Bernard Durkan (Kildare North, Fine Gael)
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17. To ask the Minister for Public Expenditure and Reform the degree to which he remains satisfied that the economy continues to recover within the parameters of public expenditure and reform requirements; if he has identified particular issues likely to require attention in this regard; and if he will make a statement on the matter. [18709/17]

Bernard Durkan (Kildare North, Fine Gael)
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The purpose of this question is to elicit information on the extent to which public sector reform and the curtailment of expenditure continues to feature in the monitoring of each Department's budget, and the degree to which it is expected to achieve targets.

Paschal Donohoe (Dublin Central, Fine Gael)
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Sustainable public finances are essential for the continued progress of our country. The careful management of how we spend the taxpayers' money has played a vital role in stabilising our public finances, with the underlying Government deficit for 2016 estimated to come in below 1% of our national income.

The Deputy will be aware that the economy continues to improve. The Central Statistics Office figures show the economy grew by 5% last year and unemployment fell to 6.4% in March.

Improving budgetary conditions in recent years have allowed the Government to allocate additional resources towards its emerging needs, with Government expenditure increasing on average by approximately 3% per year since the end of 2014, with the prospect of continuing that rate of growth into the coming years.

Departments are managing the figures so far this year inside available resources. We have resources for next year, which the Minister, Deputy Noonan, emphasised again today and on which I made a number of points during the day, but once we pay for the full year cost of our social welfare changes and honour commitments on tax reform, the net amount of resources available to the State are approximately €500 million inside what is defined as fiscal space. That means we will need to make very careful choices regarding how we spend that money next year.

It strikes me that if we consider where our economy is now, in 2007 we had 2.1 million people at work. In 2017, we will have 2.1 million people at work. In 2007, we had tax revenue of €47 billion. In 2017, the corresponding figure is €51 billion. In many cases, therefore, our public finances and our labour market are now back to where they were a decade ago. Our deficit and borrowing requirements are not back to that point yet but in other areas the economic indicators are back.

We have a clear choice ahead of us. We know what happened to the economy after 2007. We saw the huge damage that was inflicted on our country and the pain caused. To make sure we do not go through that again, we need to be sensible about the way we increase expenditure in the coming years, accompany that with reform to make sure we spend money better and then make wise choices regarding the way we manage tax in our country. If we can do that, the prospect of being able to increase spending by 3% each year and accompany that with reform year after year will offer our country a great chance to deal with the issues Deputies raise in this House every day.

Bernard Durkan (Kildare North, Fine Gael)
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I thank the Minister for his comprehensive reply. Does he remain satisfied about the ability of each Department to work within its budget to the extent required, given the existing competing demands and those that are likely to emerge during the year?

Paschal Donohoe (Dublin Central, Fine Gael)
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Yes, I am, but it is a continual area of real pressure that my colleagues, in responding to the different issues they face in their Departments, must do that within their expenditure ceilings. They and their Departments are fully committed to doing that but a real risk we face in light of the economic fork in the road at which we find ourselves is that each day different expenditure needs are called for of this Government. Week after week it is asked to spend more money in different areas, and the areas change week after week. We need to ensure that the loser in all of this is not the taxpayer through commitments being made to expenditure that end up being unaffordable with our current levels of taxation. The taxation environment is changing. It could change further as a result of what might happen with Brexit, yet we have political party after political party calling for more money to be spent in particular areas or services to be delivered and arguing that they can be achieved at no cost. That is simply not possible.

As we move into the second half of this year in particular, this will be an area in which we will need to make clear and sensible choices. I will do my bit in this regard and I hope the House will do the same.