Ruairi Quinn (Dublin South East, Labour) | Oireachtas source

I thank the joint committee for giving me an opportunity to engage in this discussion. I acknowledge the presence of the new Fianna Fáil spokesperson on education, Deputy Charlie McConalogue. I look forward to working with him and Deputy Jonathan O'Brien of Sinn Féin. If they would like to receive a briefing or any information from the Department of Education and Skills in their own right, they are perfectly entitled to receive it.

I thank the Chairman for inviting me to discuss with the committee the position of the Department in advance of budget 2013. When I presented the Department's Estimates for 2012 to the select committee in April this year, I said engagement with the committee was an important element of the "commitment in the programme for Government to open up the [Estimates and budgetary] process to wider public and parliamentary scrutiny." I also said, "I do not profess to have a monopoly of knowledge" in constructing Estimates that keep within the very tight Expenditure parameters set in the Government's comprehensive expenditure review of December 2011. Sadly, these parameters are necessarily tight, if we are to emerge from the current international programme of financial support and regain our economic sovereignty.

While the Government is ultimately responsible for preparing the Estimates of expenditure for 2013, I am happy to take advice on how we can go about this task with regard to educational expenditure. Therefore, I look forward to discussing these matters with the committee and receiving any input members may make in this regard. I hope the material my officials have provided for the committee will assist the discussion.

I propose to elaborate only briefly on the slides that were provided with the briefings, with the focus being on current expenditure. Committee members will also have received copies of the report produced by the Department as part of last year's comprehensive expenditure review process. The comprehensive expenditure review, CER, process has provided the basis for the medium-term expenditure framework for the period 2012-14. It set expenditure ceilings for each Department for that period. The task facing me and my Department for 2013 is to identify and implement the further savings measures that are necessary to keep expenditure within the CER ceiling as well as containing any further upward pressures, specifically demographic pressures on expenditure that may arise in the meantime.

I also mentioned in April that the 2013 Estimates for the Department will be based fully on the new performance budgeting format that was agreed by Government. The performance budgeting approach, by including specific information about the outputs and outcomes that will be delivered with the Estimates funding, alongside the more traditional information on expenditure, is designed to increase the focus on what is actually being delivered with public funds. This is to be welcomed.

Committee members will see from the first slide that budget 2012 shows the identification of savings measures amounting to approximately €132 million on the Education and Skills Vote in 2012, increasing to €206 million in 2013. These measures, which are summarised in the briefing material provided, none of which were easy to implement, did two things. First, they met the comprehensive expenditure review target of €76 million in savings for 2012, which were necessary to live within the voted current expenditure ceiling of €8,242 million.

Second, they also provided savings to fund important new initiatives and offset costs emerging on various areas of the Vote. These new initiatives included the literacy and numeracy strategy in schools, junior certificate reform and the roll-out of the 100 megabyte broadband to second level schools. The main upward pressures emerging were costs under the redress scheme as a result of the surge in applications received by the new closing date of last year. However, notwithstanding the saving that budget 2012 measures will deliver, one will see that in order to manage within a current expenditure ceiling of €8,165 million for 2013, I am obliged to identify a further set of measures to yield €77 million in savings next year.

This is before taking account of any further upward pressures on expenditure that may emerge in 2013. There are some indications that our allocation for teacher pay costs may be under pressure. A further area of uncertainty for 2013 will be the position regarding superannuation expenditures. Projections for superannuation expenditure in 2012 are putting very significant upward pressure on this year's allocation, due in large part to the increased number of retirements that took place in the early part of the year before the 29 February 2012. The Department is working hard to identify measures that can offset this upward pressure and the situation must be monitored very closely again for next year.

Finding further current expenditure savings next year of €77 million and containing upward pressures will be a significant challenge. The slides provide some idea of the scale of this challenge. Almost 78% of current expenditure of the Department is on pay and pensions, which covers the pay costs of just under 95,000 staff and goes towards the superannuation costs of approximately 38,000 pensioners.

In a situation where there is limited scope to reduce pay expenditure, especially given the continuing upward demographic pressures that have been summarised in the briefing material, much of the focus falls on those areas of non-pay expenditure on the Vote. The main components of non-pay expenditure are set out in the briefing material which also shows that effectively all elements of this non-pay expenditure have taken a hit as part of the range of budget savings and efficiency measures introduced over the past number of years by this and by the previous Administration. As I already indicated, few of these measures have been implemented without pain. I am very conscious of the need as far as possible to protect front-line education services, particularly for the most disadvantaged.

I must, however, accept the reality, as we all do, that failure to meet public expenditure targets now will have much more serious implications in the years ahead, including for our continued ability to maintain high quality education services into the future. It is certainly not the most favourable backdrop against which to formulate an education budget but we have a duty to act today in order to secure tomorrow.

Aside from the pressing need to make savings in day-to-day expenditure, the Government is also committed to reducing the numbers employed in the public service. I am increasingly of the view that this is perhaps the biggest challenge for our education system in the coming years. Our education workforce overwhelmingly consists of teachers, lecturers, special needs assistants and support staff. The challenge will be to deliver the same level of public services with fewer staff. In addition, the demographic boom in children which our country is experiencing at present will mean the demand for education is only going to increase.

As a social democrat, I did not enter politics with an ideological ambition to reduce the level of services in our education system. However, if we did not have a cataclysmic economic crisis in Ireland, we would still be facing some very difficult choices in education spending in the years ahead. We have a growing demand for services and self-evidently we have limited resources. It is a national tragedy that the grossly negligent handling of our country's public finances by previous Fianna Fáil Governments have added to our list of woes in this regard.

When I was Minister for Finance in the 1990s, I firmly believed we had to have a mixed social economy which was competitive, where we lived within our means, but where we delivered public services that helped and delivered for all in our society. That challenge was ignored for 14 years but it did not go away. We have to make up for lost time during a very difficult and painful balance sheet recession and where our membership of the eurozone has removed some of the tools we had in the past to restore our economic fortunes.

Though I am a heartfelt advocate of Keynesian economics, we simply cannot continue to borrow each year significantly more than we take in through revenue. It is not a sustainable model and if unchecked will have much more far-reaching consequences in the years ahead.

The process of shaping the budget for 2013 is under way. I will be bringing proposals to Government as to how my Department can deliver an Estimate for next year that will remain within the expenditure target set under the comprehensive expenditure review. I am exploring with officials all areas of expenditure and drawing on the CER report which was produced by the Department last September in this regard. Deputies and Senators will recall that last December I tried to give the education system some certainty by announcing some multi-annual reductions to allow schools and colleges and parents and students to plan for the years ahead. I have no choice but to maintain the reduced capitation grants announced for primary and post-primary schools and pay and non-pay funding for higher education institutions.

Similarly, in relation to the teacher allocations for small schools with four teachers or less, I announced a three-year phased adjustment to the pupil-teacher ratios last December.

The four-year plan of reductions in language support teacher numbers announced by the previous Fianna Fáil-Green Party Government in 2010 will unfortunately continue. Despite these reductions there still remains a challenge of finding €77 million of savings in 2013 as well as containing the costs of emerging upward pressure. It is important to remember that without the measures I have referred to the target required for next year would be even bigger.

Aside from these measures, I realise the Government must strive to be fair and to ensure the burden is shared equally. It is important for social solidarity that those who have the most provide a bigger share of the contribution to our recovery. I am sure this is a sentiment that all members present will agree with. Such is the scale of the challenge that everyone must make some contribution and the debate should be based on the acceptance of that fact.

I would strongly encourage each and every member to read the outputs from the comprehensive expenditure review process in the coming weeks and months. They list a wide range of options for current expenditure savings that are open to the Government to consider. Much as I wish, there is no magic list of easier alternative savings hidden somewhere in Marlborough Street.

Chairman, I am happy to hear the views of members today and I look forward to having a constructive, frank and rigorous debate on the decisions that must be taken.