I thank the Committee for inviting me here to discuss the Revised Estimates for 2017 and the outturn for expenditure in 2016.
As the Committee is aware, this discussion is not simply about numbers. More importantly, it is about the provision of funding to deliver vital public services for our citizens and to invest in infrastructure.
These services are delivered by over 300,000 public servants working in a number of Government Departments and Agencies, a total of 41 Votes which are subject to approval by the Dail.
My last engagement with the Committee was prior to the publication of the 2017 Estimates and I would like to thank the Committee for their valued contribution to that process.
Since Budget time there have been a number of developments that I would like to outline to give a sense of the scale and changes made to the funding of services.
The Expenditure Report 2017 published at Budget time revised the projected total gross voted expenditure for 2016 to €56,149 million, an increase of €310 million or 0.6 per cent.
This reflected additional capital expenditure outlined in the Mid-Year Expenditure Report and provision for a Social Welfare Christmas Bonus less anticipated offsetting savings across Government Departments.
These additional expenditure amounts were reflected in the Supplementary Estimates that were considered and agreed by the Dáil in December.
We operate a cash based system and as you will appreciate, given the scale of resources involved –some €56 billion in 2016 – there are timing and other budget management factors that mean that it is difficult to be precise about the final spending position.
So for 2016, the actual gross voted expenditure outturn for 2016, reflected in the end-December Exchequer returns, is €55,981 million. This is 0.6 per cent lower than the gross expenditure allocation including supplementary estimates – a very minor variation and very similar to previous years.
2017 REVISED ESTIMATES (REV)
Turning now to 2017, the REV 2017 proposes total gross voted expenditure of €58,072 million, an increase of €43 million or 0.07 per cent over the amount set out in the 2017 Expenditure Report 2017. This increase reflected a number of post-Budget technical and policy adjustments.
The increase in the 2017 Estimate over the 2016 Estimate including Supplementary Estimates is €1.7 billion or 3.1 per cent. When the 2017 Estimate is compared with the 2016 outturn the increase is €2.1 billion or 3.7 per cent.
SPENDING AND CAPITAL REVIEWS
Last October, I announced a spending review will take place in advance of Budget 2018. While moderate, sustainable, expenditure growth is now planned over the medium-term, there are increasing and competing public service demands emerging.
The intention is that the spending review process will help to broaden the Government’s options within the budgetary process by creating fiscal space for funding new policies from within existing ceilings through a systematic review of the existing cost base.
In parallel with this process, my Department is continuing its work on planning the Capital Review, the outcome of which is expected to be published alongside the 2017 Mid-Year Expenditure report.
The objective of the Capital Review will be to provide a focused analysis of capital spending and what can realistically be delivered over the remainder of the Plan utilising the additional resources now available.
PUBLIC SERVICE PAY
Finally, I would like to mention the measure announced by Government today to stabilise the Lansdowne Road Agreement following the Labour Court Recommendations on Garda pay.
After discussions with union leaders, I recommended an increase in annualised salaries of €1,000 for the period 1 April 2017 to August 2017 inclusive for those:
- on annualised salaries up to €65,000;
- who are parties to the Lansdowne Road Agreement; and
- who do not stand to benefit from the Labour Court Recommendations issued in respect of the Garda Associations.
This Government believes in the value of collective agreements and is taking steps to support the continued implementation of the Lansdowne Road Agreement until a successor can be negotiated following the report of the Public Service Pay Commission.
A collective approach to public service pay is vital to our national interest as it provides for the stable industrial relations environment which has been a pillar of our domestic recovery and restored international reputation.
Collective agreements deliver public service reform, secure productivity improvements and allow for strong fiscal planning – where pay increases are negotiated fairly and budgeted for on a multi annual basis.
This allows us to balance pay increases in the public service with other social priorities including improvements in housing and health care.
Collective Agreements however are not dead documents or static bargains, they have to be flexible and responsive to events.
The Labour Court Recommendation with respect to Garda pay provided for pay increases for a particular group of public servants. Government had to act to ensure that the benefits of the collective approach were not undermined and the Lansdowne Road Agreement remains in place.
In my opening statement I have outlined:-
- the expenditure outturn position for 2016;
- the Estimates position for 2017; and
- today’s Government’s announcement to stabilise the LRA, which has a continuing key role to play in underpinning the continue sustainability of the public finances.
I have also summarised my Department’s plans for the Spending Review and for the Review of the Capital Plan during 2017.
I look forward to working with this Committee in the coming year and welcome and value the Committee’s input and advice into key expenditure issues.
I am happy to answer the questions of the Committee on the matters I have discussed.