Pearse Doherty (Donegal, Sinn Fein)
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361. To ask the Minister for Public Expenditure and Reform the steps he will take to ensure that medium-term projections such as those in the stability programme update do not understate likely future expenditure pressures, such as public pay increases or inflation; and if he will make a statement on the matter. [15736/16]

Paschal Donohoe (Dublin Central, Fine Gael)
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The fiscal forecasts in the Stability Programme Update for the period 2017 to 2021 were set out on a technical, no-policy change basis, consistent with the approach adopted in the Budget 2016 book published by the Department of Finance in October last year.

The amounts included in both the Budget 2016 book and the April 2016 Stability Programme Update in respect of voted expenditure were guided by the Ministerial Expenditure Ceilings for the period to 2018 published in the Expenditure Report 2016. These ceilings took into account certain of the key non-discretionary drivers of expenditure including: projected expenditure pressures in Health, Education and Social Protection arising from demographics; and the projected carry over impact of certain Budget 2016 measures including additional pay costs arising under the Lansdowne Road Agreement. The expenditure ceilings also reflected agreed policy in relation to the multi-annual capital investment framework as set out in the Public Capital Plan. The expenditure ceilings do not take into account the impact of general inflationary increases.

An effective public expenditure framework has several key elements in addition to multi-annual ceilings including:

- Regular Comprehensive Reviews of Expenditure that take into account whether or not the programmes are delivering, changes in government priorities, and proposals for new expenditure programmes

- Reviews of expenditure programmes being informed by relevant evaluations of the effectiveness and efficiency of programmes utilising the Public Spending Code and the Irish Government Economic and Evaluation Service;

- Performance Budgeting with a focus on the impact of public services;

- Greater engagement with the Oireachtas in reviewing the expenditure challenges and priorities.

The Summer Economic Statement (SES) to be published this month will provide an updated assessment of the macro-economic and fiscal prospects, including the medium-term fiscal framework.  The proposed Mid-Year Expenditure Report to be published in July will also inform expenditure priorities and challenges in advance of Budget 2017.

In looking at medium term expenditure projections, it is appropriate to utilise all elements of the public expenditure framework to ensure that the available resources are directed to effectively deliver key social and economic priorities. This must be enabled through a continuing emphasis on value-for-money and effectiveness, enabled by public service reforms and the focus on outputs provided by performance budgeting initiative.