There was no threat to State pensions, Minister for Public Expenditure and Reform Brandan Howlin told the Dáil.

He said more than 400,000 people were in receipt of one of the two main State pension schemes, the contributory and non-contributory. The cost of paying for those was projected to increase by €200 million a year out to 2026, he added.

“This Government is committed to pension provision and to sustaining the value of those pensions,” Mr Howlin added.

He said that when discussing spending, it was important to consider future trends, adding that not enough citizens were planning for the future to supplement State pension entitlements.

It was in that context that Tánaiste Joan Burton had set up a working group to examine the pensions issue, he added.

Fiscal space

In his spring statement to the Dáil, Mr Howlin said the Government was looking forward to having between €1.2 billion and €1.5 billion of fiscal space for next year’s budget.

“We will allocate these resources on an equal basis between additional spending and reducing the tax burden on low- and middle-income earners,” he added. “Additional investment may also be possible arising from reduced spending on unemployment payments as the numbers at work grow.”

Mr Howlin noted the Government had earlier agreed to his proposal to enter into discussions with the trade unions on the issue of public service pay.

As the economy improved, the prospect of a successful legal challenge to the financial emergency increased, and it was prudent, therefore, for their orderly unwinding. Not to do so would be foolhardy, he added.

Mr Howlin said all public servants had their pay reduced significantly. Over the past two years, they had seen the beginning of pay awards in the private sector and, as the economy recovered, there was a need to ensure remuneration, and the cost of the public service more generally, were managed to ensure they remained sustainable.

Mr Howlin said without the productivity gains made in recent years, the Government would not be in a position to discuss unwinding the measures. It would take time, he added. “To do anything else would jeopardise the public finances again – something we will not do,” the Minister added.

Boom and bust

Mr Howlin warned the country could not be allowed return to “the devastating cycle of boom and bust” that had been the hallmark of previous governments.

“We must learn the lessons of the past decade and not repeat the mistakes that brought us to ruin,” he added.

He said the vision and plans for renewed prosperity would not be built on the “sand of short-term and unsustainable” increases in Government spending. It would be built on the “rock of fiscal responsibility and investment in the productive capacity of our people”, he added.

Mr Howlin said the Coalition had provided stable and responsible government since 2011, standing up for the Irish people and charting a path to recovery.

“We cannot and will not throw money at problems,” he added. “Expenditure growth must continue to be linked to performance and reform.”

He said any increases in expenditure and incomes must be in line with growth and productivity.

Decision-making must be evidence-based, with a strategic focus on improved outcomes for citizens, he added.

“Our task now is to map the next phase of our national journey,” said Mr Howlin.