Written answers

Tuesday, 19 January 2010

Department of Finance

Public Sector Expenditure

9:00 pm

Photo of Paul GogartyPaul Gogarty (Dublin Mid West, Green Party)
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Question 230: To ask the Minister for Finance the course of action recommended by the European Central Bank regarding the measures that need to be taken to reduce our borrowings by €4 billion in 2009, in terms of taxation policy, public sector bill, social welfare bill; and if he will make a statement on the matter. [48370/09]

Photo of Paul GogartyPaul Gogarty (Dublin Mid West, Green Party)
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Question 232: To ask the Minister for Finance the reason the cost of borrowing would increase under the agreement with the European Central Bank if action were not taken on reducing the social welfare and public sector bills, as opposed to a general increase in taxation; and if he will make a statement on the matter. [48372/09]

Photo of Brian Lenihan JnrBrian Lenihan Jnr (Dublin West, Fianna Fail)
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I propose to take Questions Nos. 230 and 232 together.

The Government has set out a multi-annual framework to restore sustainability to the public finances and to reduce the General Government Deficit to below 3% of GDP by end-2014. Over the course of 2008 and 2009 the Government has already taken significant action on curbing expenditure and raising revenue. Budget 2010 represented a further phase in the consolidation of the public finances and as I outlined in my statement on Budget day, taking account of the fact that there had already been tax increases in the previous two budgets, a limit had been reached and job creation would be impacted by further increasing the penalty on work and investment. Consequently, Budget 2010 delivered an adjustment of €4 billion (21⁄2% of GDP) for 2010. The adjustment mainly focused on reducing expenditure, including measures to further reduce the public sector pay bill, reduce Social Welfare spending and also to reduce other Departmental spending including an adjustment on capital expenditure.

The measures taken to date by the Government, including those in Budget 2010, have been welcomed by the EU Commission and the European Central Bank.

On foot of these measures it is forecast that the General Government Deficit will stabilise in 2010 at the 2009 level. Failing to stabilise the deficit in 2010 and to progressively reduce it to below the Stability and Growth Pact limit by 2014 would necessitate further increases in borrowing. This would in turn lead to an unsustainable rise in our debt servicing costs. Debt servicing costs have a first call on available resources, therefore an increase in these costs impacts on the resources available for other priorities. This serves to underline the ongoing importance of the corrective measures to be introduced in the period to 2014 and the Government is determined to take the necessary action as set out in Budget 2010.

Photo of Paul GogartyPaul Gogarty (Dublin Mid West, Green Party)
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Question 231: To ask the Minister for Finance the cost of the public sector and social welfare sector as a proportion of the overall State bill; and if he will make a statement on the matter. [48371/09]

Photo of Brian Lenihan JnrBrian Lenihan Jnr (Dublin West, Fianna Fail)
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I take it that the State bill referred to is gross Voted current spending. The Public Service pay bill is estimated at €18,675 million in gross terms for 2010, or 34% of gross Voted current spending. Social Welfare expenditure, net of pay, is estimated at €20,879 million or 38% gross Voted current spending.

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