Pearse Doherty (Donegal, Sinn Fein)
Link to this: Individually | In context | Oireachtas source

41. To ask the Minister for Public Expenditure and Reform his plans to deal with capacity pressures within the public sector in the context of the Government's announced tax cut programme. [19752/16]

Paschal Donohoe (Dublin Central, Fine Gael)
Link to this: Individually | In context | Oireachtas source

The Government recognises that economic and social progress go hand in hand. Therefore, the Programme for a Partnership Government sets out a clear strategy for increasing spending in a sustainable way built on stable revenues. A key focus of the Government is on providing the best environment for job creation. Unemployment has fallen from a peak of over 15% to 7.8% in May this year. The Government's ambition is to help create 200,000 new jobs by 2020, including 135,000 outside of Dublin.

The Summer Economic Statement (SES) estimates that there will be cumulative net fiscal space of €11.3 billion over the period 2017 to 2021. The distribution of fiscal space is consistent with commitments in the Programme for a Partnership Government including:

- At least a 2:1 split between public spending increases and tax reductions.

- To increase the level of current expenditure from its 2016 base level by at least €6.75 billion by 2021.

- To deliver an additional €4.0 billion in cumulative capital expenditure over the period 2017 to 2021. In fact €5.1 billion will be delivered.

- To provide for a rainy day fund. It is proposed to contribute €1 billion per annum to a rainy day fund from 2019 onwards.

Delivering public services needs people and as regards staffing, in both the 2015 and 2016 Budgets, provision was made for significant additional staff in the Health Sector; more teachers, Special Need Assistants and Resource teachers in the Education sector; and additional Gardaí. Overall staffing levels increased by some 7,000 (2.3%) in the Public Service in 2015 and is projected to rise by a further 8,600 (2.8%) this year.

During this time, as the Deputy will be aware, the moratorium on recruitment has been replaced with delegated arrangements which give Departments greater flexibility in managing staffing resources, including recruitment and promotion. Central to the arrangements are Departments staying within pay bill ceilings. We will of course continue to grow our public services over the medium term but the delegated arrangements will ensure that we do so at affordable and sustainable levels.

Investment in public infrastructure is vital for the medium and long-term competitiveness of the economy as well as for underpinning social cohesion through provision of vital services to the public. The public capital plan published last September set out an exchequer spend of €27 billion on capital investment over six years. Under the Plan key investments will be made in transport, education, health and enterprise. In every part of the country, these investments will boost our competitiveness, create jobs, and upgrade our social infrastructure. If we add investment from the wider semi-state sector, and off-balance sheet mechanisms such as PPPs, total state investment amounts to €42 billion over the period. The SES sets out total extra spending on capital investment of €5.1 billion over the period of the plan, an increase of 18.5% on the previously proposed Exchequer component of the plan. The allocation of this additional funding will be determined as part of the mid-term review of the Capital Plan in 2017 and will take account of key emerging priorities.

Mick Wallace (Wexford, Independent)
Link to this: Individually | In context | Oireachtas source

42. To ask the Minister for Public Expenditure and Reform if he is satisfied with the current proposed ratio of two to one public investment to tax cuts as set out in the summer economic statement, or if he believes that spending the entire fiscal space for 2017 on public investment is a better option in the long run; and if he will make a statement on the matter. [19730/16]

Paschal Donohoe (Dublin Central, Fine Gael)
Link to this: Individually | In context | Oireachtas source

The Summer Economic Statement (SES) recognises that economic and social progress go hand in hand. Only a strong economy supporting people at work can pay for the services needed to create a fair society. A key focus of the Government is on providing the best environment for job creation. Unemployment has fallen from a peak of over 15% to 7.8% in May this year. The Government's ambition is to help create 200,000 new jobs by 2020, including 135,000 outside of Dublin.

The SES estimates that there will be cumulative net fiscal space of €11.3 billion over the period 2017 to 2021 with a 2:1 ratio between increased spending on public services and tax reductions. For 2017, this results in the allocation of €0.67 billion of total net fiscal space of €1 billion to expenditure increases.

However, this is the total additional spending planned for 2017. Some increases are already included in the base expenditure for 2017 arising from certain demographic pressures in Health, Social Protection and Education, the carry forward of Budget 2016 measures and the Public Capital Plan. When added to the €0.67 billion fiscal space, the full increase in gross voted current expenditure is €1.3 billion (2.5%) between 2016 and 2017 with gross voted capital expenditure increasing by €0.4 billion (10.5%).

The Deputy may also wish to note that the allocation to expenditure increases in 2017 of €0.67 billion set out in the SES exceeds the totality of the fiscal space amounting to €0.5 billion identified for 2017 at the time of Budget 2016 in October last.

The Government's intention is that by setting out the broad parameters of economic and fiscal policy over the medium term, the SES will help frame discussions with the Oireachtas on budget priorities for 2017.