Professor John McHale:

The Deputy has raised a very good point. If my colleagues and I had complete control over the design of fiscal rules, we would keep current and capital spending separate. We would also apply the rules to current spending rather than capital spending. In terms of capital spending, where one has opportunities to invest and where the cost of capital is well below the rate of return on a project, from an economic perspective, one should undertake these investments.

Deputy Michael Creed mentioned the following but perhaps I did not realise it fully.

The concern is that when it is all lumped in together, one will be forced to cut capital spending when the actual projects themselves make sense on an economic basis. I am sure my colleagues agree with me on this, but I think the ideal set of rules would make that distinction between current and capital. Unfortunately, however, they are not the rules we have.