Paschal Donohoe (Dublin Central, Fine Gael)
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I thank the Cathaoirleach Gníomhach and the committee for the invitation to attend the meeting today to discuss the Supplementary Estimates for 2023. The Revised Estimates for 2023, published last December, set out planned expenditure of €91.1 billion. This funding was put in place to support the delivery of better public services, living standards and infrastructure for the people of Ireland. Departmental allocations across a broad range of services, schemes and programmes were agreed based on the best available information.

However, in any year developments may arise within Departments which require additional funding. Budgeting over recent years has taken place in a constantly changing economic and social context. This has included a pandemic, the outbreak of war and high inflation. These challenges have required a responsive approach from Government, both in the formulation of budgetary policy in our permanent Estimates process and as events have unfolded.

I am pleased to report the continued strength of our economy despite the global economic developments. Modified domestic demand, which is an important indicator of the performance of our domestic economy, is holding firm on the back of significant growth in recent years. Our jobs market is strong. The performance of tax revenue has improved, with cumulative end-November tax receipts, published yesterday, €4.5 billion or 5.8% ahead of last year.

Most significantly, inflation continues to fall, with price increases of 2.3% recorded in the 12 months to November. This is far lower than the 9% recorded in the 12 months to November 2022. The development will ease pressures on households and businesses in the coming period. Overall, this strong economic performance enables us to comprehensively respond to the range of externally driven challenges while also protecting investment in our day-to-day services and infrastructure plans.

I now wish to turn to the specific detail of today’s meeting, that is, the Supplementary Estimates process. It provides a mechanism to change the allocation of funding to a Vote and can be technical or substantive in nature. The technical Supplementary Estimates, which have no additional net funding impact other than a token amount of €1,000, arise where funding is available within a Vote to redistribute to areas with increased costs. Where any expected savings are not sufficient to cover the cost of the additional demands within a Vote, a substantive Supplementary Estimate may be required to provide additional funds.

In 2023, a total of 31 Supplementary Estimates were required, eight of which were technical. The remaining 23 were substantive, representing an additional €6 billion in gross expenditure or €5.5 billion in net expenditure terms. This significant level of Supplementary Estimates required arose due to a range of in-year developments, including our response to cost-of-living challenges, the higher demand for the provision of supports for those arriving into Ireland, and additional demand facing our public services, particularly in health and education.

The Revised Estimates of 2023 originally set out a contingency of €1.2 billion. This funding was utilised to fund the €1 billion Supplementary Estimate for the Department of Children, Equality, Disability, Integration and Youth in September. The rest of the substantive Supplementary Estimates necessitated an increase of €4.8 billion in the Government expenditure ceiling, which now stands at €95.9 billion. The actual end-year expenditure position for 2023 will be published in the December fiscal monitor report. The final outturn will be further refined and published in our appropriation accounts.

The largest Supplementary Estimate requirement related to the Department of children at a cumulative value of €1.26 billion. This will bring the total allocation for 2023 to €7.1 billion. The additional funding is required to support policy areas, including Tusla, disability services and the International Protection Accommodation Service, IPAS. The largest area is providing accommodation supports for people fleeing the war from Ukraine. Demand across these policy areas has increased greatly in recent years, driven by global events such as the pandemic and the war in Ukraine.

Since the invasion of Ukraine, the UN Refugee Agency estimates that more than 94,000 people have arrived in Ireland seeking humanitarian assistance, mainly women and children. The number of Ukrainians in State-supported accommodation has increased from 54,000 at the end of 2022 to more than 74,000 currently. At the same time, the numbers in IPAS accommodation have also continued to increase from 19,000 at the end of 2022 to 26,000 currently. This means the State is now providing accommodation for 100,000 people seeking refuge, which is an unparalleled figure in the history of the country. The work of all involved in supporting them must be commended.

With regard to the Department of Health, the required gross Supplementary Estimate in 2023 is €1,034 million, which is a 4.8% increase over the initial allocation. This is driven by a number of factors, including increased demand and activity, especially in the acute hospital sector, ongoing Covid-related expenditure in acute and community settings and other demand-led areas, such as primary care reimbursement, as well as State claims and pensions costs. The Government fully acknowledges that providing health services, particularly in the acute sector, is complex. There are a number of factors impacting on both demand for services and the configuration of service provision. The 2024 allocation for health recognises that the health services continue to experience a challenging and uncertain environment, especially in the aftermath of Covid-19.

In addition to significant core funding, the Department of Health has been allocated €1 billion in non-core funding to fund the post-pandemic escalation of health sector costs as a result of increased activity and demand across acute hospitals. This high level of resourcing represents an increased allocation of non-core funding. It is an additional €500 million euro of expenditure beyond the summer economic statement, SES, parameters, reflecting the prioritisation of health by the Government. The overall health allocation has now increased by more than 50% from 2019 to 2024, increasing by €7.4 billion. It is critically important that expenditure management and the overall control environment continues to improve in 2024, and better financial governance with regard to this is key.

Other Votes also required significant additional funding. The Department of the Environment, Climate and Communications received €900 million to fund three electricity credits over the course of winter 2023-24. The Department of Social Protection €1.13 billion Supplementary Estimate will fund cost-of-living lump sum payments for a range of recipients alongside the Christmas bonus. A further €800 million was provided for the Department of Education to support further progress on the school building programme and additional staffing costs alongside cost-of-living supports and the welcoming of 17,000 children from Ukraine into the school system.

Overall, the level of Supplementary Estimates has been higher in recent years. This coincides with the outbreak of the pandemic and the introduction of non-core expenditure. External shocks, including Covid-19, the war in Ukraine and elevated inflation levels have required a responsive approach to budget policy by Government. These ongoing developments, such as providing accommodation for Ukrainian arrivals and various cost-of-living packages, have necessitated year-on-year changes to departmental allocations.

The Government has signalled our commitment to deliver key public services through this Supplementary Estimates process and through budget 2024. My Department continues to review our expenditure monitoring and management processes to ensure allocations are best informed by the best available information. To that end, regular engagement takes place between my officials and all line Departments to review spending trends. I thank the Cathaoirleach for the opportunity to be here. I look forward to answering the questions of the committee.