Oireachtas Joint and Select Committees

Wednesday, 21 September 2016

Committee on Budgetary Oversight

Current and Capital Expenditure: Minister for Public Expenditure and Reform

2:00 pm

Photo of Paschal DonohoePaschal Donohoe (Dublin Central, Fine Gael) | Oireachtas source

I thank the committee for inviting me here to discuss the economic and fiscal position in the context of budget 2017. The Government and I, as Minister for Public Expenditure and Reform, are very supportive of, and appreciate the need for, the Oireachtas having an enhanced input into discussions on budgetary priorities. It was in this context that I published the mid-year expenditure report in July to provide a starting point for all Members of the Oireachtas on budget priorities and to highlight issues for discussion.

I know the committee has had the benefit of meeting a number of experts to discuss the current fiscal position, and I look forward to hearing from the members and discussing with them the main priorities for budget 2017. I know that yesterday the committee discussed revenue matters with the Minister for Finance, Deputy Michael Noonan, and the broader macroeconomic environment. Allow me to highlight some of the main points of the spending figures for budget 2017.

As members are aware, the summer economic statement envisages that day-to-day departmental spending on delivering public services will increase by €1.3 billion to €53.1 billion. It also foresees capital investment increasing by €400 million to give a total capital envelope of €4.4 billion. This will provide for continued investment in our schools, health care facilities and transport network among other things. It also allows us to invest more in housing to address the very serious pressures that exist there. This combined increase of €1.7 billion means total spending will rise from just under €56 billion in 2016 to more than €57.5 billion next year. As set out in the mid-year expenditure report, this compares with a figure of €53.1 billion in 2014. That reflects the expenditure reductions required to repair our public finances due to the terrible economic circumstances we found ourselves in. This is not to say that we can return to the old ways of previous Governments. A key approach has to be to target investment in front-line staff with a laser-like focus on reform and value for taxpayers’ money.

While I am always aware of how much more investment is needed in this area, I am glad to say the State now employs more than 66,000 teachers, 10,000 doctors and 41,000 nurses in our education and health sectors alone, all up very significantly on 2013. This increased investment has come hand in hand with more reform and a focus on excellence in public service delivery. For example, the allocation this year of €500 million to the Department of Health to deal with its funding needs and issues was associated with an accountability framework for the acute hospital sector to help ensure sustainability for our health system in future years. Similarly, the publication last week of the Action Plan for Education and the plans to raise pupil retention rates in DEIS schools to the national norm show how reform and targeted improvement is key to our approach.

My primary focus in the approaching budget is to ensure public services can be delivered in a sustainable manner that is compatible with our obligations under the Stability and Growth Pact. As I referenced earlier on, the total expenditure for next year will be almost €56 billion. As well as focusing on enhancements to services brought about by incremental increases, we need to continue to focus on how we can get more out of what we are spending. As the committee will be aware, budget discussions are under way with all of my colleagues in Government. There are many issues and matters that are still open for discussion and that will be resolved in the coming weeks.

There are numerous competing demands for resources across our public services where genuine need exists for additional funding and resources. For example, I note that the committee in a number of its previous meetings has discussed investment in capital expenditure. The key focus in this area should be in identifying and supporting the projects that give the best value to the taxpayer and that can contribute to the development of a truly cohesive and fair society. It will be a challenging climate in the coming weeks in which to formulate a budget and, of course, difficult decisions will always be required.

In my short opening statement - I understand the Chairman wants more time for questions and answers - I have laid out the key figures in expenditure as I see them. I am here to answer the questions of the committee on any matters I have raised.

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