Brendan Howlin (Wexford, Labour) | Oireachtas source

The key fiscal objective in budget 2015 is a general government deficit of 2.7% of GDP. Achieving this target will see Ireland exit the excessive deficit procedure. Thereafter fiscal policy will become subject to the preventative arm of the Stability and Growth Pact, SGP.

Each country has a medium-term budgetary objective, MTO, for its fiscal policy. For Ireland, the MTO is to achieve a budget balance in structural terms. Under the preventative arm of the SGP, a member state which has not yet reached its MTO is required to make sufficient progress towards its achievement every year. The expenditure benchmark is a complementary measure, designed to assist fiscal adjustment towards the MTO and to ensure that expenditure grows at sustainable levels thereafter. The arrangements will require that the growth in the level of spending is kept in line with the level of growth in the economy, while also ensuring that we progress towards our medium-term objective of achieving a balanced budget.

The constraints imposed by the SGP will require the continued prioritisation of expenditure to ensure that essential public services are effectively delivered. Choices will need to be made to ensure that funding continues to be directed to deliver education to our young people, provide essential social supports and health services and address emerging priorities such as meeting social housing needs. Protecting expenditure in these areas has been a key priority for the Government while implementing its structural consolidation. Sustainable growth in expenditure also requires that there is a continued focus on public service reform to increase productivity, deliver efficiencies and improve outcomes for service users.

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