2025-12-09

13. Deputy Naoise Ó Cearúil asked the Tánaiste and Minister for Finance the way in which the findings of the 'Future Forty' report will shape Ireland’s fiscal policy in the coming years, with particular reference to demographic change and global trends; and if he will make a statement on the matter. [64370/25]

In September, the Tánaiste's predecessor published the Future Forty report. In what way will the findings of this report shape Ireland's fiscal policy in the coming years, particularly when it comes to demographic change and global trends? I am sure the Tánaiste is aware that a quarter of the population by 2060 will be over the age of 65, the Tánaiste and myself included, believe it or not. That will have a significant impact on State finances.

That gave me an awful wake-up call. I had not thought of it like that but it is factually correct. I thank Deputy Ó Cearúil for raising this question. Future Forty is a really important piece of work. I can say that because I had nothing to do with it. It happened before I was in the Department of Finance. Huge credit is owed to the officials in the Department of Finance, the chief economist John McCarthy and others, who worked very hard on this. We are often accused in politics, sometimes with legitimacy and sometimes not, of short-termism. Nobody can suggest there is anything short term about publishing a plan as to where Ireland will be not in five, ten or 15 years but in 40 years. That is the exact sort of big thinking and analysis one would expect a Department of Finance which has responsibility for economic policy to do. It is not a modern version of Mystic Meg; all it can do is look at various scenarios and, of course, scenarios can change depending on the policies we pursue. I say daily and will say again tonight that while it looks out to 40 years, it basically tells us there is a window of about a decade to put in place policies to mitigate against some of the challenges we may face in demographic change and slower economic growth, potentially, but also to look at the opportunities and how we can best harness them. Future Forty was published earlier this month. It explores the key drivers of Ireland’s economy and public finances over the next forty years, on a no-policy change basis which of course is not what is going to happen because we will have lots of policies during that time from this Government and future Governments. It examines the long-term economic and fiscal impacts of global megatrends and other structural shifts including climate change, demographics, housing, healthcare, digitalisation, deglobalisation and potential EU expansion. The report presents a central scenario for our population, economy and public finances but also examines over 2,000 alternative scenarios using differing assumptions. It does not identify which scenario is most likely to occur but there are clear patterns which emerge across all trends and projections. I say to everybody in public policy - the Government, Opposition, Government Department and State agencies - that this is a tool for all of us to use to inform evidence-based policy.

Go raibh maith again, a Thánaiste. While I said in jest we will both be retired by 2060, you never know. The main thing to bear in mind is that a quarter of the population will be at retirement age. That is going to have a significant impact on pensions and healthcare. Measures have been taken already - auto-enrolment will begin in the new year, which needs to be acknowledged. It is a crucial step to ensuring the future fiscal security of a lot of people, going into old age. However, there will be revenue challenges, particularly when it comes to our reliance on corporate tax receipts. There could be a vulnerability in this regard so we need to consider broadening the tax base. This will be quite difficult, as we all acknowledge. If we are to take the document as a strategic one on how we are going to manage the economy, we will have to make painful decisions in the short term that will benefit society in the long term.

The Deputy is correct. Future Forty does highlight that expenditure related to demographic ageing is expected to grow substantially in the coming decades. Healthcare, long-term care and pensions are expected to take up an increasingly larger amount of the Government's budget. Mitigation of the ageing costs will depend on improving efficiencies and ultimately boosting productivity in public services, including by integrating innovative medical technologies into our health system. Encouraging healthy living can help to keep costs manageable in the long run, too. Future Forty projects that climate costs will rise rapidly due to both Iong-run climatic changes and the increased frequency of extreme weather events. Although there is considerable uncertainty about the future cost of climate change, Ireland must prepare in advance to lower adaptation costs in the future. Additionally, I point to the cost of servicing our national debt. While this might appear relatively minor at present, Future Forty points to its becoming a growing burden if deficit and debt are used to cover rising costs elsewhere. Future Forty outlines hypothetical issues. Of course, there are also positive outcomes and opportunities. The decision on automatic enrolment, as the Deputy rightly said, is one whose immediate benefit people will not see in the short term, but they absolutely will see it in the future when they retire with better pensions.

I thank the Tánaiste. I appreciate all that. The report contains measures we could take to achieve productivity gains. There are elements we could really tap into when it comes to digitalisation, in particular, and the likes of artificial intelligence, AI. There need to be guardrails for AI and that is why the national AI office is being established. There needs to be a proper and comprehensive examination of AI, which the Oireachtas joint committee and other bodies are doing, but we need to start considering ways to increase productivity significantly and take some of the drudgery out of administrative tasks. These could apply to the likes of waiting lists for surgeries and normal administrative tasks in various Departments. This is where we could start to see immediate and long-term economic benefits.

Deputy Ó Cearúil's reference to drudgery and repetitive tasks brought me back to my days in PricewaterhouseCoopers, where I started as an auditor. There were many repetitive tasks. Specifically on Future Forty, the Tánaiste's predecessor as Minister, Deputy Donohoe, put a very sensible budget in place. He was very anxious to ensure we would be left on safe ground for the future. Future Forty refers to corporation tax as something we cannot necessarily rely on and it also refers to broadening the tax base. Notwithstanding the sensible approach of the previous Minister, we really do need to focus on corporation tax to ensure we do not become overly reliant on it. As Deputy Ó Cearúil alluded to, we need to ensure the tax base is widened and not narrowed, as the Opposition continually seeks despite the fact that it talks about the need to increase spending on this and that. Then again, it never wants any taxes whatsoever to be raised. That is the dichotomy we have to deal with in this House. I just want to get the Tánaiste's views on it.

I agree with Deputy Neville on the importance of continuing to run budget surpluses and invest in our Future Ireland Funds – the Future Ireland Fund and the Infrastructure, Climate and Nature Fund – and the importance of continuing to be prudent in our spending of public money. That is why the Minister for public expenditure, Deputy Chambers, and I will bring to the Cabinet next week the medium-term fiscal framework, which will anchor our spending and tax plans not just for a year but also for the five years ahead. That is important for guarding our economy and for planning the delivery of public services that we get on with implementing the programme for Government. I agree with Deputy Ó Cearúil on the use of technology, including AI. I am aware that the Minister for public expenditure, Deputy Chambers, is very strong on this. He has introduced a plan on digital services and the use of digital technology in the public service. Of course, there have to be guardrails and all of that. AI is not going away, as has been said. It is actually a tool that can be used for good, subject to having a proper system of safeguards in place, including in the area of speeding up assessment times. Let us consider the progress we have been able to make using technology for passports. When we read Future Forty, as the Deputy has done, we see that the use of technology to increase productivity is a key component in addressing some of the challenges we will face in the time ahead and ensuring the costs of the delivery of public services will remain manageable.