There will be no further cash available for overspending in the Department of Health this year or next, the Ministers for Public Expenditure and Finance said yesterday.
Paschal Donohoe and Michael Noonan were speaking at the publication of the Government's Summer Economic Statement, where they confirmed the revised "fiscal space" – the amount available for tax cuts and new spending for next year – in the October budget will be about €1 billion.
The thriving economy has seen the amount available double since the 2016 budget last October. However, the Ministers insisted all departments – especially the Department of Health, where regular overspending has become the norm in recent years – will have to live within their means in future.
Although the Department of Health has recently been allocated an extra €500 million for this year, Mr Donohue insisted there would be no further supplementary estimates this year or next.
“We expect that the relevant departments will deliver services within existing budgets,” he said. He said the department had been granted a 6 per cent increase in its budget this year, equivalent to €800 million.
Political pressure
He acknowledged Ministers have previously given assurances there would be no extra spending in the course of the year, only to bow to political pressure when health services ran up against spending ceilings.
Mr Noonan insisted the recent cash top-ups for health and for the Department of Justice, which received an additional €40 million, were not “supplementary estimates”, but were “revised estimates” completed later than usual because of the delay in forming a government.
Supplementary estimates are no longer possible due to European Union rules, Mr Noonan said. However, some sources say the recent cash top-ups for health and justice are supplementary estimates in all but name, and the European Commission is unlikely to be fooled. Rather, they say, Brussels is content to allow the Government some leeway on budget rules, given Ireland's booming economy.
The general government deficit – the difference between the Government’s incomings and outgoings – is expected to fall to 0.9 per cent of GDP this year, and will be eliminated entirely by 2018.
Mr Noonan said bringing the public finances into broad balance would give the Government much greater freedom to address shortcomings in public services. And as long as growth continued, Mr Noonan said, “We’re going to have a lot of money.”
Strong growth
The
Department of Finance
predicts strong growth in the Irish economy will continue over the coming years, ranging between 5 per cent this year and 3.3 per cent in 2021. Debt will continue to fall, to 72 per cent of DGP by 2021.
The two Ministers also warned about the pressures on public sector pay. The document points out pay increases added €6.5 billion to the annual public sector pay bill between 2000 and 2008, though a recruitment embargo and public sector pay cuts reduced that figure by €3.6 billion during the economic crash.
Meanwhile, Minister for Social Protection Leo Varadkar will today tell the Dáil he will request Government approval to pay the Christmas bonus this year.
“As happened in 2014 and 2015, when a bonus was subsequently paid, there is currently no provision for a bonus in the Department’s allocation for 2016,” he said yesterday. “The State’s financial position is improving again in 2016 and I will therefore be seeking approval from my Government colleagues in the coming months for the payment of a Christmas Bonus once again this year.”
