Ms Niamh Callaghan:

I thank the Chairperson and the committee for the invitation to attend the meeting today to provide an update on budget 2023 and to assist the committee as part of its post-budget examination. Today I am joined by three colleagues from the Department of Public Expenditure and Reform, Ms Jenny Connors, Dr. Patrick Moran, and Ms Caroline O'Loughlin, alongside colleagues from the Department of Finance.

The medium-term expenditure framework, published in the summer economic statement for 2021, outlined the strategy to set core expenditure growth rate at sustainable levels of approximately 5% per annum and to provide for ongoing improvements in public services. Developments in 2022 have altered the economic landscape significantly. As part of the this year's summer economic statement, the growth rate for expenditure in 2023 was adjusted upwards. The Government’s objectives for budget 2023 are: to continue to invest in public services and infrastructure through core expenditure without further adding to inflationary pressures; to provide a comprehensive response to the cost-of-living pressures for households, businesses and wider society; and to ensure sufficient resources to respond to external challenges, including Covid-19, Brexit and the Ukrainian humanitarian response.

Budget 2023 allocated €90.4 billion in gross voted expenditure for next year. This is made up of €74.3 billion in core current expenditure for the delivery of public services, €11.6 billion in core capital expenditure as set out in the national development plan, and €4.5 billion in non-core expenditure.

Budget 2023 contains a significant response to support households, public and community services and businesses with inflationary pressures. This includes both once-off and permanent measures, including a €2.2 billion winter cost-of-living package for households with three energy credits for all households and a series of additional social protection and education payments. In addition, a Christmas bonus will be paid to eligible social protection recipients in 2022. In recognition of the unprecedented rise in energy bills, Government is also making available €340 million in 2022 to provide further support to public and community services. The Government is also introducing a €200 million Ukraine emergency response scheme to support businesses.

Budget 2023 also includes a number of core permanent spending measures, focusing on cost of living, with an estimated value of €1.3 billion, including a €12 weekly social protection rate increase for working age and pension payments and an increase in the universal subsidy on the national childcare scheme.

Chapter 2 of the Budget 2023: Expenditure Report sets out an analysis of the impact of the various cost-of-living, tax and social protection measures. Households are estimated to record an average gain in weekly disposable equivalised income of 3% as a result of budget 2023, with the overall impact being strongly progressive. The disposable income of those in the first three income deciles is estimated to increase by an average of 5.2%. This demonstrates the important role of social protection measures at the lower end of the income distribution.

I shall turn now to budget day publications. Budget 2023 saw the development and publication of key budgetary documentation such as Budget 2023: Expenditure Report. This document sets out the public expenditure strategy, expenditure allocations by Vote and the Estimates for public services. This year the report included detail regarding cost-of-living measures and non-core funding required to respond to external shocks. A series of additional analytical papers were also published this year, including Budget 2023: Forecasting Live Register Recipients and Expenditure, and a paper on the use of carbon tax funds. In addition to these publications, The Budget in Brief: A Citizen's Guide to Budget 2023 was published. This provides a high level overview of the budget decisions in a clear and accessible format.

It is useful to consider the range of budgetary documents alongside the budgetary reform initiatives as part of a whole-of-year budgeting process. These initiatives place an emphasis on broadening the approach to how public expenditure is appraised, implemented and reviewed across Departments. This is also alongside examining the impact of public expenditure among different cohorts of society and on the different types of objectives we want to achieve. It is with this more complete type of understanding that policymakers can work towards the achievement of value for money in the context of the entire budgetary process and enhance the impact of these policies and programmes. The range of budgetary reform initiatives include the public spending code, the national development plan, performance budgeting, equality budgeting, green budgeting, well-being budgeting and the spending review process.

A range of papers and strategies are produced throughout the calendar year, including the public service performance report, which was published in May, the National Economic Dialogue 2022 held in June, the summer economic statement and mid-year expenditure reports published in July, the spending review papers, which are generally published in two tranches in August and in September, the budgetary publications which I have previously referred to, and the Revised Estimates Volume in December. This demonstrates the breadth of information feeding into the preparation of the budget and the ongoing management of public expenditure in a planned, balanced, and evidence-informed manner.

I thank the committee for the opportunity to address it and I look forward to answering members' questions.