Mr. Seamus Coffey:

The point was made about the social protection budget being largely static over the past number of years without evidence of the decrease as a result of falling unemployment. Overall, the unemployment component is a relatively small part of the social protection budget. It is probably in the region of 20% to 25%. Pensions are by far the largest part. There are other areas such as child benefit and disability. The unemployment component has fallen significantly but that has been offset by increases elsewhere in the number of recipients. The number of people aged over 66 has increased by around 20,000 per annum as life expectancy has increased. There have been increases in rates for the past number of years. The unemployment element of it is falling but there have been demographic pressures elsewhere that have seen the number of recipients elsewhere rising. Policy decisions and increased rates have meant the effect is roughly neutral. The unemployment component is falling. Other elements are causing it to rise. We would not necessarily expect to see the overall social protection budget fall, given the demographic and policy decisions that have been taken.

On the rainy day fund and corporation tax, we have continued to see corporation tax surge. It was pointed out by Deputy Michael McGrath that there were further increases in corporation tax yet the contributions to the rainy day fund are not changing. They are about saving some of these windfalls in preparation for negative events that might happen in the future. However, at present, the design of the rainy day fund does not appear suitably dynamic to take into account the windfall revenues we are receiving now and the ability to spend it in the future. It has not changed even though corporation tax receipts have increased.

On some of the other overruns mentioned and why we treat the Supplementary Estimates for education and justice differently, if we look at education and justice, much of them are driven by issues in forecasting the number of people who are retiring. If one looks at the Estimates, by and large they are for superannuation and the lump sum payments made to public servants when they retire. This is expenditure that will happen anyway but if more people retire in a particular year, the amount of those lump sum payments will be greater. Essentially all it does is drag spending that would happen in the future into the current year.

The issue with health is somewhat different. It is not based on an increase in the number of people retiring, it is based on an increase in the number of people being hired. That spending becomes permanent and long-lasting. There are differences. In education, justice and other areas such as Army pensions, it looks like there are repeated Supplementary Estimates to address failures to correctly forecast retirements throughout the year. Perhaps there are issues there with how those forecasts can be assessed. The impact they have on public finances is not as severe as in the current spending increases in health.