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Public Expenditure and Reform | Economic Progress and Fiscal Management in Public Expenditure

To ask the Minister for Public Expenditure and Reform the extent to which he remains satisfied that realistic steps in terms of public expenditure and reform are being taken to facilitate economic progress and prudent fiscal management; and if he will make a statement on the matter.

To ask the Minister for Public Expenditure and Reform the extent to which his Department can remain satisfied that public expenditure as announced in Budget 2023 remains in accord with best practice; and if he will make a statement on the matter.

In Budget 2023 I have set out a responsive approach to fiscal policy – investing in the future of our public services and economy while addressing the challenges faced today. I have provided €85.9 billion in core expenditure. This funding will support the sustainable delivery of public services and infrastructure, and invest in the quality of life in Ireland to support a strong, fair and equal society into the future. This expenditure will ensure investment in our public sector workforce, improvements in our public services and investment in digitalisation and climate initiatives.

In addition I have outlined non-core expenditure of €4.5 billion which will provide for the continued support of the economy and society for the external challenges we face. Economic activity rebounded strongly as society reopened following the abatement of the Covid-19 pandemic. However, new challenges have emerged. The cost of living is increasing for many households. The war in Ukraine has meant the provision of significant humanitarian supports. Non-core allocations provide for measures in respect of a continued response to: Covid-19; Ukraine; and Brexit. This approach ensures resources can be provided on a temporary basis to respond to these challenges and then unwound when no longer required.

The Government’s aim is to deliver sustainable public expenditure, and Budget 2023 seeks to balance the need to protect the real value of public services and support citizens without adding further to inflationary pressures.

Sustainable expenditure over the medium-term will be delivered through a Medium Term Expenditure Framework (MTEF) which provides for:

–  Setting the core expenditure growth rate at sustainable levels; and

–  Providing ongoing improvements in public services.

This Framework must be responsive to the economic and fiscal context. This year has seen developments which have altered the economic landscape significantly, including higher inflation and borrowing costs. Taking account of these developments, a temporary upward adjustment is being made to the MTEF. This sees 2023 core expenditure increasing to €85.9 billion, with a core expenditure growth rate of 6.3 per cent. Core expenditure growth is expected to return to 5 per cent over the medium term.

Through this approach I am seeking to ensure the right balance between providing support, investing in our economy and public services, and safeguarding fiscal sustainability in the long term.

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