Sustaining Progress - Department of Taoiseach

Chapter 3 Sustaining Progress
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3.2 Public Expenditure
Public expenditure will be managed in a cost-effective way and with a focus on key priorities and
value for money so as to support the overall goals of this Agreement, subject to being consistent with
the strategy on the overall balance and a tax level that will facilitate the level of economic growth
necessary to maintain high levels of employment.
3.2.1 Context
Over the strong growth period of the first two years of the PPF and continuing into 2002, public
expenditure rose very sharply - the rate of increase in spending in 2001 and 2002 totalled almost
40%. Much of this increase in spending was focused on the health and education sectors. Capital
investment under the National Development Plan (NDP) increased significantly - an average increase
of 142% over the period 2000-2002 compared to the average over the corresponding period 1997-1999.
However, with the marked slowdown in economic growth, a public finance deficit of 0.7% of GDP
on a General Government basis is now foreseen for 2003. While the expectation is that economic
performance will pick up during the Agreement period, the prospect is that GNP growth may not
exceed an annual average of the order of 3%. In this context and on the basis of the NESC Strategy
Report 2002 recommendations, the pace of planned growth in public expenditure is being adjusted to
a level consistent with the overall sustainability of the public finances at a tax level that will facilitate
the level of economic growth necessary to maintain high levels of employment and progress
infrastructure and social provision towards realisation of the NESC vision for Irish society.
3.2.2 Looking Forward
Public expenditure policy under this Agreement, in terms of overall composition and balance, will,
subject to the overriding objective of keeping the public finances close to balance for the period
2003-2005, be informed by the following key points:
■ improving the efficiency and effectiveness of public expenditure by a greater focus on priorities,
service standards, transparency and results secured;
■ targeting priorities by reallocating existing expenditure from lower to higher priority programmes,
with a particular focus on growth oriented policies and actions, and by eliminating programmes
that are no longer effective in serving economic or social priorities;
■ exploring new and innovative service delivery options and evaluating the role of user charges
in effective service delivery on the basis set out in the NESC Strategy Report 2002;
■ sustaining public infrastructural investment, both directly and in partnership with the private
sector, at a significant level;
■ the continued targeting of resources and prioritisation of commitments at those most in need,
sustaining social protection and inclusion expenditure at a level that addresses the key social
deficits by continuing to protect and enhance the living standards of the disadvantaged and
improving the delivery of social cohesion objectives;
■ value for money is as important in industrial and development policy as in any other area of
public expenditure (including tax expenditures) and must be subject to rigorous evaluation; and
■ developing a stronger and more transparent monitoring and evaluation culture, and a sharper
focus on evidence-based policy making.