Dáil Éireann Debate, Thursday - 2 May 2024
145. Deputy Bernard J. Durkan asked the Minister for Public Expenditure, National Development Plan Delivery and Reform if his Department has identified any particular tendencies in the context of public spending, current or capital, including any inflationary elements which may require any corrective measures; and if he will make a statement on the matter. [20136/24]
Amharc ar fhreagraThe Government’s approach to public expenditure policy is set out in the Medium Term Expenditure Strategy (MTES). The objectives of the MTES are twofold, to ensure that the level of core expenditure growth is sustainable long-term and that investment in expenditure protects and delivers improvements to public services. This framework must be responsive to the economic landscape and is reviewed annually as part of the whole of year budget process including the Summer Economic Statement and the Estimates process.
In recent years the Government’s public expenditure policy has allowed for a proactive and balanced approach to fiscal policy while also being flexible in addressing economic trends and unforeseen events such as the Cost of Living Crisis driven by heightened inflation.
A dual pronged approach was taken by the Government where non-core expenditure, ostensibly temporary in nature, was used as part of the response to key economic and social challenges while the core expenditure continued to be assessed in terms of changes to existing levels of service and particular demands within each Department.
This approach of separating core and non-core expenditure enabled the Government to:
• Ensure adequate provision of supports while protecting core day-to-day expenditure and investment;
• Provide transparency on the costs of the challenges;
• Facilitate withdrawal of supports when no longer required by ensuring it does not become embedded in core permanent expenditure.
This has been largely successful, with non-core spending reducing year-on-year since the start of the pandemic. Non-core expenditure has reduced from some €15 billion at the height of the pandemic to a provision of just over €5 billion this year, including the final tranche of benefits from the Cost of Living package in the Budget 2024.
Harmonised Index of Consumer Prices (HICP) is a measure inflation in the Eurozone. The Draft Stability Programme Update, published last week forecasts a decline in the HICP from 2023 and out to the medium term (2.1 per cent in 2024 and 2025, and 2.0 per cent in 2026 and 2027).
Along with the Minister for Finance, I continue to monitor macroeconomic and expenditure developments throughout the year.
