Paschal Donohoe (Dublin Central, Fine Gael)
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I have noted the Fiscal Assessment Report prepared by the Irish Fiscal Advisory Council. The views expressed in these reports are an important contribution to the development of an evidence-informed approach to budgetary policy.

The report records that the Irish economy remains remarkably resilient and, in particular, that employment and taxation levels remain strong. These outcomes reflect the impact of a deliberate and planned approach by Government that is focused on investment in better public services and delivering our economic, social and climate ambitions.

With regard to the scale of Budget 2024, core expenditure in 2024 will increase by 6.1% next year. This level of growth is above the 5% anchor reflecting the elevated inflationary environment. We are seeking to smooth the impact of higher prices on public services and supports. The Government sought to strike a balance between protecting investment in public services and helping to mitigate the cost of living pressures while also ensuring sustainability of the public finances.

In relation to transparency, a wide range of budget material is published by my Department throughout the year. This provides information on emerging expenditure trends and future budgetary plans. The classification of core and non-core expenditure has been an important element of setting budgetary policy since 2020. Non-core expenditure provides flexibility to respond to external shocks (including the pandemic, war in Ukraine, cost of living pressures) while protecting core, day-to-day investment in public services and infrastructure. Critically non-core expenditure is reducing over time. In 2020 non-core expenditure was €15.4 billion reflecting scale of pandemic supports put in place for households and businesses. It will fall to €4.5 billion in 2024 and has been refocused to deal with emerging issues including supports for over 100,000 Ukrainian arrivals.

My Department continues to review its processes and will consider the findings set out in the IFAC report. However, the Government must balance medium term expenditure sustainability with the demands of different sectors, which can be challenging. We also have to recognise that estimates of existing levels of service, particularly in the health sector, are complex and have to reflect the many different drivers of expenditure including economic factors. The definition of stand-still costs used by IFAC differs significantly from Government’s Existing Level of Service. There are a number of technical differences which make a direct comparison difficult. In addition it is important to fully take into account important considerations in the drivers of demographics (e.g. economic cycle effects), productivity and efficiency measures on a service by service area basis.

Finally, it is important to recognise the very significant investment in our Health service over recent years where the overall allocation has increased by €7.7bn between 2019 and 2024 with the annual budget now reaching €22.8 billion.