Oireachtas Joint and Select Committees
Wednesday, 30 November 2022
Committee on Budgetary Oversight
Fiscal Assessment Report: Irish Fiscal Advisory Council
Neasa Hourigan (Dublin Central, Green Party)
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I might ask my questions now. Helpfully, Mr. Barnes referred to the 5% spending rule. I was interested in one paragraph in the council's opening statement, which I hope we can discuss in more detail. It states:
This assumes that the Government sticks to its 5% spending rule as planned. However, we estimate that current spending increases in 2024 and 2025 under those plans would not fully accommodate demographic or price pressures, falling short by €800 million per year on average. This implies that there is no space for additional spending without finding offsetting resources elsewhere.
I have a number of questions about that. What does €800 million relate to in terms of the 5%? What percentage of a shortfall are we talking about there? I am intrigued by the 5% rule insofar as we put it in place and then immediately broke it, but I get the impression from the opening statement that the witnesses are very much in favour of that rule. I would like to talk a little more about how we would make that more binding or whether it is a legislative mechanism. I refer not to the policy but to the mechanism by which we would make it a more binding rule. The final sentence of the paragraph relates to offsetting resources. I am not going to use the word "austerity", but are we talking there about reducing spending to hit the 5%? What does that mean?