Opening Statement of Tánaiste and Minister for Finance Simon Harris at the Budgetary Oversight Committee

Check against Delivery

Introduction

Chairman,

Thank you for the opportunity to attend the Committee today to discuss Ireland’s new Medium-Term Fiscal and Structural Plan.

Conflict in Iran

Before outlining the Plan, I would first like to take the opportunity to address the situation in Iran and the wider Middle East.

The number one priority for Government is the safety of Irish citizens currently living, visiting, or attempting to pass through any of the effected countries. There are over 20,000 Irish citizens living in the region and there are hundreds more due to travel through one of the major international airports in the area.

For people that do want to leave, Minister McEntee outlined yesterday that the use of chartered flights is being considered if necessary. Work is ongoing and we hope to update people on that shortly.

Yesterday, the Taoiseach and I met with Lieutenant General Rossa Mulcahy, Chief of Staff of the Irish Defence Forces to discuss the situation.

While developments in Lebanon are a cause of concern, Lieutenant General Mulcahy informed me that the Irish forces in the country are safe and remain in good spirits.

While not as important, or urgent, as the humanitarian situation ­- and subject to the how long the war continues - there will be economic implications to this conflict.

In the short-term we have a seen falls in financial markets around the world.

Relatedly, oil and gas prices have risen substantially. While at this point there will be no immediate pass-through to retail prices, an ongoing war in the region – and the continued closure of the Strait of Hormuz – would likely increase inflation and damage economic growth.

More generally, this conflict is the latest in a series of geopolitical and geoeconomic events that has the overall impact of heightening uncertainty.

In such an uncertain world, it is the Government’s job to ensure that Ireland has the flexibility and resilience needed to continue to prosper.

It is in this context, Chairman, that the Medium-term Plan is so important.

Background

Minister Chambers and I published the Plan just before the Christmas break and it was submitted to the European Commission in early January.

It has both a European and domestic dimension.

Firstly, all Member States are required to submit plans under the reformed EU economic governance rules, which place greater emphasis on medium-term planning, rather than annual budgets.

They represent the cornerstone of the revised European fiscal framework and each Member State will be held to account for the achievement, or otherwise, of the targets and ambitions set out in their respective Plans.

Our Plan spans five years and provides a stable, multi-annual fiscal and economic policy horizon.

On the domestic front, there are three important and interlinked elements to the document:

• a fiscal strategy with binding expenditure ceilings
• an outline of key investment goals, and
• details on structural reform efforts across all sectors

International context

Before discussing these in more detail, I think it is important to first, briefly, outline the international context in which the Plan was formulated.

Chairman, we can have no doubt that the world we live in now is different to the one we have been used to in recent years —

• The shift in US economic policy;
• The continued competitiveness pressure on European industry from China;
• The seemingly inexorable rise in the capabilities of artificial intelligence;
• And the ongoing brutal war of aggression against the people of Ukraine by Russia;
• These are all evidence of a new geopolitical and geoeconomic paradigm.

As an independent, ambitious and outward facing country, we must respond.

We can look back at the last three decades of economic progress with pride. The country has come a long way and Irish people today have more opportunity than in previous generations.

But looking back won’t help us move forward in a world that is less familiar, more competitive and deeply uncertain.

Fiscal Strategy

The Medium-term Plan is a core facet of this response.

The new Plan will support progress on implementing the key social and economic priorities of Government, while delivering on the commitment to sustainable public finances.

It provides clarity and certainty to citizens, businesses and investors on the priorities of the State as well as, where appropriate, the public resources that will fund them.

In particular, the Plan commits the Government to a fiscal strategy that is based on three core pillars of sustainability, resilience and readiness.

Firstly, we will continue to increase expenditure in public services in a sustainable way. We will not fund expenditure today on the backs of tomorrow’s taxpayers.

Secondly, we are providing for the large-scale infrastructure investment planned as part of the NDP. Crucially, we are committing to continuing investment in strategic infrastructure projects even in the event of an economic slowdown, or deterioration of the public finances.

Our commitment in this regard, shows we are serious about long-term economic planning.

Thirdly, — and relatedly — we will continue to save for the future by running surpluses and putting money in both the Future Ireland Fund and Infrastructure and Climate and Nature Fund.

Delivery

The Plan shows that the Government is committed to using the resources of the State to improve people’s lives in a sustainable way.

But money alone will not solve these issues.

The Plan sets out a series sectoral reforms and initiatives that will improve public services.

In relation to infrastructure, I cannot stress enough the importance of the reforms and improvements set out in the recent Accelerating Infrastructure Report & Action Plan.

Put simply, we will not be able to boost our competitiveness, improve living standards or meet the challenges ahead without the success of this Plan.

Irish citizens deserve and expect that their Government delivers for them.

This Government will do just that.

Conclusion

In summary, Ireland and Europe face a number of different but related challenges.

As a country we cannot sit back and wait for the consequences of these issues to affect us. We must be strategic in our thinking, flexible in our response and speedy in our delivery.

The medium-term Plan sets out the framework within which these responses can take shape.

It provides fiscal and policy certainly in a very uncertain world and can act as an enabler of the growth and dynamism we will need to meet these challenges.

Thank you once again for the invitation to discuss the Plan and I am happy to take any questions the committee might have.

ENDS