Paschal Donohoe (Dublin Central, Fine Gael) | Oireachtas source

I thank the Deputy for the question. In the period since 2020, the Government has had to negotiate a number of exceptional challenges, from Brexit to the Covid pandemic to the war in Ukraine and the subsequent impact on energy prices. All of these challenges required a response from the Government which had significant cost implications for the Exchequer. As a matter of policy it was decided to separate funding to address these challenges from the day-to-day costs of Departments. The funding for these external challenges was termed non-core expenditure.

Non-core expenditure has proved an effective approach to expenditure policy as it provided flexibility to respond to external shocks while protecting and enhancing core, day-to-day investment in public services and increasing the level of investment to meet our infrastructure demands

The amount of non-core expenditure has fallen from a high of more than €15 billion during the pandemic in 2020 to €4.5 billion in 2024. I continue to liaise with line Ministers to unwind such expenditure when it is no longer needed, the fall in Covid expenditure and the winding down of Brexit-related expenditure being key examples.

Budget 2024 made provision for €4.5 billion in non-core expenditure. This consisted of €2.6 billion to deal with consequences of the war in Ukraine, approximately €1.3 billion for legacy Covid issues in the health area, and other capital projects and EU funding requirements. This 2024 allocation is broadly in line with the provisional outturn for 2023.

In the stability programme update published last week, the Minister for Finance and I agreed to include a contingency reserve of €4.5 billion in each year from 2025 to 2027 to reflect our recent experience with non-core expenditure. The adequacy of this will be assessed closer to the budget and then reviewed in the context of the summer economic statement.

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