Oireachtas Joint and Select Committees

Wednesday, 13 June 2018

Committee on Budgetary Oversight

Pre-Budget Scrutiny and Budget Priorities: ESRI

2:00 pm

Dr. Maev-Ann Wren:

I thank Deputy Broughan for his questions. To address first of all his question about the wide range in the demographic projections, they reflect varying assumptions on three factors, namely, life expectancy, fertility or births and, most importantly, migration. The higher figure, 1.1 million, above all reflects assumed much greater inward migration. This would be predominantly in the middle-age cohorts, that is, between about 15 and 44. What we can say we know with some certainty, however, is that the people who will be 80 and 85 in 2030 are in the country now. Therefore, between those two projections there is actually very little difference. It is in and around 90% for 80 years and over and nearly 100%, nearly a doubling, for 85 years and over. This rapid ageing that we project is in a sense a certainty. One could say that the higher demographic growth overall projection is an optimistic one because it implies that we would have the younger people to staff the services, join the labour force and pay taxes and so on to support the needs of the older population. Given our ageing, therefore, we need to hope for greater population growth in a sense.

In answer to the Deputy's question about what this means for future budgets, we are not in a position to answer that yet. What I can say to him is that regarding the projections of demand we have done, which in the opening statement were expressed from 2015 to 2030, annual average increases are about 1% to 3% per annum across services. In fact, for those services used more by older people, such as long-term care and home care, the figure is 2% to 3%. For other services it is 1% to 2%. When one considers increases in budgets overall, this probably sounds like a sustainable path but of course that is volume and the other component of expenditure is price. We are currently working on developing our model to be able to project expenditures. This will involve looking at issues such as potential pathways for public sector pay, for skill mix and for pharmaceutical prices. We hope to be in a position in a year's time or two years' time to come back and to talk about these.

To make a further point on this, do we have a sense of where we are building from? This work has not been done before in Ireland. When the EU ageing reports, which project the effects on expenditure out to 2050 and which were referenced earlier by IFAC, were published, Ireland was one of three countries that could not supply an age cost profile - in other words, how much was being spent on health services by age within the population. Ireland, Greece and Romania were the three countries that could not supply this because our data have been so poor. Part of the big project in which we have been involved with the support of the Department of Health and with a great deal of involvement with stakeholders such as the HSE involves trying to improve the data sources in order that we can project with some certainty. For instance, were one to use those EU ageing reports, the Irish projections are based on the assumption that Ireland's expenditure profile by age is the same as the EU average, which is a big reach.

Finally, regarding the Deputy's question about waiting lists, we have done our level best with the data available to include in our projections of demand what it would take to meet not only the effects of demographic growth and ageing but also current unmet demand. We have used waiting lists where those data have been available and, where available, survey evidence on unmet need expressed by people who return the surveys.