Written answers

Thursday, 23 September 2021

Department of Public Expenditure and Reform

Public Expenditure Policy

Photo of Bernard DurkanBernard Durkan (Kildare North, Fine Gael)
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217. To ask the Minister for Public Expenditure and Reform the extent to which he expects to rely on reform as a means of meeting public expenditure challenges ahead; and if he will make a statement on the matter. [45866/21]

Photo of Bernard DurkanBernard Durkan (Kildare North, Fine Gael)
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231. To ask the Minister for Public Expenditure and Reform the degree to which value for money targets continue to be met by various Departments; and if he will make a statement on the matter. [45880/21]

Photo of Michael McGrathMichael McGrath (Cork South Central, Fianna Fail)
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I propose to take Questions Nos. 217 and 231 together.

Over the last number of years, a range of reforms has been implemented in order to enhance Ireland’s budgetary framework and ensure that expenditure is managed in an efficient and effective way. The intention of these reforms is to increase transparency around the budgetary process and to facilitate meaningful dialogue around key elements of the Budget and on what is being achieved with public funds.

Central to these reforms is the ‘whole-of-year’ budgetary framework. This refers to an ongoing consideration of budgetary priorities throughout the year, rather than focusing budget discussions only around Budget Day. An important element of this is the publication of a range of documents at key points in the year to enhance engagement on relevant budgetary issues.

Improving and supporting the evaluation capacity within Government Departments has also formed an important part of the reform programme. Supported by the establishment of the Irish Government Economic and Evaluation Service, this has led to the development of a number of additional processes and reports to support the budgetary framework.

A key objective of these reforms is to support sustainable growth in public expenditure while delivering improvements in public services. Pre-Covid, the average annual growth rate in spending on day-to-day services over the five year period 2015 to 2020 was projected at 4%, with the emphasis over this period being on catch-up growth in capital spending and sustainable growth in current spending targeted at key frontline services. This approach delivered a positive fiscal position as we entered the crisis caused by the pandemic, with a General Government surplus being recorded in 2019.

Looking forward, the strategy outlined in the SES provides for core expenditure growth of just over 5 per cent per annum on average over the period to 2025. This level of expenditure growth is prudent, sustainable and in line with the estimated trend growth rate of the economy.

The increases over the period to 2025 would see overall core expenditure grow from €70 billion pre-Covid as set out in REV 2020, to €93 billion in 2025. This significant level of expenditure on services and investment in infrastructure requires that there is a continued focus on ensuring that this expenditure delivers value for money and improved outcomes. Sustainability in expenditure not alone requires that the overall level of expenditure remains affordable over the longer term, but also that it delivers sustainable improvements in public services and infrastructure. This requires an ongoing focus on the quality of expenditure.

In light of this, the Programme for Government commits to continuing reform and improvement of the budgetary process, including an enhanced focus across Government on issues of performance and national well-being. In implementing further reforms, my Department will look to build on the budgetary reforms already in place and the significant work on public service reform already completed. Adopting this approach will support stronger dialogue on key elements of budgetary policy and will help to facilitate the continued development of budgetary decisions, consistent with the maintenance of stable public finances.

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