Michael Noonan (Limerick City, Fine Gael) | Oireachtas source

Yes. That is what we have spelled out in the medium-term economic strategy. The structural deficit is a difficult concept. The easiest thing is to ask what are the permanent features of the economy and what is cyclical. Whatever is cyclical rises and falls with the business cycle, so if one strips out what is cyclical the structural part is left. If there is a structural deficit the business cycle will not remove it. One must address the structural deficit as a specific piece of economic project work to remove it, whereas the cyclical deficits will be removed by the business cycle as it moves on. Calculating that is extremely difficult in an economy like Ireland's, which is so open and has such a high level of exports.
There is room for debate and we have had that debate with the Commission. We are not always happy with the Commission's view of the calculation of the structural deficit. Some things could be structural but may be due to cyclical influences or vice versa, so it is a bit tenuous. If the Deputy asked me to provide a hard and fast definition of what a structural deficit is, there are variations across textbooks and across countries. In general terms, however, if the lead-in point is to ask what a cyclical deficit is, it is the rise and fall of deficits as the economic cycle proceeds. When one gets high growth levels the deficit goes down on the cycle, and when one hits recession the deficit goes up. That corrects over the cycle, so that is not the real concern. We need to take out of the system the rocks in the stream that inhibit the flow of economic activity, which are there due to the malstructure in an economy. If one takes out those pieces one is then dealing with the structural deficit. That is the best I can do to describe it.