• Expenditure Report outlines budgetary approach targeted at delivering steady & sustainable improvements in public services & infrastructure
  • Spending Review focuses on value for money of existing level of expenditure

The Minister for Finance and Public Expenditure & Reform, Paschal Donohoe T.D., has today (Thursday) published the Mid-Year Expenditure Report (MYER) for 2018. The Report, along with the National Economic Dialogue and the Summer Economic Statement (SES), is an integral part of the reformed budget process. The Report reviews the Government’s expenditure position at the end of June and considers the potential impact on the full year position.

The MYER sets out the opening pre-Budget position for 2019, consistent with the budgetary parameters in the SES. A key element of the expenditure strategy for 2019 is the provision of an increase of almost €1.5 billion or 25 per cent in capital investment next year. This reflects the importance of capital spending in mitigating risk and enhancing the growth prospects of our economy.

The Government’s budgetary strategy is focussed on ensuring that steady increases in public expenditure are underpinned by stable and predictable tax revenue. As outlined in the MYER, this strategy requires that the expenditure policy framework ensures consistent evaluation of the effectiveness of existing expenditure, alongside sustainable levels of expenditure growth. Reforms to the budgetary process in recent years seek to embed sound expenditure management practice that maintains a focus on the results being achieved across the public service and the extent to which public spending is delivering on key policy objectives.

Given this context, on Budget Day 2016, Minister Donohoe announced that a review of day-to-day Government spending would take place on a three year basis, out to 2019. The Spending Review 2018 represents the second cycle in this series of rolling, selective reviews, which will cover a substantial majority of current public expenditure over the three year period from 2017 to 2019.

The rationale for the Spending Review relates to the State’s key role in safeguarding the future prosperity and health of its citizens. This is particularly key in how we allocate funding, to ensure that each Government programme is delivering on its objectives and ensuring the best possible outcomes for the money spent. This forms part of the wider public sector reforms that set objectives for improving how Government services are delivered, as part of Our Public Service 2020.

Minister Donohoe said: ‘As set out in the Summer Economic Statement (SES), which was published last month, the public finances are in good health and, with more than 2.2 million people at work, we will broadly balance the books this year. A headline deficit of 0.1 per cent of GDP is being projected for 2019 and the Government, with a focus on how the domestic economy is performing and the challenges that are on the global horizon, has adopted a cautious approach to the public finances, clearly stating that we will not adopt taxation and spending measures that result in a larger deficit than this’.

“Given the uncertainties in the external environment, it is of fundamental importance that the Government ensures ongoing sustainability in the public finances and prioritises expenditure that enhances the resilience of the economy, making us better able to deal with whatever the future holds. There needs to be as much focus on the existing level of expenditure, which amounts to almost €62 billion l for 2018, as there is on the year-on-year incremental increases in spending.

“The Spending Review process allows for an evaluation of existing spending to assess its efficiency and effectiveness in delivering on key objectives. This seeks to reorient the budgetary focus towards the totality of Government spending to ensure that we are improving the outcomes for the people of Ireland and making steady and sustainable improvements in people’s lives”.

The papers published today as part of the Spending Review 2018 cover a broad range of policy areas and account for a significant proportion of current expenditure. The Spending Review 2018 began in December 2017 and 27 papers have been produced by officials across the public service. The input and expertise of the Irish Government Economic and Evaluation Service (IGEES) has been key in delivering such high-quality output as part of the Spending Review 2018.

Minister Donohoe concluded: “The recent budgetary reforms seek to foster a more collaborative response to decision making between Government, the Oireachtas and broader society. The detailed analysis produced during the Spending Review process provides greater transparency on the extent to which spending is delivering improvements in public services for our citizens. This greatly enhances the evidence base for Government when considering budgetary options and provides a basis for further meaningful dialogue and ultimately better decision making.”