a hypothetical simulation that analyses the potential evolution of the budget balance and public debt in the event that budgetary policy did not adjust to the challenges posed by population ageing. In this hypothetical no-policy-change scenario, non-age related expenditure as a share of GDP/GNI* is assumed to remain unchanged over the forecast horizon while total revenue is assumed to move in line with nominal GDP/GNI*.

Age-related increases in public expenditure and a slower pace of revenue growth lead to the emergence of a significant deficit by the end of the next decade, reaching just below 3 per cent of GDP (4.7 per cent of GNI*). The deficit is projected to continue to increase sharply thereafter, reaching just below 6 per cent of GDP (9.3 per cent of GNI*) by 2070, without policy intervention.

As well as the baseline assumption of the State Pension Age (SPA) remaining at 66 years of age indefinitely, tables 1 and 2 below present simulations of the potential evolution of the budgetary balance if: a) the previously legislated increases in the SPA went ahead as planned (i.e. the SPA increased to 67 in 2021 and 68 in 2028); and b) if the previously legislated increases went ahead as planned and after that, the SPA increased by ¾ of a year for every projected increase of one year in life expectancy.

The simulations suggest that linking the SPA to life expectancy would reduce the projected General Government Deficit by 1.4 percentage points of GDP (2.3 percentage points of GNI*) by 2070. Analysis suggests that this would reduce the debt-to-GNI* ratio by approximately 40 percentage points by the end of the projection period.

It is important to note that the simulations presented do not take into account second-round effects or non-linearities. For example, continuing to run deficits of this magnitude would, almost certainly, result in a significant risk premium, with adverse implications for sovereign borrowing costs and the interest bill. Increases in interest rates with such elevated levels of debt would put significant pressure on the public finances. In addition, the starting point for this exercise was outturn fiscal data from 2019. While the macroeconomic projections underpinning this analysis envisaged a sharp decline in output in 2020, they did not capture the significant increase in expenditure related to the support measures implemented by the Irish Government during the Covid-19 pandemic. As such, the deficit in this exercise in the short-term may be understated.

While these simulations are for illustrative purposes only, they do highlight the need for policy intervention.

The tables below present figures in the base year of the exercise, 2019, 2021 and after this, projections at a 10-year interval. My Department will provide the Deputy’s office with projections for every year from 2021 to 2069, as requested.

Table 1

as per cent of GDP

2019

2021

2030

2040

2050

2060

2070

Baseline (SPA remains at 66)

0.5%

-0.3%

-1.5%

-3.1%

-4.5%

-5.2%

-5.7%

Increasing SPA as per previous legislation

0.5%

-0.2%

-1.1%

-2.6%

-4.0%

-4.7%

-5.2%

Linking SPA to life expectancy

0.5%

-0.2%

-1.1%

-2.4%

-3.5%

-4.0%

-4.3%

Table 2

as per cent of GNI*

2019

2021

2030

2040

2050

2060

2070

Baseline (SPA remains at 66)

0.9%

-0.5%

-2.5%

-5.0%

-7.2%

-8.4%

-9.3%

Increasing SPA as per previous legislation

0.9%

-0.3%

-1.9%

-4.2%

-6.5%

-7.7%

-8.5%

Linking SPA to life expectancy

0.9%

-0.3%

-1.8%

-3.9%

-5.6%

-6.6%

-7.0%

Defective Building Materials

Questions (207, 208, 209)

Neale Richmond

Question:

207. Deputy Neale Richmond asked the Minister for Finance if homes affected by pyrite and therefore have no market value are exempt from paying local property tax; and if he will make a statement on the matter. [45921/21]

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Neale Richmond

Question:

208. Deputy Neale Richmond asked the Minister for Finance the process by which a homeowner can confirm their exemption to paying the local property tax due to pyrite; and if he will make a statement on the matter. [45922/21]

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Neale Richmond

Question:

209. Deputy Neale Richmond asked the Minister for Finance if a home (details supplied) is exempt from paying local property tax due to pyrite issues; and if he will make a statement on the matter. [45923/21]

View answer

Written answers

I propose to take Questions Nos. 207 to 209, inclusive, together.

Local Property Tax (LPT) operates on a self-assessment basis and it is a matter for the property owner in the first instance, to calculate the tax due based on his or her assessment of the market value of the property. When making an assessment, issues such as the presence of pyrite would be one of the factors that a property owner should take into account in valuing their property.

The qualifying criteria in respect of the exemption from LPT on foot of significant pyrite damage is set out in the Finance (Local Property Tax) (Amendment) Act 2015 for the current ‘valuation period’ (2013 to 2021). The criteria for the next ‘valuation period’ (2022 to 2025) is set out in the Finance (Local Property Tax) (Amendment) Act 2021.

In accordance with the legislation, a residential property is eligible for exemption from LPT on foot of pyrite related damage where:

1. a certificate of damage has been completed by a competent person or,

2. the property has been accepted into the Pyrite Remediation Scheme operated by the Pyrite Resolution Board or,

3. an insurance company has remediated the property or provided sufficient funds to carry out the remediation or,

4. the builder who constructed the property has remediated it or provided sufficient funds to carry out the remediation.

Property owners claiming the exemption under Criteria 1 must provide a certificate to Revenue, which is completed in accordance with I.S. 398-1.2013 as set down by the then Minister for the Environment, Community and Local Government. Property owners claiming the exemption under Criteria 2 to 4 must also provide the relevant supporting documentation to Revenue.

Where the LPT exemption is granted, it applies for a fixed period of six years from the first ‘liability date’ (1 November) after the property is confirmed as meeting the eligibility conditions. For example, if a property qualifies for the exemption from the ‘liability date’ 1 November 2021, it will be exempt from LPT for the years 2022 to 2027 (inclusive). It is important to note that while the exemption is being phased out and will not be available after 21 July 2023, properties that become eligible on or before this date will still benefit for a period of six years.

Property owners whose properties meet the eligibility criteria can claim the ‘pyrite exemption’ when completing the LPT return for the next valuation period (2022 to 2005), which should be submitted by 7 November 2021. The relevant supporting documentation should also be submitted in support of the claim. Further details in relation to the qualifying criteria and how to claim an exemption for a property with significant pyrite damage are available on the Revenue website at www.revenue.ie/en/property/local-property-tax/exemptions-apply-2022-2025/properties-certified-with-pyritic-damage.aspx, which may be of assistance to the Deputy.

Finally, I am advised by Revenue that the ‘liable person’ for the property referenced by the Deputy in Question 45923/21 has not made a claim for an exemption from LPT due to pyrite damage. Revenue has also advised that it will make direct contact with the person in the coming days to explain the eligibility criteria for the exemption and advise on the type of supporting documentation required.

Question No. 208 answered with Question No. 207.
Question No. 209 answered with Question No. 207.

Ethics in Public Office

Questions (210)

Mairéad Farrell

Question:

210. Deputy Mairéad Farrell asked the Minister for Public Expenditure and Reform his views on the current state of public ethics and standards in Irish political life given recent events; and if he will make a statement on the matter. [45430/21]

View answer

Written answers

I wish to assure the Deputy that neither I nor this Government are in any way complacent when it comes to the matter of ethics and standards in our political life.

Since its establishment in 2011, my Department has committed significant resources in terms of policy development and consultation across government to explore how the statutory framework for ethics can be reformed to make it fit-for-purpose. Legislation to this end which was brought forward by my predecessor in 2015 lapsed with the dissolution of the Dáil in advance of last year’s general election, but we made a commitment in the new Programme for Government to “reform and consolidate the Ethics in Public Office legislation”. As the Minister responsible, I recently brought proposals to Government for a review of the statutory framework for ethics in public life, which is the first step in delivering on our commitment.

This review will consider, inter alia:

- Ireland’s existing ethics legislative framework;

- The recommendations of relevant tribunals of inquiry;

- Recommendations made by the Standards in Public Office Commission based on its operation of the current regime;

- The views of key stakeholders;

- Current EU/international best practice; and

- The views submitted during a public consultation.

The outcome of the review, which the Government agreed, will inform proposals for legislative reform that I intend to bring forward in 2022, with the ultimate goal of an easy to understand and user-friendly ethical framework that contributes to the quality and effectiveness of our public administration.

Brexit Supports

Questions (211, 213)

Christopher O'Sullivan

Question:

211. Deputy Christopher O'Sullivan asked the Minister for Public Expenditure and Reform if there have been any further developments with regard to the Brexit Adjustment Fund; and if he will make a statement on the matter. [33692/21]

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Neale Richmond

Question:

213. Deputy Neale Richmond asked the Minister for Public Expenditure and Reform if he will report on Ireland’s funding under the Brexit Adjustment Reserve. [34659/21]

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Written answers

I propose to take Questions Nos. 211 and 213 together.

At the end of June, agreement was reached between the European Parliament and the Council of Ministers on the European Commission’s proposal for a Brexit Adjustment Reserve.

The Reserve has a total value of €5 billion in constant (2018) prices, or €5.47 billion in current prices. All Member States are to receive a provisional allocation.

I am pleased to say that Ireland has been allocated €1.065 billion in constant (2018) prices, equivalent to €1.165 billion in current prices. This represents 21% of the total value of the Reserve, the largest allocation for any Member State.

The reference period for expenditure under the Reserve runs from 1 January 2020 to 31 December 2023.

80% of the total Reserve will be made available as pre-financing in three instalments: 40% in 2021; 30% in 2022; 30% in 2023. The remaining 20% will be made available in 2025 once Member States have accounted to the Commission for expenditure under the Reserve. In Ireland’s case, the bulk of expenditure will be in the form of pre-financing.

The objective of Reserve is to provide support to counter the adverse economic, social, territorial and, where appropriate, environmental consequences of the withdrawal of the UK from the EU. Importantly, the Reserve may only support measures specifically taken by Member States to contribute to this objective.

In Ireland’s case, the allocation of resources from the Reserve will be aligned with the annual Estimates process. Ireland has already spent a considerable amount on preparing for Brexit, with successive budgets since the UK referendum providing significant supports for business and the agri-food sectors, as well as the infrastructure required at the port and airport to maintain the flow of east west trade.

Possible areas for support under Reserve include enterprise supports; supports for the agri-food sector; fisheries; reskilling and retraining; and infrastructure for the ports and airport.

In line with the requirements of the BAR Regulation, a Designated Body will be established within my Department to oversee expenditure under the Reserve.

An Garda Síochána

Questions (212)

Jennifer Murnane O'Connor

Question:

212. Deputy Jennifer Murnane O'Connor asked the Minister for Public Expenditure and Reform when Leighlinbridge Garda station will be reopened; and if he will make a statement on the matter. [36766/21]

View answer

Written answers

A Programme for Government included for a ‘pilot programme of station re-openings’ throughout the country, including Leighlinbridge Garda Station.

Tenders for the refurbishment works were issued to contractors in July and submissions returned in August 2021.

The evaluation of tenders submitted is nearing completion and subject to the necessary approvals and ongoing discussion, regarding Garda priorities and the availability of funding, with An Garda Síochána it is expected that the contract for the works will be awarded in the fourth quarter of 2021.

The programme for the completion of the refurbishment works is approximately three months.

Question No. 213 answered with Question No. 211.

Covid-19 Pandemic

Questions (214, 224, 228)

Richard Boyd Barrett

Question:

214. Deputy Richard Boyd Barrett asked the Minister for Public Expenditure and Reform the practical measures he will make to reward essential workers for the contribution they made to the fight against Covid-19; if these measures will include raising the minimum wage to €15 per hour, a four day working week, more public holidays and statutory holiday entitlements; and if he will make a statement on the matter. [43776/21]

View answer

Bernard Durkan

Question:

224. Deputy Bernard J. Durkan asked the Minister for Public Expenditure and Reform the extent to which he has examined ways and means to acknowledge the efforts and dedication of front-line workers throughout the Covid-19 pandemic; the options available to him in his Department to reward to such persons; and if he will make a statement on the matter. [45873/21]

View answer

Bernard Durkan

Question:

228. Deputy Bernard J. Durkan asked the Minister for Public Expenditure and Reform the nature of any reforms proposed to ensure equity and reward throughout the public sector in line with requirements in the aftermath of Covid-19; and if he will make a statement on the matter. [45877/21]

View answer

Written answers

I propose to take Questions Nos. 214, 224 and 228 together.

The Government acknowledges the contribution of our frontline workers and all workers across the economy during the COVID-19 pandemic. The value of the contribution made by our frontline workers across the economy cannot be overstated. Their hard work and sacrifice has been crucial to getting the country through this pandemic and the Government is committed to recognising those efforts.

Working together has been a key element of the Government’s approach to the pandemic to date, and this should form part of any approach to recognition also. It is important that in deciding on our approach to recognition, we recognise the contribution of workers across the public and private sector. The Government must consider the whole of the economy in its deliberations on this matter.

There are a number of issues that I will be considering and will be discussing with my Government colleagues in relation to recognition. In addition to the breathe of recognition, the timing and service delivery impact of any approach must be taken into account. I wish to assure the deputy that this issue is a priority for the Government and will be addressed in the near future.

In addressing the specific measures raised by the Deputy, matters such as the minimum wage, public holidays and statutory holiday entitlements are not within the remit of my Department. As noted, the Government will consider options to recognise essential workers and as such I cannot commit to specific measures at this time until the Government has had an opportunity to discuss these complex issues. I have addressed the matter of a four day week previously, noting that in light of the large potential costs and disruption to critical services I do not believe that it is the right time to consider a transition to a four day week for the public service.

Heritage Sites

Questions (215)

Seán Sherlock

Question:

215. Deputy Sean Sherlock asked the Minister for Public Expenditure and Reform the status of operations at a site (details supplied); and when he plans to open it for public use. [45841/21]

View answer

Written answers

Anne's Grove Gardens is scheduled to open to the public in 2022. Since 2016, The OPW has been engaged in a complex conservation project to restore the historic gardens and this major phase of refurbishment, which is the first in a series of phases, is nearing completion. It is planned to have the Gardens available to the public next year with a modest catering offering in place on site. The visitor experience will focus on the gardens and the important plant collection and visitors will have some opportunities to explore some of the restored courtyard areas.

Further phases of conservation works are planned relating to the main house and ancillary buildings. These projects are subject to planning permission and the availability of funding in the years ahead.

Tax Data

Questions (216, 218, 219, 220, 221, 222, 229, 230)

Bernard Durkan

Question:

216. Deputy Bernard J. Durkan asked the Minister for Public Expenditure and Reform the extent to which the short and medium-term strategy of his Department is likely in any way to be affected by suggested changes in corporation profits tax; and if he will make a statement on the matter. [45865/21]

View answer

Bernard Durkan

Question:

218. Deputy Bernard J. Durkan asked the Minister for Public Expenditure and Reform the extent to which he remains satisfied that current expenditure policy remains adequate to meet the challenges in the short to medium term; and if he will make a statement on the matter. [45867/21]

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Bernard Durkan

Question:

219. Deputy Bernard J. Durkan asked the Minister for Public Expenditure and Reform the extent to which public expenditure and reform strategies need to be revised to meet any challenges in the short to medium term; and if he will make a statement on the matter. [45868/21]

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Bernard Durkan

Question:

220. Deputy Bernard J. Durkan asked the Minister for Public Expenditure and Reform the areas of expenditure experiencing most pressure at the present time; if he expects to develop a short, medium and long-term expenditure and reform strategy to meet any exigencies; and if he will make a statement on the matter. [45869/21]

View answer

Bernard Durkan

Question:

221. Deputy Bernard J. Durkan asked the Minister for Public Expenditure and Reform the degree to which he expects to meet current expenditure requirements in the course of Budget 2022; the extent to which he has identified particularly sensitive areas needing attention; and if he will make a statement on the matter. [45870/21]

View answer

Bernard Durkan

Question:

222. Deputy Bernard J. Durkan asked the Minister for Public Expenditure and Reform his plans for prudent and strategic expenditure in the short term in order to encourage economic recovery in the aftermath of Covid-19 and Brexit; and if he will make a statement on the matter. [45871/21]

View answer

Bernard Durkan

Question:

229. Deputy Bernard J. Durkan asked the Minister for Public Expenditure and Reform the extent to which his Department has identified Departments affected by and overrun in expenditure which might not be related to Covid-19 or Brexit; and if he will make a statement on the matter. [45878/21]

View answer

Bernard Durkan

Question:

230. Deputy Bernard J. Durkan asked the Minister for Public Expenditure and Reform the extent to which various Departments can be rewarded for adherence to public expenditure and reform guidelines while maintaining maximum level of service; and if he will make a statement on the matter. [45879/21]

View answer

Written answers

I propose to take Questions Nos. 216, 218 to 222, inclusive, 229 and 230 together.

The medium term expenditure strategy to 2025 was set out in the Summer Economic Statement (SES) and detailed further in the Mid-Year Expenditure Report. This strategy aims to meet key challenges facing us in the short to medium term and reflects the Government’s commitment to return the public finances to a more sustainable position; address our infrastructure challenges including in the key areas of housing and climate action; continue to enhance our public services and social supports; and ensure a balanced recovery from the pandemic. This will see core expenditure grow year by just over 5 per cent on average, in line with the trend growth rate of the economy, over the period to 2025 while providing for the careful phased withdrawal of Covid-19 related supports.

Potential reductions in corporation tax income as a result of the reforms to global corporation tax policy currently under discussion have been accounted for to the extent possible within this, with the revenue projections set out by the Department of Finance estimating a shortfall in receipts of €2 billion by 2025 compared to current tax policies remaining in place.

Discussions are currently underway on the allocation of resources as part of Budget 2022, within the parameters agreed by Government in the SES. This will see overall gross expenditure of €88.2 billion next year, including increased spending of €4.2 billion within the core expenditure ceiling of €80.1 billion. Of this additional spending, €1.1 will be increased investment under the National Development Plan, with €2.1 billion to meet the costs of maintaining existing levels of service and €1 billion to fund priority new expenditure measures.

Provision to meet the continued challenges posed by Covid-19, and by Brexit, has been included in spending projections for next year with temporary spending of €7 billion provided for in respect of Covid-19 related measures and the €1.1 billion Brexit Adjustment Reserve.

For 2021 spending, as per the end of August Fiscal Monitor overall gross expenditure was under profile by 3%. The Department of Social Protection showed the only overspend against profile, and this related to Covid-19 income and employment support schemes as the extension of the PUP and EWSS post end-June under the Economic Recovery Plan has not yet been included in profiles.

Given the significant level of resources to be provided under the medium term expenditure strategy, an ongoing and enhanced focus on value for money is required, including adherence to public expenditure guidelines, and we must ensure that there is the capacity to deliver this significant level of investment and build on the budgetary reforms already in place to drive spending efficiency and effectiveness.

Public Expenditure Policy

Questions (217, 231)

Bernard Durkan

Question:

217. Deputy Bernard J. Durkan asked the Minister for Public Expenditure and Reform the extent to which he expects to rely on reform as a means of meeting public expenditure challenges ahead; and if he will make a statement on the matter. [45866/21]

View answer

Bernard Durkan

Question:

231. Deputy Bernard J. Durkan asked the Minister for Public Expenditure and Reform the degree to which value for money targets continue to be met by various Departments; and if he will make a statement on the matter. [45880/21]

View answer

Written answers

I propose to take Questions Nos. 217 and 231 together.

Over the last number of years, a range of reforms has been implemented in order to enhance Ireland’s budgetary framework and ensure that expenditure is managed in an efficient and effective way. The intention of these reforms is to increase transparency around the budgetary process and to facilitate meaningful dialogue around key elements of the Budget and on what is being achieved with public funds.

Central to these reforms is the ‘whole-of-year’ budgetary framework. This refers to an ongoing consideration of budgetary priorities throughout the year, rather than focusing budget discussions only around Budget Day. An important element of this is the publication of a range of documents at key points in the year to enhance engagement on relevant budgetary issues.

Improving and supporting the evaluation capacity within Government Departments has also formed an important part of the reform programme. Supported by the establishment of the Irish Government Economic and Evaluation Service, this has led to the development of a number of additional processes and reports to support the budgetary framework.

A key objective of these reforms is to support sustainable growth in public expenditure while delivering improvements in public services. Pre-Covid, the average annual growth rate in spending on day-to-day services over the five year period 2015 to 2020 was projected at 4%, with the emphasis over this period being on catch-up growth in capital spending and sustainable growth in current spending targeted at key frontline services. This approach delivered a positive fiscal position as we entered the crisis caused by the pandemic, with a General Government surplus being recorded in 2019.

Looking forward, the strategy outlined in the SES provides for core expenditure growth of just over 5 per cent per annum on average over the period to 2025. This level of expenditure growth is prudent, sustainable and in line with the estimated trend growth rate of the economy.

The increases over the period to 2025 would see overall core expenditure grow from €70 billion pre-Covid as set out in REV 2020, to €93 billion in 2025. This significant level of expenditure on services and investment in infrastructure requires that there is a continued focus on ensuring that this expenditure delivers value for money and improved outcomes. Sustainability in expenditure not alone requires that the overall level of expenditure remains affordable over the longer term, but also that it delivers sustainable improvements in public services and infrastructure. This requires an ongoing focus on the quality of expenditure.

In light of this, the Programme for Government commits to continuing reform and improvement of the budgetary process, including an enhanced focus across Government on issues of performance and national well-being. In implementing further reforms, 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 support stronger dialogue 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.

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