Thursday, 20 June 2019

Ceisteanna (6)

Barry Cowen


6. Deputy Barry Cowen asked the Minister for Public Expenditure and Reform his views on whether a new analysis should be undertaken by the Irish Government Economic and Evaluation Service on demographics and demographic impacts on the budgetary positions; and if he will make a statement on the matter. [25804/19]

Amharc ar fhreagra

Freagraí ó Béal (6 píosaí cainte) (Ceist ar Public)

Demographic projections are undertaken by the Irish Government Economic and Evaluation Service, IGEES. It last did so in 2016 with projections up to 2027. Can the Minister speak to the validity of the projections for 2017, 2018 and 2019 where there was a €436 million to €440 million range? Were they accurate? Does the Minister acknowledge that an updated analysis is needed considering how much has changed since the projections were made in 2016? Does he agree that the number of Departments used as a barometer should be increased from three? I am conscious of what the Irish Fiscal Advisory Council, IFAC, said about Government projections, that they were not credible. This would be a means by which that credibility could be somewhat restored.

The Deputy is correct that the last time the matter was looked at was in 2016. It estimated the additional cost of demographics was an average of €435 million annually from 2017 to 2021. We do plan to examine it again. I intend that a paper on this will be published as part of our 2019 spending review.

I am not sure whether there is currently a case for the study to be broadened beyond the three Departments, the main reason being that those tend to be the three Departments which are most affected by demographic change. The one area we do need to examine is the Department of Children and Youth Affairs as its expenditure is affected by the scale of the population and its youth.

I welcome the Minister's commitment to bring forward a paper to consider renewing the study and examining it afresh, considering changes since 2016, especially in the context of a possible crash-out Brexit. There is a contention that the fiscal space of €600 million in coming years could be eaten up by demographics alone. We need the Minister to clarify this as soon as possible.

I ask that a review would consider broadening the scope from the three Departments which the Minister is correct in saying are the most pertinent, but they are not the only ones which can be affected. He mentioned one and there may be others.

Will he tell the House if the figures were correct, and if not how far off they were over the last three years? If they were not correct, why was this? IFAC has argued the figure is far greater.

The Deputy asked about the effect of this on budgetary resources in future. I do not believe the figures will have an effect on our figures for budget 2020. Our challenge is that over time, the gradual change in our population may have a very big effect on budgets in the medium term, specifically what will happen as the population gradually gets older and the impact that might have on the Department of Health in particular. There will not be such a change in that trend that it will affect our position next year but it is something the House will have to take into account for future years because of the good things that are happening here with people living longer.

I will take the Deputy's comments on expanding beyond the three Departments on board. I think it will have greater relevance in the medium term. It is something we can consider.

I believe the figures we have used on demographics to date have been accurate, however we must continue to evaluate this and the effect that a growing population has on the Department of Health and the kind of pressure that its services are under.

As the Minister mentioned health, I refer to a response he gave me recently on foot of the current figures and the 10% increase year-on-year which he acknowledged must be addressed as soon as possible. It appears his policy in that regard is to find resources from other areas to meet that demand. That is not the case in capital expenditure, as we discussed earlier in relation to broadband or the national children's hospital because, as the Minister said, projects may only be delayed. However, we know the Minister must find €200 million next year for projects which were delayed this year, which only compounds the issue year-on-year. Eventually someone will be left holding the parcel, but it appears that the Minister is intent that it not be himself.

I acknowledge his commitment on the demographic figures published in the paper, their validity to date, and the improvements that can be made in the future.

The Deputy referred to a question I dealt with in the House yesterday on the Department of Health. To give that figure more context, it must be acknowledged that up to the end of April, health expenditure was very much in line with what it had been budgeted for. However, there was a change in May which had an effect on the year-to-date figure. I am engaged in forming a view on what will happen at the end of June, which we will know in the next week and a half, and whether there are any changes or measures which need to be put in as a consequence.

The Deputy referred to our capital ceilings. I have just had a big debate on the national broadband plan. That must be viewed in the context of the fact that the additional funding we have needed to find for current expenditure in the Department of Health has been significantly bigger than any of the figures we have debated this morning concerning capital projects. This is why IFAC was so critical of that development.