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Spending Review

Background to Review

On Budget Day last year, Minister Donohoe announced that a review of day-to-day Government spending would take place in advance of Budget 2018. The 2017 Spending Review is the first in a series of rolling, selective reviews, which will cover the totality of Government spending over a three year period to 2019. The results of the first year of this new approach are published with the Mid-Year Expenditure Report 2017.

Context for Review

This is a new approach to reviewing expenditure, which has been tailored to reflect the current fiscal and economic landscape, while also reflecting the lessons learned from previous review rounds.  Each year, there is an increasing tendency at budget time to focus on the ‘additional’ incremental increases available, or the so-called ‘fiscal space.’ By systematically examining the totality of spending with regard to the principles of efficiency, effectiveness, sustainability and impact, this tendency can be countered.

The papers prepared for the Spending Review cover a wide range of policy areas and account for a significant proportion of current expenditure. Work on the 2017 Spending Review began in January of this year and 18 papers have been prepared.

Key Objectives of Review

The Spending Review process operates within the reformed expenditure framework that has been developed since the crisis. This new system is designed to replace periodic, sharp fiscal retrenchments with an ongoing emphasis on prudent and sustainable growth in public expenditure. It was introduced to better manage the efficient and effective allocation of expenditure, while respecting the necessary parameters set by overall budgetary targets. The Spending Review complements the operation of the MTEF in better reconciling these ‘top-down’ and ‘bottom-up’ objectives over the medium term.

Output of the Review

In terms of the output from the 2017 Spending Review, there are two main elements:

  • key sectoral trend analyses; and
  • individual topic papers.

Spending Review: Key Sectoral Trend Analyses

The first part of the Review involved an analysis of broad trends in Government expenditure over the past twenty years.  This demonstrated the significant increase in investment over the period with expenditure tripling from €18 billion in 1996 to over €56 billion in 2016. This investment has resulted in an expansion of frontline services, increased provision of social welfare supports and significant developments in infrastructure.

Following on from this overview, a more in-depth analysis was undertaken at a sectoral level. This included a review of the long-term expenditure trends in each sector, exploration of changes in key performance indicators, a brief discussion of the outcomes achieved and an overview of emerging expenditure pressures/demands.

Spending Review: Topic Papers

Following on from the high-level trend analysis, the individual topic papers were selected to reflect key strategic/priority areas of expenditure, both in terms of the quantum of expenditure and the significance of the emerging policy challenges.

Given the diversity of policy areas analysed in the Review, the papers differ reflecting the data available, the stock of relevant analysis already developed on the topic and the type of questions posed in the analysis. In addition, papers also differed by adopting varying analytical approaches, including baselining and trend analysis, investigation of cost drivers, forecasting of future expenditure pressures, process checks and consideration of policy reform options and their potential impact on the future evolution of the given policy area.

Results of the Spending Review

The published output of the Spending Review is intended to provide a robust evidence base to inform discussions between stakeholders ahead of the Estimates 2018 process and improve the options for decision by the Government for Budget 2018 over the medium-term. This will continue into the future on the basis of the analysis and results generated in the further two years of the current three year spending review cycle. From a longer-term perspective, the analysis also supports multi-annual planning, improving sectoral planning and resource allocation while respecting overall fiscal targets.

The Spending Review framework and approach taken is in keeping with a range of other reforms measures undertaken to embed and improve the use of evaluation in policy making across the public service, including the establishment of the Irish Government Economic and Evaluation Service, the development of the performance budgeting initiative and the Public Spending Code.

Spending Review 2017 Papers

Tracking Trends in Public Spending 2017

An Assessment of the Rationale, Efficiency and Targeting of Supports in Enterprise Ireland

Climate Change Related Research and Funding in Ireland, 2010 – 2015

Current Expenditure on Housing Supports

The Central Votes: Spending Trends and Key Drivers

Analysis of Further Education & Training Expenditure by Education Training Boards

Special Educational Needs Provision

The Irish Government Economic and Evaluation Service (IGEES): Selection of IGEES Output

Environment Fund

Defence Expenditure

Public Service Obligation (PSO) Funding for Public Transport

Challenges to Investment in Policing: A Public Expenditure Perspective

Review of Social Protection Employment Supports

Acute Hospital Expenditure Review

Future Sustainability of Pharmaceutical Expenditure

Evaluating Further Education and Training Expenditure: Strategic Pilot Initiative Report (SOLAS)

Department of Jobs, Enterprise and Innovation: Review of Capital Expenditure on Research, Development and Innovation (2000 – 2016)

Courts Service Reform (Courts Service)

Disability Allowance Expenditure Drivers

Disability and Special Education Related Expenditure

Targeted Agricultural Modernisation Schemes II