Regina Doherty (Meath East, Fine Gael) | Oireachtas source

I thank the Chair and committee members for the invitation to appear before them.

I am seeking a Supplementary Estimate of €100 million for 2019. The purpose of this Supplementary Estimate is primarily to fund the Christmas bonus for Vote 37 social assistance recipients. The Christmas bonus will be paid next week.

I was pleased that we could restore the Christmas bonus last year, and I was very happy to announce that, despite the current climate of uncertainty, the Christmas bonus will again be paid at a rate of 100% this December. The payment recognises the needs of people who are long-term financially dependent on their social welfare payment for all or most of their income, such as pensioners, people with disabilities and carers. It will benefit some 1.2 million long-term social welfare recipients and is estimated to cost approximately €279 million overall. It is likely to be spent in local communities, contributing to local communities, towns and villages during what I hope will be a happy Christmas season.

This cost is broken down into nearly €123 million for Vote 37 recipients and over €156 million for Social Insurance Fund recipients. The Social Insurance Fund is meeting the cost of the bonus being paid to people on contributory payments such as the contributory State pension, invalidity pension, and so on. Accordingly, this element of the bonus does not impact in any way on this Supplementary Estimate.

In contrast, the bonus that is paid to people in receipt of payments from voted schemes is met entirely by the Exchequer. As the committee knows, the bonus is not included in the original Estimates for the Department and, unless savings are made that will meet the entire cost, a Supplementary Estimate is required each year in order to ensure that the bonus gets paid.

This year, I have again included an additional table, beginning at page 3 of the committee’s brief, which provides the outturn position on the various schemes prior to the payment of the bonus. The Chairman had previously suggested that this approach would be of assistance to the committee and I know it helped last year so we should continue in that vein every year.

Income from PRSI receipts during 2019 will result in Social Insurance Fund income of an estimated €11.6 billion. This will be €393 million, or 3.4%, ahead of the 2019 Revised Estimate and will be €1 billion, or 9.5%, ahead of the position in 2018.

Expenditure on Social Insurance Fund schemes and administration, including payment of the Christmas bonus, is expected to cost approximately €10 billion. This is €220.5 million, or 2.2%, above profile, of which €156.5 million is due to payment of the Christmas bonus. Even with the payment of the Christmas bonus to social insurance schemes, the surplus of income over expenditure in the fund in this calendar year is expected to be around €1.6 billion. This is due mainly to the higher PRSI receipts from increased numbers of people at work. The accumulated surplus in the fund at the end of the year is estimated to reach €3.9 billion.

While it is, of course, welcome to see the fund in a healthy surplus, it is worth remembering, particularly in these uncertain times, that this surplus can become a deficit very quickly. A similar surplus was exhausted within two years when the recession had a significant impact on income to the fund.

Overall expenditure on the Department’s schemes, services and administration in 2019 is expected to be €20.8 billion. This will be €311.7 million, or 1.5%, more than provided for in the original 2019 Revised Estimates. As I mentioned earlier, some €279 million of this is due to payment of the Christmas bonus.

Total expenditure for the Department, which includes expenditure from the Vote and from the Social Insurance Fund, comprises overspends on some schemes and underspends on others.

On the social insurance side, there has been a higher than anticipated expenditure on the State pension (contributory) but a lower than estimated expenditure on illness benefit. On the Vote, there has been a higher expenditure than profiled on illness, disability and carer's payments and lower than estimated expenditures on working age employment supports. Taken together, and excluding the Christmas bonus, departmental expenditure on schemes and services is expected to be €32.3 million ahead of the profile, which is less than 0.2% of its expenditure.

The live register is expected to average at approximately 192,200 in 2019, which is a reduction of more than 29,000 on the average for 2018. While the live register is not designed to measure unemployment, this decline reflects the positive trends in the labour market generally. The numbers in employment continue to grow and the number of people unemployed fell by 11% over the year to quarter 3. The latest data shows the unemployment rate has fallen below 5%. The live register is now under 180,000, the lowest since early 2008. These positive trends are very welcome and in line with the Government's pathways to work objectives.

The 2019 Supplementary Estimate referred to the committee and the briefing provided to members lists the schemes for which additional sums are being sought, as well as the schemes that are behind profile. The amount of the Supplementary Estimate is derived by estimating the outturn across all voted schemes, which includes underspends on some schemes and overspends on others, and adding in the cost of the Christmas bonus. As the members are aware, almost all of my Department’s expenditure is demand-led. Changes in the economy, labour market and society, as well as the demographic make-up of the population at a particular point in time, all impact the expenditure across the Department. An estimate of expenditure for any scheme for the following year is published in December as part of the annual Revised Estimates programme. The individual estimates are constructed on a scheme by scheme basis, using data on trends in recipient numbers, average payment values and other relevant information that is available at the time the estimate is calculated.

As I mentioned earlier, it is appropriate to note that the outturn position for the Department, in the absence of the payment of the Christmas bonus, would be €20.5 billion, or 0.2% above the Estimate. I am sure the committee will agree that this provides a great degree of assurance that the Estimates process in my Department works very well and provides insofar as is possible given the large number of variables involved a clear and accurate picture of projected expenditure. Trends can and do change over the course of each year, however, resulting in expenditure being higher or lower than provided for in the Estimate. Actual expenditure on most schemes will never be precisely on target because of these factors. The extent of any overspend or underspend only becomes fully apparent at the end of the year when the outturn for the year has been confirmed.

I hope that my opening statement, together with the briefing material provided, has given the committee a clear overview of where we expect to be at the end of the year. I look forward to members' questions and, hopefully, positive comments.