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

I thank the committee for inviting me to discuss the Revised Estimates for 2017 and the outturn for expenditure in 2016. As the committee is well aware, this discussion is not simply about numbers. More importantly, it is about the provision of funding to deliver vital public services for our citizens and to invest in infrastructure. These services are delivered by over 300,000 public servants working in a number of Government Departments and agencies, a total of 41 separate Votes which are subject to approval by the Dáil. My last engagement with the committee was prior to the publication of the 2017 Estimates and I thank it for its valued contribution to that process. Since budget time, there have been a number of developments which I will outline to give a brief sense of the scale and changes made to the funding of services.

The expenditure report of 2017, which was published at budget time, revised the projected total gross voted expenditure for 2016 to €56.149 billion, which was an increase of €310 million or 0.6%. This reflected additional capital expenditure which was outlined in the mid-year expenditure report and provision for a social welfare Christmas bonus less anticipated offsetting savings across Government Departments. These additional expenditure amounts were reflected in the Supplementary Estimates that were considered and agreed by the Dáil in December. We operate a cash-based accounting system and, as the committee will appreciate, given the scale of resources involved, which was some €56 billion in 2016, there are timing and other budget management issues that mean it is difficult to be precise about the final spending position. So for 2016, the actual gross voted expenditure outturn is reflected in the end of December Exchequer returns, which is €55.981 billion. This is 0.6% lower than the gross expenditure allocation including Supplementary Estimates and is a very minor variation and very similar to previous years.

I will turn now to 2017. The 2017 Revised Estimates proposes total gross voted expenditure of €58.07 billion, which is an increase of €43 million, or 0.07%, over the amount set out in the expenditure report of 2017. This increase reflects a number of post-budget technical and policy adjustments. The increase in the 2017 Estimate over the 2016 Estimate, including Supplementary Estimates, is €1.7 billion, or 3.1%. When the 2017 Estimate is compared with the 2016 outturn the increase is €2.1 billion, or 3.7%.

Last October, I announced a spending review, which will take place in advance of budget 2018. While moderate, sustainable expenditure growth is now planned over the medium term, there are increasing and competing public service demands emerging. The intention is that the spending review process will help to broaden the Government's options within the budgetary process by creating fiscal space for funding new policies from within existing ceilings through a systematic review of the existing cost base. In parallel with this process, my Department is continuing its works on planning the capital review, the outcome of which is expected to be published alongside the 2017 mid-year expenditure report. The objective of the capital review will be to provide a focused analysis of capital spending and what can realistically be delivered over the remainder of the plan utilising the additional resources now available.

I want to mention the measure announced by Government today to stabilise the Lansdowne Road agreement following the Labour Court recommendations on Garda pay. After discussions with union leaders, I recommended an increase in annualised salaries of €1,000 for the period 1 April 2017 to the end of August 2017, inclusive, for those on annualised salaries up to €65,000, those who are parties to the Lansdowne Road agreement, and those who do not stand to benefit from the Labour Court recommendations issued in respect of the Garda associations.

The Government believes in the value of collective agreements and is taking steps to support the continued implementation of the Lansdowne Road agreement until a successor agreement can be negotiated following the report of the Public Service Pay Commission. A collective approach to public service pay is vital to our national interest as it provides for the stable industrial relations environment, which has been a pillar of our domestic recovery and restored international reputation. These agreements deliver public service reform, secure productivity improvements and allow for strong fiscal planning where pay increases are negotiated fairly and budgeted for on a multi-annual basis. This allows us to balance pay increases in the public service with other social priorities, including improvements in housing and health care. Collective agreements, however, are not dead documents or static bargains, they have to be flexible and responsive to events.

The Labour Court recommendation with respect to Garda pay provided for pay increases for a particular group of public servants. The Government had to act to ensure that the benefits of a collective approach were not undermined and that the Lansdowne Road agreement remains in place.

In my opening statement I have outlined the expenditure outturn position for 2016, the Estimates position for 2017 and the Government's announcement to stabilise the Lansdowne Road agreement, which has a continuing key role to play in underpinning the continued sustainability of our public finances. I have also summarised my Department's plans for the spending review and made reference to the capital review planning for 2017. I look forward to working with all the members of the committee this year and would welcome their input into and questions on any of the issues I have raised.