Brendan Howlin (Wexford, Labour) | Oireachtas source

I indicated in an earlier response that I welcomed the establishment of the Irish Fiscal Advisory Council, IFAC, which brings an independent expert perspective to assessing fiscal matters. In its recent report, IFAC commented on the demographic pressures on expenditure in the context of the forecasts made in the Spring Economic Statement, SES. As the demographic profile of our population changes, certain sectors, including social protection, health, and education, will face additional demands. In my statement to the House on the SES, I outlined that demographic changes in the health area will cost an estimated €200 million per year over the coming years, the cost of the contributory and non-contributory State pension schemes is projected to increase by €200 million per year out to 2026, and by 2021 we will need an extra 3,500 teachers at primary and secondary level.

However, expenditure demands in other areas are also changing. Key priorities of the Government have been to provide a societal safety net for those who lost their jobs during the economic crisis, with expenditure on live register-related payments increasing significantly in recent years, and to create the environment for a sustainable recovery in employment. Unemployment has reduced from its peak of more than 15% in 2012 to 9.7% most recently. With this recovery in employment, expenditure on live register-related payments has reduced.

The fiscal projections in the spring economic statement for the post-2016 period reflect a no policy change scenario from an expenditure perspective, other than provision being made for an increase of €300 million in gross voted expenditure per annum to offset demographic pressures outlined above in sectors that account for 80% of gross voted current expenditure in 2015. In addition, given the improvements forecast in the labour market, with unemployment forecast to fall from 9.6% in 2015 to 6.9% in 2020, certain live register related savings will make funds available to meet expenditure pressures in other areas. This is the balance we have struck in formulating the statement.

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