John Browne (Wexford, Fianna Fail)
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Question 6: To ask the Minister for Finance if he is preparing his Budget 2012 on the basis of achieving a deficit of 8.6% in 2012 or if he intends to target a lower deficit percentage; and if he will make a statement on the matter. [27610/11]

Michael Noonan (Limerick City, Fine Gael)
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The general Government deficit target for 2012, as set by the ECOFIN Council in December 2010, is 8.6% of GDP. The Government is fully aware of the importance of achieving this target in the context of the 2012 budget as well as the views of those who have called for a more ambitious deficit target. The Government is committed to implementing the necessary adjustment package to ensure we continue to meet our targets. I have stated that an adjustment above the €3.6 billion amount already signalled may be required if the 8.6% of GDP deficit target for 2012 is to be achieved. The necessary budgetary adjustment will be implemented through a combination of further reductions to public expenditure and additional revenue-raising measures and will take account of the comprehensive reviews of both current and capital expenditure, which are currently being finalised, as well as the most up-to-date economic and fiscal data available.

The estimate of the 2012 deficit and the level of budgetary adjustment required to meet our deficit reduction target will be set out in the pre-budget outlook, which is scheduled to be published later this month. That document will set out a medium-term consolidation plan for 2012 to 2015 which will indicate the overall composition of revenue and expenditure adjustments for the period. The 2012 budget will be published in early December, as is the norm. Quarter 2 economic data released in recent weeks and budgetary data for the first nine months of the year which were released yesterday were both broadly consistent with expectations. My Department is currently assessing what implications the latest macroeconomic and budgetary data might have for 2012 and beyond. Such assessment will, along with later data, inform Government in the context of its budgetary preparations over the coming months.

Michael McGrath (Cork South Central, Fianna Fail)
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I thank the Minister. Has a final date been set for the publication of the pre-budget outlook and the multi-year plan? Will the Minister clarify whether it is a plan to the end of 2015, which appears logical given that the 3% target has now been linked to 2015 rather than 2014? Will he publish a new four-year plan or a three-year one?

Is it the Minister's view that we should aim to achieve the 8.6% target or does he believe we should do better than that? There are counter arguments - one is the need to reduce the deficit as quickly as possible while the other is the risk and the damage to the domestic economy of imposing a greater adjustment than we are committed to in terms of €3.6 billion.

We are in a better position going into 2012 than might have been expected given the very welcome interest rate reduction which will yield approximately €900 million next year. Looking at yesterday's figures, the Exchequer position is close to €1 billion ahead of profile at this stage. It appears the Minister's starting position is quite good but the great unknown and the variable is growth next year and that projection is being finalised. What is the Minister's view of the 8.6%? Is it the target he wants to achieve or does he believe Ireland should achieve a lower deficit?

Michael Noonan (Limerick City, Fine Gael)
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The 8.6% target is in the programme and is the one we are working towards in preparation for the budget. We do not have the full data yet which would allow us to make full decisions. Yesterday's figures were helpful but there were things in them which were unhelpful as well. The Deputy will notice VAT was below profile. When one comes to the end of the year, it will probably be still below profile so as we go into 2012. We will have to build in a lower figure for VAT than was expected in the multi-annual programme.

There was a dramatic improvement in yesterday's unemployment figures, the largest reduction in the month of September since statistics began. If that is maintained up to the end of the year, one may be putting in a lower figure for unemployment benefit than anticipated for 2012. There are swings and roundabouts. We do not know yet but the working target is 8.6% and we will achieve that. There are all sorts of arguments as to whether we should go beyond that.

Michael McGrath (Cork South Central, Fianna Fail)
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Can the Minister give the House a date for the publication of the pre-budget outlook and the new plan? Is it a four-year plan to the end of 2015?

Michael Noonan (Limerick City, Fine Gael)
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The plan is 2012 to 2015. Like all these plans, it gets less precise as one goes forward to the third year or fourth year. We will give as accurate an estimate as we possibly can. My intention is to publish towards the end of October but I cannot give the Deputy a date yet.

Pearse Doherty (Donegal South West, Sinn Fein)
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Yesterday the Central Bank projected growth rates of 1.8% for 2012, which is significantly lower than the Government's projection of 2.5%. If the growth rate turns out at 1.8%, what will that mean in terms of an adjustment? Where will the €3.6 billion end up? I am glad the Minister continues to assume an adjustment of 8.6% because there is no sense in the €4 billion that others, including the leader of Fianna Fáil, Deputy Martin, have called for. What type of adjustment would be required if the Central Bank's projections are accurate?

Michael Noonan (Limerick City, Fine Gael)
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The figure from the Department of Finance is not comparable with that of the Central Bank because our projections were made in April, when the situation was entirely different. Clearly, we will also be making a downward adjustment to our projection because the countries to which we export are not growing as fast as anticipated. We will have to mark down our growth given that it is export led. The general rule of thumb is that a 1% reduction in GDP translates into about €800 million in revenue, although I ask Deputies not to tie me to the last euro in terms of accuracy because that is a rough but useful mnemonic for calculations. As Deputy Doherty will agree, however, it is a big blow.