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Contents | Executive summary | How to obtain this publication | Additional information
The following OECD assessment and recommendations summarise chapter 4 of the Economic survey of Ireland published on 16 April 2008.
Contents
Public expenditure growth needs to slow and efficiency must be increased
Ireland enjoyed spectacular growth in tax revenues over the past five years. This allowed real public spending to increase faster than in any other OECD country except Korea, while the government also paid down public debt and started to build a fund to pay for future pension liabilities. This left the public finances in a healthy position. Revenue growth has, however, decelerated sharply as the economy has slowed and the government surplus shrank from 3½ per cent of GNI in 2006 to ½ per cent in 2007. Over the coming years the growth in tax revenues will be lower than that seen in recent years, partly due to lower property-related receipts. Current expenditure needs to increase more slowly than in the past. The budgeted slowdown of spending over the coming years is welcome and maintains infrastructure investment as a priority. However, the budget still plans to raise current expenditure by 7.7% in 2008 and the budget is likely to show a deficit of close to 1% of GNI in 2008. It will be important that current spending growth slows further in subsequent years as planned. In particular, it will be crucial to avoid expensive commitments. The recent public service pay benchmarking exercise showed that public and private sector wages are broadly in line and pay restraint will be necessary in the upcoming national pay negotiation under the “Towards 2016” social partnership agreement.
Real government expenditure has expanded rapidly
Cumulative growth since 2000
Source: OECD (2007), Economic Outlook 82 database.
Expectations for improvements in public services will remain high even as government spending slows. Achieving value for money will become increasingly important if higher standards of service are to be delivered. A wide range of improvements has been made to the management of public spending: a unified budget has been introduced; a multi-year framework for capital expenditure has been implemented; Value for Money reviews are being undertaken in all government departments; the Management Information Framework (MIF) has been rolled out across government; and a new Efficiency Review of public expenditure has been launched. However, the framework needs to be consolidated: the budget constraint on spending departments needs to be tighter, in line with the more top-down approach to expenditure management introduced by the new unified budget framework, to focus efforts on delivering services more efficiently and directing resources to where they are most effective. The multiannual budget framework for current spending should be strengthened along the lines of the models introduced in other countries, to avoid sharp changes from year-to-year and excessive spending growth at times of buoyant revenues. The focus of expenditure management should continue to shift from control of inputs to specification of outputs, and the link between analysis and decision-making should be tightened.
How to obtain this publication
The Policy Brief (pdf format) can be downloaded in English. It contains the OECD assessment and recommendations.The complete edition of the Economic survey of Ireland 2008 is available from:
- SourceOECD for subscribing institutions and many libraries
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Government officials with accounts ( subscribe) can go to the "Books" tab on OLIS
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Additional information
For further information please contact the Ireland Desk at the OECD Economics Department at eco.survey@oecd.org. The OECD Secretariat's report was prepared by Sebastian Barnes and David Rae under the supervision of Peter Hoeller. Research assistance was provided by Isabelle Duong.
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