Dáil Éireann - Volume 625 - 10 October, 2006

Written Answers. - Social Welfare Code.

Mr. Broughan asked the Minister for Social and Family Affairs his views on recent figures produced by the Central Statistics Office showing that expenditure on social protection here at 15.9% of GDP was the fourth lowest in the EU and well below the EU average of 27.4%; his plans to increase the amounts spent on social protection; and if he will make a statement on the matter. [31724/06]

  Mr. Brennan: The figures referred to are contained in a Central Statistics Office Report, published on the 27th of June 2006, entitled “Measuring Ireland’s Progress, 2005”. The information is based on figures published by Eurostat, the Statistical Office of the EU, which publishes comparisons of social protection expenditure as a percentage of GDP across the EU. This encompasses not only social welfare expenditure but also expenditure in other areas such as health care, social housing, employment support programmes and other social inclusion programmes.

The latest such statistics were released on 20 October 2005 and deal with developments up to and including 2002. No comparable figures are yet available for the period 2003, 2004 or 2005 during which the Irish economy continued to perform exceptionally.

When examining such data it is important to remember that gross expenditure measures do not take account of social charges or taxes which may be levied on benefits after they are paid, nor do they include transfers made by means of tax concessions, as opposed to direct cash payments. For example, tax relief on contributions towards occupational and private pensions, which are an [176] important feature of Ireland’s pension system, is not counted as expenditure. The EUROSTAT release draws attention to the fact that the EU average masks major national differences in the structure of social protection funding, partly related to differing levels of wealth between countries, and also reflect differences in social protection systems, demographic trends, unemployment rates and other social, institutional and economic factors.

The level of expenditure is also significantly influenced by the age profile of the population. Ireland, currently with one of the youngest populations in the EU, needs to spend less on pensions and healthcare/care of the elderly than most other member states.

In addition, social protection expenditure as a percentage of GDP is crucially dependent on the pace of economic growth and the level of unemployment. The statistics show that at EU level, between 1993 and 1996, social protection expenditure relative to GDP stabilised at a level below the peak of 28.8% in 1993. This was due to renewed GDP growth and slower growth in s-ocial protection expenditure, particularly related to unemployment benefits. Over the period from 1996 the EU average dropped from 28.4% to the level of 27.7% in 2002. Ireland’s position mirrored that of the EU as a whole, except that the level of economic growth and the decline in unemployment were much greater in Ireland than in most other EU countries and consequently the drop in the percentage of GDP accounted for by social protection expenditure was greater.

The fact is that under this Government there has been a sustained and substantial increase in social protection expenditure. The EUROSTAT report states that the increase in Ireland’s per capita expenditure (8.7% per annum and the highest of all EU countries) from 1998 to 2002, in comparison to that of the EU as a whole (2.5% per annum), was “particularly pronounced”.

Moreover, it should be noted that social welfare expenditure will have increased substantially during the 4 year period 2002 to 2006. The overall spending on social welfare in 2006 will increase to over €13.6 billion, an increase of over EUR 1.4 billion from the 2005 figure, representing the highest ever spend on social welfare. Indeed, between 1997 and 2006 the basic rate of social welfare payment has increased by 99.7%, well ahead of the 34.2% increase in consumer prices and the 67.7% increase in gross average industrial earnings.

This Government will continue to address the scope for further improvements in Ireland’s social protection infrastructure, guided by the National Anti Poverty Strategy, while at the same time continuing to take the measures necessary to maintain economic growth and competitiveness and thereby generate the resources for further social investment.

[177] Question No. 159 answered with Question No. 148.