Eamon Gilmore (Dún Laoghaire, Labour)
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Question 25: To ask the Minister for Social and Family Affairs if his attention has been drawn to recent figures from the EU showing that Ireland spent just 16% of its GDP on social benefits compared to an EU average of 27.7%; his plans to increase social spending towards the EU average; the estimated proportion of GDP likely to be spent on social benefits in 2006; and if he will make a statement on the matter. [4707/06]

Séamus Brennan (Dublin South, Fianna Fail)
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EUROSTAT, the Statistical Office of the EU, publishes comparisons of social protection expenditure as a percentage of GDP across the EU. This encompasses not only social welfare expenditure but also expenditure in other areas such as health care, social housing, employment support programmes and other social inclusion programmes. The latest such statistics were released on 20 October 2005 and deal with developments up to and including 2002. No comparable figures are yet available for 2003 or 2004.

When examining such data it is important to remember that gross expenditure measures do not take account of social charges or taxes which may be levied on benefits after they are paid, nor do they include transfers made by means of tax concessions, as opposed to direct cash payments. For example, tax relief on contributions towards occupational and private pensions, which are an important feature of Ireland's pension system, is not counted as expenditure.

The EUROSTAT release draws attention to the fact the EU average masks major national differences in the structure of social protection funding, partly related to differing levels of wealth between countries, and also reflect differences in social protection systems, demographic trends, unemployment rates and other social, institutional and economic factors. The level of expenditure is also significantly influenced by the age profile of the population. Ireland, currently with the youngest population in the EU, needs to spend less on pensions and health care-care of the elderly than most other member states. In 2002 social protection expenditure accounted for 27.7% of GDP in the EU-25 countries, compared to 27.3% in 2001. The corresponding ratio for Ireland was 16% compared to 15.3% in 2001.

Social protection expenditure as a percentage of GDP is crucially dependent on the pace of economic growth and the level of unemployment. The statistics show that for the EU-15 countries social protection expenditure relative to GDP had fallen from its maximum share of 28.7% in 1993 until 1999 when it accounted for 27.3%. This was due to renewed GDP growth and slower growth in social protection expenditure, particularly related to unemployment benefits. Ireland's position mirrored that of the EU-15, except that the level of economic growth and the decline in unemployment were much greater in Ireland than in most other EU countries and consequently the drop in the percentage of GDP accounted for by social protection expenditure was greater — from 20.2% in 1993 to 14.7% in 1999.

The fact is that under this Government there has been a sustained and substantial increase in social protection expenditure. The EUROSTAT report states that the increase in Ireland's per capita expenditure from 1998 to 2002, 8.7% per annum on average and the highest of all EU countries, in comparison to that of the EU as a whole, 2.5% per annum, was "particularly pronounced". Moreover, it should be noted that social welfare expenditure will have increased substantially during the three year period 2002 to 2005 — an overall increase of 29 %, which was well ahead of the corresponding increases in prices and in earnings.

As announced in last December's budget, overall spending this year on social welfare will be at its highest ever level, €13.553 billion — an increase of over €1.3 billion from the 2005 level. Figures are not yet available to provide a corresponding estimate of the proportion of GDP spent on social protection programmes in 2006.

This Government will continue to address the scope for further improvements in Ireland's social protection infrastructure, guided by the national anti-poverty strategy, while at the same time continuing to take the measures necessary to maintain economic growth and competitiveness and thereby generate the resources for further social investment.