Dáil Éireann Debate, Thursday - 18 December 2025
174. Deputy John Clendennen asked the Tánaiste and Minister for Finance his long-term strategy for ensuring the sustainability of public finances given the demographic pressures outlined in the Department of Finance's Future Forty: Ireland's Demographic Outlook, which projects an increase in the old-age dependency ratio from 23.1% in 2022 to 55.2% by 2065; and if he will make a statement on the matter. [69735/25]
View answer184. Deputy Malcolm Byrne asked the Tánaiste and Minister for Finance the implications of aging demographics as set out in the Future Forty report; and the actions his Department will take as a result. [69523/25]
View answerI propose to take Questions Nos. 174 and 184 together.
I thank Deputy Clendennen and I know Deputy Byrne has a similar question. Both Future Forty reports, Ireland's Demographic Outlook and A Fiscal and Economic Outlook to 2065, explore the key drivers of Ireland’s economy and public finances over the next 40 years, on a no-policy change basis. We are often accused of short termism in this place. In fairness to the officials in the Department of Finance who worked on this, this is the antidote to short termism, talking about what Ireland might look like, and not predicting it but actually putting a whole variety of different scenarios - about 2,000 of them - out there. It is really the antidote to short termism, saying, here is what Ireland could look like in 2016 on a no-policy change basis.
Developing realistic projections of Ireland’s future population size and demographic profile is a fundamental step in the broader assessment of the long- term drivers of economic growth. The analysis demonstrates how alternative scenarios for future net migration and fertility rates can affect population and demographic projections.
In Future Forty’s central scenario, the old-age dependency ratio is expected to increase - as the Deputy rightly said - from 23% in 2022 to 55% in 2065. These headwinds are unavoidable. However, even in a high migration, high fertility situation, Future Forty finds that the old age dependency rate may increase to 50% by 2065.
While people are thankfully living longer - this is a good thing, by the way - and living more active lives, the ageing population will have significant fiscal impacts for Ireland as age-related spending, including on healthcare and long-term care, increases in line with this change. It will also put downward pressure on our labour force and therefore could suppress economic growth.
The exact path of our future is uncertain; the risks are tilted to the downside.
However, steps can be taken to mitigate these risks and prepare for the challenges ahead. In fact, in the reading of Future Forty, it looks out for 40 years but its basic, simple message is that we have a decade to take the policy decisions that we need to take collectively to future-proof our country.
The Government has already introduced several policies to respond to these challenges. First, the programme of capital investment under the updated national development plan will support productivity growth, including by crowding in private investment. In addition, continued capitalisation of the Future Ireland Fund and the Infrastructure, Climate and Nature Fund will help to offset some of these future pressures. Finally, the rollout of the pension auto-enrolment scheme, which is a very important, transformational measure, will ensure that all eligible workers, for the first time, have supplementary private pension provision, thereby alleviating pressure on the public finances and helping to improve quality of life in retirement.
The key finding from the analysis is that policy development in the coming decade will have a critical bearing on Ireland's long-term living standards. We will all have different views on what those policies could be but Future Forty provides us with an important evidence base and data that will be useful to all of us in our work. This window of opportunity must be used to improve efficiencies, boost our resilience and implement key structural reforms in order to raise productivity. It is only by implementing policy action on all of these fronts that we can ensure long-term economic, fiscal and environmental sustainability.
My Department, alongside the Department of Public Expenditure, Infrastructure, Public Service Reform and Digitalisation and the Department of the Taoiseach, is committed to developing potential enhancements to better integrate long-term strategic planning more systematically into policymaking. Future Forty will be central to this process.
The report is on a “no policy change” basis. Of course, there will always be policy changes. The question for all of us is whether it is informed, intelligent and evidence-based policy. Crucially, the report looks at the advancement of technology, whether it be AI or other developments, and what that will do to productivity. What will it do in terms of being able to improve our access to healthcare as we age, hopefully with dignity, in our country? Future Forty is a very important piece of work that provides, in a way that I have not seen before in these Houses, a treasure trove of information, data and various scenarios that can help all of us - Government and Opposition - in planning for the future of our economy and society.
I agree with the Tánaiste that long-term forecasting models are very welcome. When we look at some of the measures we have introduced already, like the Future Ireland Fund and saving for days of pressing future financial demands, the question is whether we are doing it at a fast enough pace. Regularly, in this Chamber, we hear negative connotations and associations concerning migration. This report is very clear regarding our dependence on growing our labour force and economy, and who is going to play a vital role in ensuring that materialises. When we see a forecasted increase of 2.5 times in the old-age dependency rate in the next 40 years, it is startling to think of what we will have to do in this space in the coming years. I ask the Tánaiste to commit to publishing a clear, multi-annual demographic and fiscal strategy so we can continue to monitor this on an ongoing annual basis.
This is an incredibly important report, as the Tánaiste said. I welcome the fact that he acknowledges the role of AI and technology, and how it may change our lives. It is worthy of a full debate in the House. Given the statistics we are looking at, by 2041, on current projections, there will be 1.4 million people aged 65 and older, and by 2065, there will be 2 million people aged 65 and older, triple the number at present.
This is of particular interest to the Tánaiste, given he is probably the youngest in the Chamber, so he will have to keep working to fund all of our pensions. The pension issue is certainly something we will need to address. We need to look at how we are designing our communities and societies. It is critical that we engage with older people’s representatives around that. I have asked the Tánaiste before about keeping people healthier as they get older, and the commitments within the programme for Government for tax relief for gym membership, which is critical.
I agree with the Minister on the need to look long-term in the projections. When looking so far ahead, there are huge variances but we need to look beyond one year.
I recall that in his first speech as leader of Fine Gael, the Minister promised that a five-year tax strategy would be published by the end of last year. I cannot find that anywhere. Is it on the Fine Gael website, the Department of Finance website or the Department of the Taoiseach website? Will the Minister outline where that five-year tax strategy is? For the life of me, I cannot find it anywhere.
I thank Deputy Doherty for reminding me. Once we publish the medium-term fiscal framework, which will set out the expenditure trajectory to the end of the decade, it will enable me, in my new role, to look at that.
That is not a tax strategy.
What I can tell the Deputy is that the trajectory of the tax bands for the coming years is what is outlined in the programme for Government. I look forward to debating that with the Deputy in the months and, God willing, years ahead.
I thank Deputy Doherty for acknowledging this. The Future Forty document is not my document or the Deputy’s document. It is genuinely something that we should all embrace. It is produced by very able and informed officials and economic experts in the Department of Finance. It is as much for the Opposition as the Government; it is as much for the Oireachtas as the Executive. It will, no doubt, provide us with a useful debating tool, and hopefully inject, from everybody's perspective, a degree of evidence into all of the things that all of us say in these Houses, which the public rightly expect.
Are we doing it at a fast enough pace? That is a very fair question from Deputy Clendennen. An objective answer is probably “No”. More broadly, there are very significant megatrends, as they call them in the document, coming at us. There are huge opportunities within that, and there are also huge challenges. We have taken a number of important steps, such as the establishment of what could effectively be sovereign wealth funds. The Future Ireland Fund and the Infrastructure, Climate and Nature Fund are important steps, and running budgetary surpluses is helpful. The NDP provides clarity and €275.4 billion of funding out to 2035, and that it runs for longer than the lifetime of this Government is good.
I will come back to the issue of gyms. Deputy Byrne is right regarding what we can do to positively age. We are not powerless when we look at this document. We are all going to get older but we can get older and stay healthy. What can we do from a policy, health service and technology point of view to help make that more of a reality? On the issue of taxes for gyms, we look at all matters in the context of the budget. I would also point out that there are lots of ways you can keep fit out in the fresh air too.
One point in relation to funds is that the strength of deposits in Ireland on a domestic and international basis must be noted. The registration of auto-enrolment on 1 January is a big step forward. It is certainly welcome. Given the objective that it is set to achieve, it is going in the right direction. I have one ask. There is an element of apprehension, particularly among small businesses, about affordability and viability in this space. It is something we will have to monitor very closely in order to protect small businesses. I made the point at committee yesterday that there is now a situation where small businesses on high streets and in small villages are competing with multinational corporations. We need to get the balance right with regard to the demands. Nonetheless, it is definitely a worthwhile initiative. We also need to ensure that people who want to work later in life can do that and be rewarded for it, from a financial need or social well-being perspective. Those are initiatives that we need to look at as well.
I agree with Deputy Clendennen on auto-enrolment. It is essential, but it is important that we take on board the concerns of SMEs.
It is very welcome that we now have life expectancy of 83 in this country. It is a huge success that we are at that point. One of the challenges is that we age healthily. In Singapore, as part of the old age package, admission to community gyms and swimming pools is free for those over 65. There is a commitment in the programme for Government to tax relief for gym membership in order to promote strength training. What is critical is that we ensure that those who are in their 40s and 50s, and then in their 60s, 70s, 80s and 90s, can remain healthy.
It is critical to engage with organisations like the National Older People's Council, and I know Kevin Molloy in my own area is regularly raising issues around this. We need to involve older people in the discussions on these issues as well.
I was certainly not being flippant about the programme for Government commitments. I do not want anyone holding off on staying healthy until future budgets. These are issues that we will, of course, consider in the round, as we always do in advance of the budget.
I was in Millstreet in west Cork recently to visit a community gym that is part-funded through Government grants. It was great to see. I was on the same rowing machine that now-President Connolly had been on when she was campaigning. It is the most famous rowing machine in Ireland because the President was on it, and they are very proud of that fact. It is a great community gym. It is an example of communities working together to create healthy communities and help themselves age in a good way.
Deputies Clendennen and Byrne referred to auto-enrolment. I was talking to the Swedish minister in Brussels the other day.
I think this is something they did in Sweden many decades ago. It is a transformational decision. I accept that it is going to be a little difficult for people. We are asking people and employers to put a little aside at a challenging time, knowing it will create provision for them as they age above and beyond the State pension. The communications campaign is important, making sure everybody knows how it works and the obligations on everybody. I have heard good media engagement on that recently. It is important we keep that up. I am conscious of the pressures on small and medium businesses as I know the Deputy is. There will be different views in this House on this. We have taken a number of measures to try to assist with that, including the 9% VAT rate, the new timeline for the living wage and the decision not to expand the statutory sick scheme further beyond five days. I accept there are different views on those decisions in the House, but they were taken in recognition of the reality that when we have a bright idea in here, we do not always have to pay for it; it is the business that does. Auto-enrolment really needs to happen. As it rolls out, we will continue to engage and listen. We will look back long after we are all gone and say this was a really important moment to protect low-income workers in particular as they age. Future Forty suggests there will be many more low-income workers ageing and living longer, healthier lives in the future.
