Dáil Éireann Debate, Thursday - 2 May 2024
80. Deputy Bernard J. Durkan asked the Minister for Public Expenditure, National Development Plan Delivery and Reform the extent to which expenditure trends are overstepping their targets; whether particular areas have come to notice in this regard; if inflation or other issues are contributory factors; if he plans specific measures to ensure that budget remains in target; and if he will make a statement on the matter. [19767/24]
View answerThis question seeks to ascertain, given recent announcements, the Departments which are responsible for spending more money than was anticipated in the year to date. Will the Minister make a statement on the matter?
Government expenditure policy is framed around the medium-term economic strategy which has two objectives, to ensure the long-term sustainability of core expenditure growth and to ensure that the investment in expenditure delivers improvement in public services and infrastructure. As outlined in the stability programme update published last week, the Government is providing investment of €97 billion across the public service to protect living standards, improve public services and safeguard our future through enhanced capital investment. Managing the delivery of such public services and public capital investment within allocations is the responsibility of each Minister and his or her Department. My officials monitor overall expenditure in line with agreed Government objectives and engage with the Government and with Departments on their variances and assess any building pressures.
A number of processes and procedures are in place. We monitor the drawdown of funds against published profiles; we look at key data and information on voted expenditure, which is published every month; we look at quarterly reporting to the Government on the main spending of Departments, and there is regular engagement between all Departments and my officials. Total gross expenditure to the end of quarter 1 was €22.8 billion, which was 14.9% up versus a year ago. This was €275 million or 1.3% above profile. The current expenditure overrun was moderated by an underspend in capital expenditure of €273 million.
The most influential factor in the current expenditure variance versus profile was with regard to health expenditure, where expenditure was running at 7% above planned levels, as was laid out in the monthly publications. I continue to work with all Departments in regard to spending. We have made progress in recent months in bringing spending into line with where profile spending is expected to be. The Deputy will see some of that progress continue in the Exchequer returns that will be published in the coming days.
Can I further ask whether, given that the Minister's colleague, the Minister for Finance, issued a similar statement bringing to the public attention the tendency to overspend in certain areas, is it within the capacity of management to curtail this in sufficient amounts and numbers between now and remainder of the year? The tendency in an election year, and we have two elections coming up shortly, is that various commentators call for more expenditure. When more expenditure, or over-expenditure, takes place, they claim incompetence. They claim that too much money is being wasted, as they say, but it is not always wasted. There is a dilemma. Is the Minister satisfied that sufficient measures are in hand to discourage the tendency in any individual Department to take off without control?
Yes, I am, but it continues to be a challenge, one I and my predecessors have faced over many years because in some cases, Government spending can be ahead of profile. Despite the best efforts of all involved, that has required Supplementary Estimates.
All that being said, however, we have to look at where overall Government expenditure has been in the last number of years. It has grown at a moderate pace, if we look at total Government expenditures in the context of what has happened with inflation within our economy and also in the context of the growth of tax revenues during that period. As I said, over the last number of weeks in particular, I and my officials have been engaging with the issues of where spending stands in comparison to where profile spending should be.
Important progress on this has been made. However, we will continue to have more work we need to do in the coming months simply to make sure that when we prepare budget 2025, we are able to continue to be safe with the public finances of the country, while making progress on issues the country will want us to make progress on across next year.
I will ask the Minister about the degree to which inflation has been a contributory factor in the year to date and is likely to continue in the future. What are the sources of that inflation if it is impacting?
The inflation would be on two different levels. It would relate to supply where, undoubtedly, from a capital point of view, we have seen cost pressure and pressure with tendering and supply chains, which is driven by all the economic developments of which Deputy Durkan will be very aware.
For want of a better phrase, I would not at all use inflation with regard to demand. I do not think that would be an appropriate phrase to use. There has been a heightened need for certain public services, however, both during and after the pandemic, and that has undoubtedly contributed to the pressures that some front-line public services have had to confront.
As I said, overall, if we look at core expenditure and non-core expenditure in the round and look at where we have been in the last number of years, public expenditure has been safely and responsibly managed. It is the reason we are now in surplus and why we are able to increase capital investment at a time in which we need to do so. I will continue to have that approach across the remainder of this year and into next year.
I thank the Minister.
