Patrick O'Donovan (Limerick County, Fine Gael) | Oireachtas source

As I said to Deputy Conway-Walsh earlier, the Minister, Deputy Donohoe. is out of the country and I will take all of the questions. A 5% growth rate for core expenditure was set out in the 2021 summer economic statement as part of our medium-term expenditure strategy. This strategy aims to align core voted expenditure growth with the trend growth rate of the economy as measured by GNI*. This seeks to ensure a level of public spending that is sustainable, allowing us to provide consistent investment in delivering public services and infrastructure.

The significant increases in investment of recent years are delivering valuable infrastructure across sectors, including housing, transport, education, climate action and others. This improves the quality of life in Ireland and invests in the future.

Expenditure for non-core, temporary measures to address the impact challenges, such as the Covid-19 pandemic, Brexit, cost of living measures and Ukraine-related spending, are dealt with separately from expenditure on the delivery of core programmes and infrastructure. This careful and planned management of the economy and public finances has allowed the Government to provide increased resources for core public services, investing in quality of life in Ireland to support a strong, fair and equal society into the future, and to deliver significant and essential infrastructural projects through the national development plan. These projects will support this country’s climate ambitions, employment prospects, economic development and regional growth and put in place considerable supports to provide assistance to our people and businesses.

In setting expenditure parameters, however, the Government is aware that our fiscal strategy also needs to adapt to the evolving nature of our economy. Accordingly, last summer, the Government took the decision to increase the growth rate of public expenditure above 5% for 2023 to take account of higher than anticipated inflation. This short-term adjustment balances the two criteria underpinning the overall fiscal strategy. On the one hand, it provides additional resources to continue a steady upward trajectory of investment to support citizens through income supports, access to services and building infrastructure capacity. On the other hand, the upward adjustment is below the headline inflation rate to limit the risk of expenditure policy feeding into an inflationary spiral. In tandem with the non-core temporary expenditure response, this adjustment provides a balanced response to the challenging economic environment.

The stability programme update was published last month. This set out voted expenditure projections out to 2026, on a technical, no policy change basis. On this basis, the voted expenditure ceilings reflect the 5% growth rate anchor for core spending that has been set out under the medium-term strategy.

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