Update: Fiscal and Economic Constraints on Economy – Public Expenditure and Reform 6th November, 2014

 
  To ask the Minister for Public Expenditure and Reform the extent to which he and his Department continue to monitor the impact of fiscal and economic constraints imposed throughout the economy in the course of the economic downturn with a view to identifying specific targets for amelioration as part of the planned economic recovery; if he anticipates the further softening of measures taken at the beginning of the downturn; and if he will make a statement on the matter.
 
REPLY.

 The banking crisis  in 2008 and  subsequent recession  had  a profound  impact on the public finances necessitating the implementation of significant expenditure reductions over a six year period.

Gross voted expenditure has been reduced from its peak of €63.1 billion in 2009 to €54.5 billion in 2013.   This represents a reduction of approximately 13 ½ per cent between 2009 and 2013.    The gross voted expenditure allocation for  2014  is €53 billion.

The implementation of these  expenditure adjustments  has contributed towards  a  radical improvement in the sustainability of the public finances and  has been delivered through the efforts of all Departments and their agencies to seek savings, pursue efficiencies, and manage within constrained budgets, often while meeting increasing demands for the public services they deliver.

Only now, after 6 years of fiscal consolidation, is our economy beginning to recover, with this economic recovery leading to an improvement in the fiscal outlook. Becasue of this,  the Government can now achieve the key budgetary objective of bringing the deficit below 3% of GDP in 2015 without having to make further cuts to spending.   Indeed, in the recent Budget we were able to provide for some targetted spending increases for areas of priority.   The Comprehensive Expenditure Report 2015 – 2017, published on Budget day, shows that total gross  voted expenditure for 2015 will be  €53.6 billion, which is  an increase of  €0.6 billion over the  allocation in the 2014 Revised Estimates.

When  implementing  expenditure reductions, the Government’s priority has at all times been to protect our society’s most vulnerable and support economic recovery to the greatest extent possible. In line with this priority, the increase in expenditure in 2015 is targeted at critical areas in Social Protection, Health, Education,  and Housing, with capital investment targeted at providing more homes to those in need of support, and investment in vital infrastructure to underpin future economic growth.

My Department, through the implementation of successive Public Service Reform Plans has focused on the rationalisation of public sector bodies, implementation of shared services across Government Departments, increased evaluation of expenditure policies and programmes, and numerous other productivity-enhancing measures.  This work will contionue to ensure the ongoing delivery of expenditure efficiencies.    

As outlined in the Comprehensive Expenditure Report, it is intended that expenditure will increase by further amounts in 2016 and 2017 to meet service pressures.  The level of increases will be determined at that time taking into account our economic growth  and our continued requirement to reduce the deficit and meet the requirements of the Stability and Growth Pact.  

Our challenge as a Government over the coming years will be to ensure that the progress made in returning stability to the public finances is not undone by unnecessary profligacy. Decisions regarding the unwinding of measures taken during the fiscal crisis will be taken with due regard to the resource constraints which persist.   We must use our recovery wisely  through retaining and  augmenting the benefits of improved efficiency, increased productivity, and enhanced fiscal discipline.