Full budget speech of Minister for Public Expenditure and Reform
Brendan Howlin delivers Budget 2014 speech
This Budget and Estimates sets out to deliver on this Government’s promise to the Irish people at the last General Election – to fulfil our commitments under the troika programme foisted on the Irish people by the previous Government and to restore Ireland’s economic sovereignty.
In pursuit of this goal, the two Government parties agreed a strategy for this Budget and Estimates. It involves reducing the tax and spending consolidation from €3.1 billion to €2.5 billion, targeting a general government deficit of 4.8% for 2014 and in the process, achieving a primary balance.
This strategy seeks to reassure international investors that we are committed to reducing our deficit to below 3% of GDP by 2015, as we work to exit the troika programme.
It seeks to put us on a path to long term debt sustainability and to ease the burden on future generations.
It seeks to encourage growth in the domestic economy by targeting a consolidation no greater than is necessary to achieve our fiscal goals and by investing for future economic growth.
And equally importantly, it seeks to minimise the effects of austerity on the Irish people.
This is the last of our Budgets under the fiscal constraints of the troika programme. We have made good on our commitments to the international community that has supported us. We do not underestimate this effort. It is a testament to the fortitude of the Irish people.
‘No austerity’ is the catch-cry of those that have argued that there were alternative strategies available to this Government.
Nobody is ideologically committed to austerity. Austerity is what is left, after Fianna Fáil in Government drove the economy into the ground and led us beholden, like the famine victims of old, to seek relief outside this country.
Some have argued that rather than seeking consolidation of our position with international support, we should have harnessed whatever remained of our resources and, with a final throw of a dice, spent it all in an effort to reflate our economy, regardless of the international economic environment. But, we tried that before, in 1977, and it led to more than a decade of hardship.
As I have stated consistently, Government policy is not focussed solely on getting the deficit down. We have supported enterprise and job creation through direct investment and structural reforms, measures which are beginning to bear fruit. We have also sought and secured better terms on our international loans.
Our task now is to plan for the future. We must ensure that the sacrifices of the last few years are not in vain and that we use the progress made as a platform for future growth and development.
The expenditure measures I am announcing for 2014 amount to €1.6 billion out of an overall consolidation of some €2.5 billion.
We have come a long way in meeting our fiscal targets. At end of 2010 the deficit was over 30%. Our target deficit for 2014 is 4.8%. Since we took office in 2011, this Government has managed to reduce spending in a balanced, strategic and responsible way. This is in stark contrast to the previous government, who oversaw a litany of disastrous decisions that failed the Irish people.
The progress that we have made in bringing stability to the economy and meeting our fiscal targets must be viewed in the context of increased demands on services.
Not only have we reduced spending in absolute terms, we are delivering more services with that reduced money.
We have a growing population, which increased by almost 350,000 between 2006 and the last census in 2011.
The numbers in receipt of Jobseeker’s payments have increased by almost 200,000 or 130% between 2008 and 2012.
Numbers in Education have increased by 78,000 or 8%, from 961,000 in 2008 to 1,039,000 last year.
Medical Card holders have increased by 540,000 or over 40% between 2008 and 2012, from 1.35 million to 1.89 million.
The number of people of pensionable age has increased by 65,500 or 13.5% since 2008.
There are few areas where reform has been as manifest as it has been in the budgetary process.
We have moved, in line with the new European arrangements, to an October Budget which should ensure we can achieve one key goal of Oireachtas committees: the examination of spending plans before the money has been spent. This should bring about a qualitative difference in our debate about spending over the next few years.
Our first task upon taking office as a new Government was to undertake a Comprehensive Review of Expenditure. This was not a once off measure. The review of what we do, how we do it and whether we are using our resources appropriately and achieving our policy goals has become the new normal. To this end, a further Comprehensive Review of Expenditure and a review of the Capital Investment Framework will commence in the coming months.
Public Service Reform
I would like to acknowledge the contribution that public servants have made to our recovery.
Over the course of the last 5 years, the Public Service has reduced in size by almost 10%. The cost of the pay bill has fallen even further, by some 17%, and the Haddington Road Agreement that I reached with Public Service unions earlier this year will permit that cost to fall further again.
These savings need to be protected and sustained, which means that we must continue to demand further efficiency in the system. And we must ensure that Public Service managers across every sector make full use of the 15 million extra hours and the other hard-won workplace flexibilities agreed in Haddington Road.
However, as we reform and improve, there are immediate pressures that need to be addressed. In recent times, I have come to the view that there are areas of the Public Service where we simply need to provide some additional staff, after five years of downsizing.
For this reason, the target for Public Service numbers next year has been adjusted to allow some scope for additional staff in our classrooms, hospital wards and for front line policing.
These important additional resources are a Reform Dividend, only made possible because of the savings being delivered across the system as a whole; and it can be done while still reducing the pay bill next year by over €500 million.