Dáil Éireann Debate, Tuesday - 12 July 2022
342. Deputy Mairéad Farrell asked the Minister for Public Expenditure and Reform the reason that there has been no change in the expenditure forecast in relation to budgetary decisions (details supplied); and if he will make a statement on the matter. [37140/22]
View answerTable 1 of the 2022 Summer Economic Statement sets out the budgetary strategy for the period to 2025. As part of the total €6.7 billion budget package for 2023 an amount of €3 billion is indicated as for ‘budgetary decisions’. This category comprises provision for Existing Levels of Service (ELS) costs and the planned core capital expenditure increases under the National Development Plan.
Under the approach set out in last year’s Summer Economic Statement, 3% of the core current expenditure base is being set aside each year to meet ELS costs. These include costs arising from demographic pressures in areas such as Social Protection, Health and Education; carryover costs from measures already introduced in prior year Budgets; and public service pay commitments.
The division in the core current expenditure amount available for allocation each Budget between ELS costs and new measures provides an indication of the expected costs in meeting ELS. The 3% provision set out is based on assessment of previous budgets and the prevailing position in advance of Budget 2022.
Agreement on the level of expenditure required to maintain ELS is a key part of the Estimates process. This involves detailed analysis requiring validation at programme level. A number of factors are taken into consideration including actual demand in the current year compared to that underpinning the budgetary allocation, the potential impacts of existing initiatives on demand and utilisation patterns, impact of demographics on demand, specific price pressures, as well as any capacity constraints that may exist.
Inflationary pressures are generally dealt with on a year-by-year basis as part of the normal budgetary process, with an expectation and responsibility across all Departments and agencies to generate efficiency dividends and promote productivity where possible.
The ‘to be allocated’ line in Table 1 indicates the amount available for new tax and expenditure measures. Any new policy decision taken as part of Budget 2023 will need to be funded from this amount. This includes any core expenditure measures that may be introduced to assist citizens with costs of living pressures.
Where analysis undertaken as part of the estimates process results in ELS costs being lower than expected, this would increase the amount available to fund new measures. The converse would apply if analysis during the estimates process showed higher ELS provision were required in any given year. As set out in Expenditure Report 2022, following this detailed analysis during the estimates process last year the amount provided in respect of ELS costs in Budget 2022 was €1.6 billion. The amount included as ELS costs for 2023 in the SES is €2.2 billion.
