Oireachtas Joint and Select Committees

Wednesday, 22 November 2023

Committee on Budgetary Oversight

Existing Levels of Service Costs: Discussion (Resumed)

Professor Michael McMahon:

I believe we agree it should be available. When we produce our stand-still reports, it is actually very simple for us to do the breakdown. This is because we have separately modelled demographics. I am not claiming every demographic forecast is perfect but demographics comprise one of the easiest things in the world to forecast because people get older by a year each year. Knowing how the population blocs will move through is quite easy. The harder part is mapping how this will translate into price and spending pressures, but again there are historical experiences that one can work off across different types of budgets. Some areas, like health, are very sensitive to groups in the older age range.

Again, we can track that. Once we have done so, we will have a number that makes up the standstill cost related to demographics. The harder part, although theoretically simple, is to split out the price pressures. Once an assumption is made as to how prices will adjust from one sector to the other and apply that to this year's spending, the equivalent amount for the same amount of spending next year can be worked. Once those are combined, it is quite easy. The process we have for calculating standstill costs, which we outlined in the opening statement, makes that disaggregation very transparent and easy to do. Part of our mandate is to consider the process by which the Government sets budgets. We should come to the same conclusion. The output should be that we get these numbers out of the Government budget easily. Our deeper question is around the process by which we come to the ELS numbers that makes it hard to make that split. The answer we would get is that they come up through negotiation and decisions.

Comments

No comments

Log in or join to post a public comment.