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

I thank the Deputy for his questions. I will start with the first. We make a provision for demographic expenditure in the outlook for the State. The clearest example of that is where we are in 2017. We have a figure laid out of €900 million that Deputy Brophy quizzed me about earlier, a portion of which is for demographics. That is then laid out in the summer economic statement across the forthcoming years in terms of how we expect that to roll out.

Where there is a point of difference between myself and IFAC is on the role of indexation and the automaticity of future expenditure increases. I believe that making expenditure increases automatic in terms of income payments or other payments that we make available to people will take us down a path which leads to the kind of difficulties that we are trying to get out of at present. It must be a political choice, for which the Minister of the day is accountable to the Oireachtas, as to whether we make changes to income payments to citizens. The moment it becomes automatic, it reduces the ability of a Government to make changes in expenditure based on its political views. It also creates the kind of sustainability problems that we are doing our best to get out of. Furthermore, in terms of the reform agenda on which the Deputy has challenged me, if we end up in a place where there is an expectation of expenditure automatically increasing in particular areas, year after year, it becomes more difficult for the government of the day to deliver the kind of reform the Deputy wants. I take a different view of the concept of indexation and automaticity which has, in turn, influenced the difference between IFAC and myself regarding some of the figures.

I totally accept that we need to budget for demographics in the future, which we have done. The broad point that the Deputy made at the start of his contribution contains a lot of truth. The increases in expenditure to which we are referring here, which will be 3% to 3.5% for next year, are a fraction of how much money we are already spending. Much of the debate tends to be on the increment as opposed to the stock of public expenditure. That leads on to the next point that the Deputy put to me regarding where I believe too much money is being spent. Every time I sit down with a Government colleague and every time my officials sit down with their counterparts from other Departments, our approach is to get them to show us how the money they have is delivering a better return. Every discussion I have with colleagues centres on that point. Very rarely do the meetings that I have with my colleagues, particularly those I am having at present, begin with me asking them to explain how additional money will deliver additional services. I begin by asking them to tell me how the funding they have can go further and, in particular, how the demographics and capital allocations that many Departments assume they will get can go further. All of the discussions begin thus.

On the question of which Departments are spending too much, I believe every Department could do more with the funding available. That is the attitude I adopt with all of my colleagues because I believe we must have a relentless approach to efficiency. While great improvements have been made in recent years in that area, we must keep on challenging ourselves to do more.

Deputy Donnelly said that there are areas in the Department of Health in which we could make efficiency savings. I ask him to give me the detail on that. If one looks at that area, one will see that the majority of expenditure is on wages. The money goes to people we employ. I would be very happy to hear the Deputy's observations on how we could achieve more efficiencies in that area than we are achieving currently.