Written answers

Thursday, 4 July 2024

Photo of Alan FarrellAlan Farrell (Dublin Fingal, Fine Gael)
Link to this: Individually | In context

74. To ask the Minister for Finance to provide an update following the publication of the Population Ageing and the Public Finances report; and if he will make a statement on the matter. [28221/24]

Photo of Jack ChambersJack Chambers (Dublin West, Fianna Fail)
Link to this: Individually | In context

Last week my Department published its third triennial assessment of the budgetary costs associated with ageing in Ireland. The key message from the report is that while Ireland’s demographic profile is relatively favourable at present, it is set to age rapidly over the coming decades, bringing us closer to the EU norm. While it is, of course, a very positive development that people in Ireland are living longer, healthier lives, it is important that we understand the significant impact these trends will have on our economy and public finances.

To put the ageing of our population into perspective, Ireland will experience one of the largest proportional increases in the ratio of people over the age of 65 to those of working age between now and 2050. To put it another way, there are currently around 4 persons of working age for each retiree in Ireland, by 2050 the equivalent figure will be around 2.

The effect this will have on our public finances will be two-fold. Firstly, Government revenues will be impacted because they are linked to economic growth. An ageing population will slow growth, as the labour supply expands more modestly and growth becomes increasingly dependent on labour productivity gains.

Secondly, public expenditure will be impacted as demand for age-sensitive areas such as healthcare, long-term care and pensions grows. This will be the most significant channel impacting on the public finances. My Department’s analysis shows that total age-related expenditure is projected to increase by 6 percentage points of national income over the next three decades, the largest increase in the EU.

It is in this context, and to promote intergenerational equity, that the Government is preparing for the establishment of the Future Ireland Fund, which will save a portion of ‘windfall’ corporation tax receipts to help offset some of the costs associated with long-term structural challenges, including an ageing population.

Nevertheless, it is clear that further reforms will be required to fully address the fiscal pressures associated with an ageing population. The alternative to this is to place a significant financial burden on future generations.

Comments

No comments

Log in or join to post a public comment.