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Budget 2019

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Minister for Public Expenditure and Reform (Deputy Paschal Donohoe)

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Minister for Public Expenditure and Reform (Deputy Paschal Donohoe)

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Snippet Contents:

I propose to take Questions Nos. 223 and 231 together.
The Stability Programme Update, published in April of this year, set out budgetary projections for the period to 2023 from a starting baseline of the 2018 fiscal outturn. These projections also formed the basis for the Summer Economic Statement. The 2018 outturn figures reflect the expenditure incurred in respect of the Social Protection Christmas Bonus for 2018.
Payment in respect of a Christmas Bonus commenced again in 2014, initially at a rate of 25%. The percentage rate has increased each year since 2014 and reached 100% in 2018. In line with the practice that such payments are funded based on the fiscal position for the year, in each of the years 2014 to 2019, the Revised Estimates Volume did not include a specific allocation in respect of a Social Welfare Christmas Bonus. This reflects the fact that the decision on paying a bonus, including the rate of that bonus, takes into account the overall fiscal position each year. Given that the decision to pay a Christmas Bonus this year relates to 2019 expenditure, it would not impact on the unallocated resources of €700 million available for 2020 outlined in the Summer Economic Statement.
The Christmas Bonus is paid both from funds voted by the Dáil and from the Social Insurance Fund. At the end of May, the surplus on the Social Insurance Fund was €120 million ahead of profile, driven by strong growth in PRSI receipts, and net voted expenditure of the Social Protection Vote was €19 million below profile. A continuation of these trends in receipts and expenditure would see such upside being available as an offset against the impact on the General Government Balance of any budgetary decision in respect of a Christmas Bonus payment for 2019.
On the broader question of making our multi-year current expenditure projections more robust, both in the light of the analysis offered by the Irish Fiscal Advisory Council, and of my experience of managing current expenditure, I have decided in the Summer Economic Statement, published last week, to increase the rate of current expenditure growth post 2020 to 3 ¼ per cent. Taking into account projected capital expenditure growth, this allows for an annual increase in gross total expenditure of c. 3 ½ per cent over the period 2021 to 2024. This is an appropriate level of growth, given the uncertainties arising in the external environment and the current position in the economic cycle. It is in this context that the scope for annual resource allocations, including the question of an annual Christmas bonus, will fall to be determined.